Why buy in Tenerife?
The Canary Isles is a very popular holiday destination for millions of people from all over the world for many reasons. It is a very good place to buy property whether it be for investment purposes, a second home or even your primary residence in the sun. Otherwise known as the land of eternal spring due to the fantastic weather which very rarely drops below 20º C in the winter months. Summer is a very comfortable 28ºC on average and is a nice dry heat with hardly any humidity making it the perfect climate to get away from the cold countries of central Europe.
Tenerife is the largest of the Canary Isles and is probably the most popular holiday resort. It offers a wide variety of beautiful scenery, from sunny palm tree lined beaches to the lush green pine tree forests and the lunar landscapes of the volcanic area Las Cañadas of mount Teide which is the highest mountain in Spain. You can literally witness all of the four seasons in one day if you decide to explore the island properly. In winter for example, you can set off early from one of the islands many sunny resorts and travel through the clouds and mist of the pine forests before coming out above the clouds to clear blue skies and play in the snow on mount Teide and then drive back down to the coast to sunbathe again.
The property market is always buoyant in the Canary Isles as it caters for everyone. It offers a wide range of properties from rural country houses to holiday apartments, luxury villas, apartment complexes and typical canarian style cottages. There are lots of quiet Spanish villages as well as busy tourist resorts. There are many great quality golf courses on the island with apartments and villas surrounding them. Tenerife also offers a wide range of watersports and activities including scuba diving, windsurfing, kite surfing, boat trips and jet skiing. There are a multitude of outdoor activities like tennis, padel, bowls, hiking horse riding and cycling. Or you can just chill by the pool or go to one of the many sandy beaches.
Many people buy property in Tenerife for investment purposes due to the high rental potential, whether it be long term for residential use or short-term holiday lets. If you are buying for rental purposes, you must make sure that the agent you are buying from informs you about the up to date letting laws.
People also buy property in Tenerife as a second home and spend their winter months away from the cold weather in their own country. People who choose to live in Tenerife in winter months are named “swallows” by the locals who liken them to the birds that migrate for the cold winter months.
The Island in general is a very safe place to live and there is very little crime to worry about apart from the normal petty crimes which exist anywhere else in the world. You will feel very safe at all times in Tenerife, especially at night time. Tenerife is home to a large mix of many cultures and people from all over the globe.
The Canary Isles are easily accessible and are only a short flight away from the rest of Europe. If you are travelling from England for example, the flights are only around 4 hours long, which is nothing compared to other holiday destinations which offer winter sun. There is no need to put up with long-haul flights in order to achieve this..
Tenerife is also easily accessible by ferry and many people choose to drive and bring their car with them. This can be a nice way to spend time visiting different places on the journey to Tenerife as long as you take your time to enjoy the scenery.
Whether you are buying an overseas property for personal use or as an investment, you are certain to be making a very good investment providing that you follow certain guidelines that we will point out below. We have tried to keep things as easy and open as possible, and if you do have any further questions then please feel free to contact us. You will find all our contact details on the final page of this buyers guide.
The buying process in a nutshell
The actual buying process is quite simple as long as you use a professional estate agent and don’t try and do things on your own. They will guide you through the whole buying process, but please bear in mind the following points. It may all seem a bit complicated and scary but you will have nothing to worry about providing that you have a good estate agent and legal advisor to look after you.
You will need to open a Spanish bank account and have an NIE number in order to buy a property and you will obviously have to have the funds in place to make the purchase. If you need a mortgage for your Tenerife property then we recommend that you talk to your financial advisor or bank before you start to look at properties so that you know how much you can afford to spend on your property. When working out your figures, you need to allow for approximately an extra 10% on top of the purchase price to cover the buying cost, things like stamp duty, legal fees, notary fees and land registry fees etc. Your agent will give you a full breakdown of these things prior to you buying.
Once you find your property, you would normally have to pay a non-refundable deposit of 10% and sign a private sales agreement with the vendor or their representative and then complete the sale within approximately 60 days, whereby you would sign the title deeds (escritura) in front of the notary public and make the final payments.
Your agent or legal representative will then register your new property in your name and within approximately 30 to 45 days you will get back an original copy of the escritura.
Your legal advisor will change over the utility bills from the previous owner to your name and set up a standing order at your bank.
You will need to take out property insurance to cover your building and contents.
You may need to find a property maintenance company or key holder to look after your property while you are not in the country.
If you are considering renting out your property, please make sure that you can do this legally and use a proper agent to do this for you. If the property is in a complex, you may need to go through the complex reception if they have the sole management rights.
Do your research
Buying a property is always a big decision to make and buying overseas is an especially big decision, so you must make sure that you are doing the right thing. You should always do your research before you decide to buy.
One very important thing you need to consider is what do you want the property for? What is the purpose of you buying the property? Is it for personal use, a retirement home or is it a property that you are buying for investment purposes and are looking to get returns on your investment? Do you want a property in a complex or community or do you want a detached property where there are probably no community fees to pay? Are you looking to buy a rundown property to refurbish and sell on to make a profit? Is this a short term or long term investment? What is your exit strategy when you finally decide to move on?
Take the time to explain to your agent exactly what you are looking for. This will help them find you the right property and will save you all a lot of time. You do not want to leave them guessing what you are looking for. Sometimes it is worth going out to visit a handful of properties with your agent just to give them an idea of they type of property you are looking for.
You will need to decide which area you are interested in buying a property and make sure that it is this the right area for you, especially if you are planning on staying long-term. Many people fall in love with their holiday resort and buy a property without giving it too much thought, only to find that they wished they had bought a property away from the tourist areas. It could be a good idea to rent a property on a long-term basis first to get the feel of the area and see if you are happy living there before you decide to buy.
If you are buying in a complex or community, you need to bear in mind that there are usually added costs for service charges and community fees to maintain the complex. These costs will normally include maintenance on things like gardens, swimming pools, communal areas and lifts etc. You need to find out what the ongoing fees are before you buy so that you can budget your monthly running costs properly.
There are some complexes that do not allow short term rentals, so if you are looking to buy an investment property to rent out, make sure that you are allowed to do so prior to buying. You might also need to register your property with the authorities to be able to rent out and of course follow the local authority and tax rules. Your estate agent will be able to advise you on these things, so make sure you ask them.
If you decide to buy a detached property then you will have to consider things like gardeners, pool maintenance companies and general maintenance companies that you can use in case you need them, especially if you are away from the property for any length of time, it may be worth considering a trustworthy key-holder.
The more time you spend researching and deciding what you are buying the property for, the more time you will save when actually viewing properties. If you know what you are looking for and can make this clear to your agent, it will make it much easier and quicker for them to show you exactly what you are looking for, rather than viewing properties that do not match your requirements.
Be clear about the reason why you are buying the property and make sure that you buy in the right area. If you get it wrong the first time, it can cost you a lot of money.
Use a professional estate agent
The whole process of buying and selling a property in Tenerife is quite simple and safe as long as you use a professional agent to help you. Many people will have heard of the so called “nightmares” when people have bought an overseas property and maybe lost money in the process, but it could be that these people have possibly tried to cut corners and not used a professional agent or a legal advisor. In many cases they will have dealt with someone they have met in a bar and thought they could trust just because they spoke their language. You would never buy a property in your own country without using an agent and legal advisor, so do not do it here. Do not buy a property from someone that you have met without going through the full legal process.
Make sure that you find a professional estate agent who has an office open to the general public and make an appointment to go and see them at their office to discuss your requirements. A professional agent will want to sit down with you to find out exactly what you are looking for and what your financial situation is so that they can find you the right property at the right price while matching your financial requirements and maybe even help you with the mortgage application with a local bank or broker. The work they do prior to your viewing will save you a lot of wasted time. Be open with them and tell them exactly what you are looking for so that they can help you. If you don’t tell them exactly what you are looking for, they will probably end up guessing and most likely show you properties that are not what you want to see.
Unfortunately, there are many “one-man band” agents around that do not have an office and will want to meet you directly at the property you want to visit or even a bar, cafeteria or hotel reception. They will often only have a nice website offering their properties but no actual office. We recommend that you stay away from this type of agent. When doing your research on the web you can often see if they have an office or not and if you are not sure, make sure that you ask them where their office is based and visit their office before you decide on if you want to deal with them.
Ensure that you use an agent that has been operating for many years and have ‘weathered the financial storms’ so to speak. A lot of agents start up while the property market is going good but then close down when the going gets tough. You want to make sure that your agent will be around for you in the future to help you in case you need any future help. Ask them how long they have been operating and how much expertise they have in the market.
A professional agent should never pressure you into buying a property because they understand that the purchase needs to be carefully thought about. They will guide you through the process and answer any questions that you may have. If you ever feel pressured by them, simply back off from them. There is no need for sales pressure. Their job is to find you the type of property you are looking for. You will know if the property is right for you or not and you do not need pushing into buying something that you are not sure about.
Your agent will help you with the tasks such as opening bank accounts, applying for NIE numbers (foreign identification numbers) and will be able to point you in the right direction of a qualified legal advisor and other things like furniture shops, cleaning companies and tradesmen etc. Most agents will have dealt with these people for years so will be able to vouch for them.
Your agent will take care of the whole buying and selling process to make sure that everything goes smoothly for you.
Use a legal advisor
Just like the rule about using a legal, professional estate agent. Make sure that you get an independent professional legal advisor to look after you throughout the buying process just like you would do at home. When buying a property in your country, we are sure that you would never consider buying it without using a professional legal advisor. Never buy a property without using one in Tenerife, it is that simple.
Make sure that you visit them in their office and have a proper chat to them about the services they offer. Normally the first consultation is free and you can get to know them and get an impression of how they work. Make sure that they speak your language clearly so that there are no communication issues. Your estate agent should be able to recommend a good legal advisor.
If your agent tells you that you do not need a legal advisor and that they will do all the paperwork for you, you can either insist that you use your own legal advisor or walk away from them and find an agent that uses an external, independent legal advisor that will not be biased, one that will look after your interests and not the ones of the agent or the vendor. If you want to carry on using the agent because they have the property you want to buy, make sure that you insist on using your own legal advisor. If they contest this, there is probably something wrong so find another agent.
Your legal advisor will make sure that you buy the property free of debts and tenants. They will ensure that the property is properly registered at the land registry and that there are no outstanding legal issues or debts attached to the property. They will check that the utility bills are up to date so that they can transfer them over to you after you buy the property. They will also deal with the local authorities to make sure that the local taxes are paid and that there is nothing outstanding on the day you make the purchase.
Never sign any documents until your legal advisor has checked them for you and make sure that they explain clearly what you are signing.
If you need any help on finding a legal advisor then please contact us and we will gladly help you find one. We will help you whether you buy with us or not as we know how important this is.
Getting an NIE number
When buying a property in Spain, you are required to apply for a NIE number which is a foreigners identification number. This is normally applied for at the national police station and can be either done by yourself, or with the help of your agent or legal advisor. There is a small cost involved which they will guide you with. You will have to fill in some simple forms and give a copy of your current passports. You will have to pay a small fee at the bank and then go to the national police station to apply for the NIE number. This can take a whole morning so be prepared for a long wait just in case.
If you are giving your agent or legal advisor a power of attorney to act for you, they can normally apply for your NIE on your behalf. You may want to ask them for advice on this matter.
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Spanish bank account
You will need to open a Spanish bank account before you buy a property so that you can transfer the money for the purchase as well as setting up standing orders for utility bills like water, rubbish, sewage and electric as well as things like property insurance and local property rates etc. Your agent or legal advisor can help you with this process and maybe recommend a good bank. We recommend that you use a bank that has a branch near the property you are thinking of buying so that you can pop in to speak to them in person should you need to. There are of course online banks but we do not recommend them, especially if you are looking for a mortgage. It can be hard work trying to deal with things over the phone or via email. This of course is a personal choice and something that you will have to decide for yourself.
You will need your passport or ID card and will be required to prove that you are legally able to open an account and will be asked to provide proof of income. The exact requirements may vary from bank to bank and you will have to discuss this with staff at the bank. If you can find a bank with staff who speak your language then this will of course help you. It will also help if they have an easy to use online banking system and in your language so that you can process online transactions if needed.
It goes without saying that you should make sure that you always have funds available in your Spanish bank account so that your utilities and bills get paid on time. The last thing you want is to have your electric or water cut off while you are not there. It can be a difficult and costly process to have them re-connected. If you miss paying the local authorities and taxes, they will charge you compounding interest, so keep on top of your accounts.
If you need a mortgage to buy your property it is probably a good idea to get mortgage advice prior to searching for a property. This way you will know roughly how much the bank will lend you and that will save you time completing the deal once you have found a property that you like. In any case, the bank will have to value the property and will probably lend you a percentage based on the lower figure of either the sales price or the valuation. The percentage will vary per bank but if you are a resident you may get a mortgage of up to 80% of the lower of the two figures and if you are a non-resident you may get up to 60% of the lower of the two figures. (For example, if you find a property for 125,000€ and the valuation comes back at 110,000€ the bank may offer to lend you money based on the 110,000€ but, if the valuation on the same property comes back at 140,000€ they may lend you money based on the purchase price of 125,000€) These are obviously examples and must be checked with at your bank.
If you do not have a mortgage in place when you are searching for a property, you stand the risk of losing the property you want to buy while you are applying for the mortgage. Many owners are not prepared to wait for a buyer to apply for a mortgage, especially if the market is moving fast. You are also in a better position to negotiate a better sale price if you have your funds in place and can make a quick purchase, so speak to your estate agent, bank or financial advisor and get the wheels in motion prior to searching for a property.
It could possibly be better for you to apply for a mortgage in your own country first because your own bank knows your banking history, it could make the process easier for you. You will probably be able to make the monthly payments in your own currency which could also save you money as well by not having to make regular overseas transfers.
You should also check with your bank to see if there are any early cancelation fees as this can come as a surprise at the end in case you want to pay off your mortgage early.
Check with the bank if you have the option of fixed interest payments as well as variable interest rates. The current rate of interest is very low and it could prove beneficial to you to have a fixed interest rate.
*Please note that we are not financial advisors. Any opinions given in this guide are ours and are only meant for informative purposes. They are not meant to be financial advice. You should always get professional legal and financial advice.
Paying a deposit
When you have found the property you want to buy, you will normally be required to pay a deposit to secure the sale which is usually 10% of the sale price. This should be held in your estate agent’s client account or maybe even your legal advisors account. It can even be lodged at the public notaries office for safe keeping at an additional cost which your agents will talk to you about. You must be absolutely certain that you can continue with the sale because this deposit is usually non-refundable so you would lose it if you back out of the sale.
Some vendors might request that the deposit is transferred to their own account but we do not recommend this, because if they back out of the deal you are entitled to get the deposit back, it might be difficult to get it back from them if they already have it, but if your agent holds it, it can be transferred to you straight away. If the vendor backs out of the sale, they should pay you a penalty of the same amount as the deposit you paid. For example, if you have paid a deposit of 10,000€ you will get back your deposit plus another 10,000€ from the vendors. This would of course need legal action and your agent and legal advisor will give you more details of how this works.
When you finally sign the escritura in front of the notary public, you will be asked to prove where the money has come from so it is advisable to make a transfer for the deposit as well as the funds for the rest of the sale and do it from your own bank account and not a third party bank account holder.
Private sales contracts
Once you have paid the deposit you will be required to sign a private sales contract which outlines the details of the purchase and conditions of the sale. This is something that your agent or legal advisor will prepare for you to sign and will typically be signed directly with the vendors or their representative. If they do have a representative acting on their behalf, make sure that your agent or legal advisor verifies that they have power of attorney to be able to sign on their behalf.
The contract will state the terms and conditions of the sale including the price, maximum timeline for signing and who is liable for what. The buyer is liable for all the costs involved in buying the property and the vendor has to make sure that they sell you the property totally debt free and free of tenants. The average timescale for a sales agreement is 60 days from paying the deposit, although this is something that can be flexible depending on the buyers and sellers circumstances. There is usually a fifteen-day leeway at the end of the contract just in case there are any unforeseen problems that need resolving to be able to complete the sale. On or before the end date in the agreement you will then be required to sign the title deeds (Escritura) at a public notary and it is at this time the property is transferred over to you and final payments are made.
If you are transferring funds from abroad you need to allow time for the money to arrive to your Spanish bank account. Your funds should be ready and in place in plenty of time before the completion, you do not want to leave things until the last minute and maybe miss the date for the signing.
Signing the title deeds (escritura)
When buying a property, you must make sure that it has an escritura and that the property is registered at the land registry office. This will all be checked out by your agent and legal advisor.
On the day that you sign for the property it will be done at the notaries office. This is when the final payment must be made to the vendors and you get the keys for your new property.
You will have to prove where your money has come from to make the purchase so you should make the payment by either a banker’s draft or a bank transfer. If the vendor has a mortgage on the property, it is normal practice that part of the payment is made directly to their bank in order to cancel their mortgage. If this is the case make sure that your legal advisor sees that the mortgage cancelation is then registered with the land registry and that the vendor pays for this to be done. If the vendors have any outstanding debts, they might be retained from the funds you pay them to make sure that they are paid. If you have any doubts about these things, your agent and advisor will guide you.
Your agent and advisor should be there with you and you should have the escritura translated properly to you so that you fully understand what you are signing. You will need to take your passports and NIE numbers. The notary will verify that you are who you say you are and that the details in the title deeds are correct before they allow you to sign. They are there to witness that everything is done correctly.
Once the escritura has been signed it has to be registered in the land registry in your name and this will be done by your legal advisor. It can take about 30 to 45 days and once it has been done, you should be given an original copy along with any invoices for costs incurred. You can however ask for a photocopy (copia simple) of the title deeds on the day of the signing. This is normal procedure and can only take about 15 minutes after the signing.
The extra costs involved in buying
When buying a property in Tenerife you have to bear in mind that there are extra costs involved additional to the actual purchase price. These costs can add up to about 10% of the purchase price in total but the higher the price of the property, the percentage drops slightly due to the fixed fees involved.
At the moment of writing this document, the stamp duty on buying a property is 6.5% which is quite a big addition to the price. Apart from this you will also have to pay the notary fees, land register fees and your legal advisors fees. All these payments are normally made on the day of the signing of the escritura so you will need to have the funds in place.
Make sure that you get a full breakdown of costs from your agent and legal advisor prior to completing the sale so that there are no surprises after the purchase has been made.
You should keep all the receipts for all the costs incurred in buying your property because these can be off set against any profit you may have when you eventually come to sell the property again in the future. This is something that your financial advisor will tell you about.
Making a Spanish will
The majority of people don’t like talking about death but it is something that happens to all of us and there is no point in trying to avoid this important issue or pushing it to once side. If you are a property owner, you need to prepare your Spanish will as soon as possible to protect your estate in Spain.
In some countries you can actually modify your existing will to include your estate in Spain but we believe it is best to also have a Spanish will. It can be signed at the notaries office, even on the day you make the purchase if you like and does not cost a lot of money.
Make sure that you talk to your agent and legal advisor about it so that they can help you get it done.
We recommend that you speak to your financial advisor before making this decision but please bear in mind that they need to understand how the law works in Spain. It might be worth getting them to talk directly to your legal advisor in Spain first so that they are aware of the situation and can therefore advise you better.
When you own a property, you should always insure it so it protects you in the case of any damage or problems, especially if you are leaving it unattended for any length of time.
There are few things that you need to know if your property is in a community or complex, because many people get confused regarding the insurance cover they need. If your property forms part of a community or complex, there will normally be an owner’s community that runs the complex in the way of cleaning and general maintenance of the communal areas etc. If this is the case, you will have to pay community or service charges to pay for these services and normally they should have a community insurance policy in place to cover the community and communal areas. There will normally be a president, secretary and an administrator who help run the community who you can talk to regarding the type of community insurance they have in place but here is the thing. The community insurance policy usually only covers the communal areas and, in most cases, does not cover any possible damage done to your property. Many people mistakenly think that their property is covered just because the community has an insurance policy.
You need to take out an insurance policy that covers building and contents so that your property is properly protected. If you are renting your property out, you will probably need public liability insurance as well in case something happens to someone while they are staying in your property. The costs are very reasonable at the moment of writing and it is not worth taking the risk of not having proper insurance cover. For the sake of a few extra Euros, make sure that you get both buildings and contents insurance and ask your insurance broker regarding public liability cover as well..
Your estate agent might even be an agent for an insurance company and you can ask them for their advice. There will be local insurance agents that you can talk to in your own language so take the time to discuss it with them. You can always get insurance online but it might be difficult if they don’t speak your language. Sometimes, face to face service is much better.
If you are taking out a mortgage on your property the bank will probably offer you insurance and tell you that you must take out their insurance cover by law which protects the lender. This is not quite true and they will do this because they get paid commission from the insurance company. It is true that you need an insurance policy in place which covers the mortgage amount to the lender but you are free to choose which insurance company you use. Shop around and get quotes from other companies. If your bank pushes you into taking their insurance policy, it can very expensive so it might be worth cancelling after the first year and taking out another policy with another company.
Negotiate the price
When buying a property, you should always try and negotiate the price, your estate agent will do this for you. In some cases, the vendors put a price on their property that they expect they will have to drop slightly in order to make the sale, so do not be afraid to negotiate. Bear in mind though that the deal has to be fair on all sides and some vendors can get offended if you make a ridiculously low offer. There have been cases whereby the owners have been offended by a silly offer and they have then refused to sell their property to the potential buyer.
Your agent will be familiar with negotiating deals and will gladly do this on your behalf. It will make life much easier for you both if you give your agent room to manoeuvre on your behalf, so give them an idea of the price you are willing to pay in case your initial offer is not accepted. It will save you both a lot of time and will get you the result you want, which is buying the property. If you can get a discount then that is an added bonus for you.
Vendors might be tempted to lower the price if you are able to make a quick completion, so make sure that you have your funds in place and that you can act as quick as possible. There is little point in asking for a lower price if you then have to wait for your bank to give you an answer about a mortgage.
Do not be tempted to try and befriend the owners and try to negotiate direct with them. It usually ends in tears. Your estate agent is accustomed to negotiating and knows how it should be done properly. They are there to liaise between buyer and seller and take out the personal and emotional involvement. They will have plenty of experience and will probably get the best possible deal for all parties involved.
Please bear in mind that in any negotiation, it should always be a win/win situation whereby all parties involved are happy.
Using a power of attorney to buy
It is possible for you to give someone a power of attorney to buy a property on your behalf. Giving a power of attorney is common practice but you need to know and trust the person you are giving it to. If you decide to do this then make sure that you consult your legal advisor about it before you do so.
It would need to be specific to buying the property and acting for you in all matters relating to that purchase. Do not give anyone a general power of attorney as this is giving them power to act on your behalf for anything which could be very risky.
A power of attorney can be prepared easily at the notaries office and does not usually cost a lot of money. In many cases it would be a lot cheaper than buying flights and finding accomodation to be in Tenerife and do the signing yourself. It is also possible to be prepared and signed in the country where you live. There is a special process for this which your legal advisor will explain to you.
A few things to consider once you have bought a property
Once you own a property there are a few things you might want to have in place to make life easier for you. If you are spending time away from your property and leaving it unattended you might want to consider the following points.
Key holder or management company
It is worth considering having a trustworthy key holder that can look after a set of keys for you just in case there is an emergency and you need quick access to your property. There are property management companies that offer this type of service and reasonable prices to do so.
Building and maintenance company
It is recommended to have the contact details of a good building and maintenance company who can do any repair work that you might need. Your property management company will normally deal with a few so can maybe help you with this matter. If you do not have a property management company, find a reliable maintenance person who can do things like this for you.
You may not want the hassle of cleaning your property every time you arrive. There are many cleaning companies that will prepare your property and get it ready for your arrival so that it is ready and clean for you when you arrive. Check with your property management company, they will normally offer this service.
Online banking facilities from your bank are very important and this needs setting up while you are in Tenerife so that you can use it while you are away. There could be times when you have to make transactions. This is all available online now but the service does need setting up so that it is ready to use. Some online banking services require a coordinates card to be able to complete the transactions and this may need collecting in person at the bank. In other cases they might want to register your mobile phone to your online banking so that you can receive confirmation codes. Check with your bank while you are at their branch so they can help you set the service up properly.
If you have bought a property in a complex where you can legally rent the property out, you might need to deal with a letting agency to help you with the bookings etc. Do some research to find one or ask your agent for recommendations. They will gladly help you.