Reasons to Consider Buying Property in Tenerife
Tenerife is a popular destination for millions of tourists each year, making it an attractive choice for property investment. Known as the “Island of Eternal Spring,” it boasts fantastic year-round weather with temperatures rarely dropping below 20 degrees Celsius.
Beyond the great weather, Tenerife is the largest and most popular of the seven islands with stunning landscapes, palm-lined beaches, lush green forests, and breathtaking mountain ranges. With all four seasons simultaneously present on the island, you can enjoy a morning at the beach during the winter months, drive across the Teide mountain range to the north coast and enjoy autumnal weather, stop at the foot of the Teide mountain, take a cable car to the snow-capped peaks, and then return to the southern side to once again enjoy the summer heat.
Tenerife’s real estate market is constantly active, and there is a wide range of properties available to suit various needs and preferences. From family homes and holiday homes to luxury villas surrounded by golf courses, there are also typical Canarian authentic village houses. Nature lovers can indulge in a variety of hobbies and sports, such as windsurfing, kite surfing, sailing, jet skiing, tennis, cycling, mountaineering, horse riding, and more.
Investing in property in Tenerife is a smart choice due to high demand for rental properties both in the short and long term. It is important to work with a reputable real estate agent who is familiar with current laws and regulations if you are considering buying for investment purposes.
Tenerife is also an excellent option if you want to spend the cold winter months in a beautiful sunny place with a good public safety record and low crime rates. Additionally, Tenerife is a cultural melting pot with tourists and immigrants from all over the world.
We highly recommend reading our guide before making a decision on buying property in Tenerife. By following our advice, we are confident that your investment will pay off quickly and bring you joy for years to come.
PROCESS OF PURCHASING PROPERTY
Let Your Home Tenerife guide you from A to Z in the local real estate market and save you time and worry. With our extensive network, we can offer you many exclusive and interesting properties for sale. We also provide advice and guidance to ensure a smooth and surprise-free purchasing process. Join us for a briefing or webinar before your visit, so you know exactly what to expect and avoid any disappointment. Choose the right broker and invest with confidence.
HOW TO BUY?
Private contract and deposit.ย (Contrato de arras)
Our clients usually visit 8-14 properties before making a decision, and viewings typically take 2-5 days.
Once our client has selected a property, we request an updated certificate from the property register to ensure that the property is free of debts, legal costs, and encumbrances.
After verifying the documents, a pre-sale or pre-contract, known as โcontrato de arrasโ in Spanish, is prepared, which includes the intentions of the parties, records the price, payment schedule, conditions, and other terms. In the case of purchasing on the secondary market, the deposit is 10% of the total transaction price, although the parties may agree on a higher percentage.
Payment must be made by check or bank transfer to the real estate agencyโs bank account. If the Buyer withdraws from the transaction for any reason, the deposit is retained for the benefit of the Seller. On the other hand, if the Seller withdraws, they must pay twice the amount of the penalty to the Buyer. In individual cases, the conditions of the pre-contract can be agreed upon individually, according to the wishes of the buyer and the seller. The usual term of the pre-contract is two to three months, after which the transaction must be finalized with the signing of the final contract before a Spanish notary (escritura publica).
ย At the same time, the property is reserved for you and is no longer available for other potential buyers.
If you purchase through Your Home Tenerife, you won’t have any problems with the following:
We will open a bank account with a Spanish bank at the same time. It usually takes about 20 minutes and is free of charge. You will need your passport or ID card.
If you do not live in Spain, we will accompany you to the Las Americas National Police Station to obtain your NIE number (tax identification number). It takes 2 hours and costs only 11 euros for the state stamp.”
In the contract, the buyer usually has 2 months to complete the full purchase price. During this time, they must transfer the remaining money to their Spanish bank account. Once the buyer and the owners confirm the signing date of the deed, the buyer must return to Tenerife or send a legal representative.
The signing always takes place at the Notary’s office.
The final payment to the owner is always made by bank draft.
We will accompany you to your Spanish bank to ensure that the bank draft is filled out correctly. After the notary reads the text of the deed, you will hand over the bank draft to the owner, they will give you the keys to the property, both parties and the Notary will sign the deed, and you will become the rightful owner of the property.
After signing in front of the Notary and paying the full purchase price, you have the right to move into your property immediately if you choose to do so as the buyer. We always recommend inspecting the property directly after signing with the Notary.
The sales purchase pre-contract (contrato de arras) is the most common, but not obligatory element in transactions. If the seller and buyer are ready, and have all necessary documents and funds for the full payment, the transaction can be carried out immediately at the notary office.
However, in reality, there are three difficulties to face in Tenerife:
- It is almost impossible to get an appointment immediately, as notaries are overburdened.
- Owners may find it difficult to obtain all the necessary documentation on the same day.
- Banks may not release the bank draft for the full payment to the buyer on the same day.
Therefore, we always recommend the safest way to make an immediate agreement when buying property in Tenerife is by signing a sales purchase pre-contract (contrato de arras).
Indeed, Spanish laws do not require the mandatory presence of a lawyer for the signing of a real estate purchase agreement, but they do not prohibit it either. The role and responsibilities of a lawyer in a real estate purchase transaction in Spain are not clearly defined, so sellers and buyers can decide for themselves whether or not to use legal services. In practice, lawyers widely recommend their services on all platforms for real estate purchases. According to lawyers, their experience and expertise can help smooth the process and reduce legal risks. However, all important legal checks are performed by the notary.
Lawyer fees for real estate transactions are usually 1-1.5% of the purchase price per transaction.
Multiple law firms in Tenerife are at our disposal. If you are interested, we would be happy to recommend them to you.
PURCHASE COSTS
If the exact amount of the brokerage fee to be paid by the buyer is not separately indicated on a property’s data sheet, the real estate prices listed on our website already include the brokerage fee.ย
The cost per Title Deed is typically around โฌ800 on average, but the exact amount may vary based on factors such as the number of pages in the deed and the number of property owners.
Registering the Title Deed in the Property Registry costs an average of โฌ800.
If you are applying for a mortgage from a Spanish bank, please note that there are some additional expenses to consider, including a bank commission of 1% of the amount issued, an evaluation of the property by an independent company (which can cost between โฌ300 to โฌ800 depending on the size of the property), and obligatory property insurance (which can cost between โฌ150 to โฌ400 per year depending on the property).
If you have signed a Spanish property purchase contract, there are several steps you need to take to ensure the transaction is successfully completed.
Below, we list some important measures to follow after signing the purchase agreement :
Registering the Sales Contract: The sales contract must be submitted to the local property registry office in order to officially register the property ownership.
Paying Taxes: After purchasing the property, taxes must be paid, which are generally determined as a percentage of the purchase price. The tax payment obligation falls on the buyer and must be paid within 30 days after signing the sales contract.
Insurance: Most properties require mandatory insurance that covers the property and its contents. It’s advisable to arrange this before signing the sales contract.
Updating Municipal Records: It’s necessary to report the change to the city hall to update the garbage fee and to record the information for the IBI payment.
Utilities: The buyer must transfer the utilities, such as water, electricity, and community fees, to their name. If desired, the buyer can also arrange for services like home security, internet, and phone.
It’s important to note that the property purchasing process in Spain can be complex, and local laws and regulations may apply to individual transactions. Therefore, seeking the assistance of experts may be necessary to ensure that all necessary steps are taken to make the transaction a success.
If required, our office will manage the entire process carefully and safely on behalf of the buyer. The fee for this service is between 500-700 โฌ. Ask for detailed information.
The existence of the IBI (Impuesto sobre Bienes Inmuebles) payment is also verified by the notary before the signing of the purchase agreement. The buyer is solely responsible for paying this tax from the day of the purchase.
The IBI (Impuesto sobre Bienes Inmuebles) is a property tax that is paid annually in Spain. It is a local tax that is calculated based on the cadastral value of the property, which is determined by the local government. The tax revenue is used to fund local services such as road maintenance and public lighting.
Here are some key points to know about IBI:
- The tax is paid by the property owner and is due annually.
- The amount of IBI owed is based on the cadastral value of the property, which is determined by the local government.
- The cadastral value is typically lower than the market value of the property, so the IBI tax is generally lower than other property taxes.
- The tax rate can vary by municipality, so it’s important to check with the local government to determine the exact rate.
- The IBI payment is usually made in two installments, one in June and one in November.
- If the IBI is not paid, the local government can impose penalties and even seize the property in extreme cases.
It’s important to keep up with IBI payments to avoid penalties and potential legal issues. The local government can provide more information about the IBI and the payment process.
PORPERTY TAXES
If you are buying a new property, you must pay IGIC (Impuesto General Indirecto Canario) .
For existing (used) properties, you must pay ITP (Impuesto de Transmisiones Patrimoniales) .
The tax rate in both cases is 6.5% of the property value stated in the Escritura.
For commercial properties intended for private production and undeveloped land, the tax rate is 6.5% of the value stated in the Escritura. The tax must be paid once, at the time of purchase, and is payable at the local tax office.
When purchasing a parking space or garage together with a residential property (in a single notarial deed), the same tax applies as for the residential property.
Stamp duty or document tax – Stamp duty (Impuesto de Actos Jurรญdicos Documentados) – is a one-time tax payable at a rate equivalent to 0.5% of the property value stated in the Escritura. The application of the ITP tax law excludes the use of AJD, so the stamp duty must only be paid when purchasing new properties.
Tax Plus Valiaย (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) is related to the official increase in value of the property since its last purchase. This tax is calculated and paid to the local authority, and the obligation to pay it falls on the seller, unless otherwise agreed between the parties.
NOTARY
In Spain, the sale of real estate is always carried out by a notary, which guarantees maximum security.
The documents relating to the property are handed over to the notary, who carries out the verification of the encumbrances and debts himself. The file is then kept in the notary’s archive.
The buyer and the seller choose the time when they meet with the notary to sign the contract (escritura publica). Each party may have a representative, such as a real estate agent. In addition, if one party is a foreigner who does not speak Spanish, a sworn translator must also be present.
Usually, before signing the document, the parties study the contract and agree on important aspects. Therefore, at the meeting, the notary simply reads the document, explains the parties’ rights and obligations, and makes minor modifications if necessary.
If there is no objection to the agreement, the notary contacts the real estate registry and blocks the property, from which no further action is possible.
Then the parties sign the contract. The buyer signs all documents directly with the owner.
The buyer hands over bank checks to the seller for the remaining value of the property. The seller hands over the keys, property documents, and tax and utility receipts. The buyer also receives a copy of the purchase agreement, and the original can be obtained after registration with the real estate registry.
After signing the property registration document, the contracts with utility service providers (water, electricity, gas) must be handed over to the new owner.
Miscellaneous Information
Tenerife has always been a popular destination for British retirees, and it’s not hard to see why. With its moderate climate, rich cultural heritage and excellent healthcare system, it offers an attractive lifestyle for those who want to spend their golden years in the sun.
More details
If you want to acquire residence in Spain, a Spanish Property Golden Visa may be what you need. Also known as a ‘real estate visa’, this visa allows you to automatically settle in Spain.ย More details
Great to hear that you’re interested in buying property in Tenerife! At Your Home Tenerife, we are always here to answer any questions you may have about the process.
Whether you’re a first-time buyer or an experienced investor, our team of expert agents can guide you through every step of the process. From selecting the perfect property to negotiating the best deal and handling all the paperwork, we make it easy for you to achieve your real estate goals.
With access to almost all properties for sale in Tenerife, including many exclusive agency listings, we can help you find your dream property in this beautiful island paradise. And with our extensive knowledge of the local market and our commitment to providing exceptional customer service, you can trust us to ensure a smooth and hassle-free buying experience.
So if you have any questions or would like to discuss your real estate needs with us, don’t hesitate to get in touch. You can write to us at any time and one of our agents will be happy to assist you.