Advice on buying Tenerife PropertyYou have found a property you wish to purchase what next?
- A 10% deposit is normally required on a resale Tenerife property.
- The vendor and the purchaser must sign a contract which will include a completion date and the method and dates of payment.
Your estate agent or solicitor then has the responsibility to gather all up to date receipts to confirm there are no debts on the property.
These documents include:- Nota Simple (Confirmation of ownership and any mortgages or embargoes)
- I.B.I. (Local council rates)
- Electricity and water receipts up to date
- Community fees receipts up to date, signed and approved by the President of the community of owners and the secretary
- Copy of the property title deed (Escritura)
Without the original of these documents on the day of completion a Tenerife Notary will not sign the deed unless it is clearly stated that you are aware that certain receipts were missing.
Should there be a mortgage on the property, this will be cancelled and the cancellation registered on the same day that you sign at the Notary.
Advice on Property Taxes and Legal FeesThese are in addition to the property sales price and range between 8-10% of the new declared value on the escrtitura. They are as follows:
- 6.5% (Impuesto sobre Transmisiones Patrimoniales y Actos Jurdicos Documentados- Mod 600)
of the new declared value on the deeds (equivalent of VAT) when buying a re-sale property.
- 5% if new and Stamp Duty 0.5% of Mod 600
- Notary fees - Fixed scale of charges based on the price of the property purchased in Tenerife
- Land Registry Office
- Lawyers fees
- Plus Valia (added value). An "added value" tax based upon the increase of the Town Hall Index value of the price per square metre OF THE LAND from the prior (vendor's) purchase to the present sale.
Guide to MortgagesNon-residents can obtain between 60 to 70% of the bank valuation. We must point out that banks in the Canary Islands do not value a property the same as in other countries. Rebuilding costs play an essential role in the official valuation purpose of mortgage loans, a rough guideline is 1.500€ per m2 .
We can assist you and guide you through the process of obtaining a mortgage here in Tenerife.
Costs involved- Valuation will cost approximately 210€
- 1% mortgage opening commission
- Insurance will vary from 120€ to 240€ per year.
- Notary and registration of the mortgage
Advantages:
- Provided you submit the requested financial information, it should be in place within 10 to 15 working days.
- The financial information required is minimal
- Amongst the lowest interest rates in Europe, currently approximately 3.75%
- Banks here in Tenerife will finance you a percentage of the valuation, NOT of the real selling price, sometimes higher than the buying price
Frequently asked questionsWhat is a sales agreement?
A private document signed between the buyer and seller. It must reflect true ownership, legal definition of the property, the exact dates of payment, currency of the transaction (euros, pounds, dollars etc) completion dates and penalty clauses. We strongly recommend that the vendor commits to paying double the amount of the deposit paid should he withdraw from the contract. There would also be a penalty paid by the purchaser in the amount of the deposit held should he withdraw from the agreement.
Is it easy for a foreigner to obtain a mortgage? Yes, Provided you can submit basic financial information to them, getting a mortgage here is much easier than in most European countries.
Other costs involved in owning a property in Tenerife LOCAL RATES Local rates are payable annually, and are calculated from the rateable value of the land assigned by the local Tax Office.
RUBBISH COLLECTION The rubbish collection rate is applied by the Town Hall according to the property and payable every 6 months.
WATER RATESWater consumption is calculated by the water meter and is payable every 3 months. Payment can be made directly at the Town Hall or by bank with direct debit instructions
COMMUNITY FEESProperties on some complexes will have an annual community charge to cover costs of general maintenance, pool care, gardens, reception etc. Depending on the size of the development and the services offered, this can vary between 800 and 1200 per annum. Other complexes will not share services and there will be a minimal fee to cover street lighting etc.
ELECTRICITY Charged bimonthly with minimum rates applicable (whether you are in residence or not). Don't forget you use a lot less electricity in Tenerife as no heating is required.
TELEPHONECharged monthly. Standard rates vary according to equipment installed, but can be in the region of 9 per month including a touch-dial telephone. Broadband internet connections are available in Tenerife.
These guidelines are meant for guidance only and describe a straightforward purchase scenarios. However this information is not meant to replace proper legal advice, which we always insist you take.
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