A guide to buying and selling in Tenerife
Buying and selling properties in Tenerife are straightforward processes, just a little different to what you might be used to! Below we have set out brief guidelines which will help you through the main requirements.
Buying a property in Tenerife
This guide will give you the basic information you need to know when considering making an investment in property in Tenerife. Buying a property here is not complicated as long as the correct procedures are followed and a responsible agent is used. A good agent will offer a full service including arranging all sale details, organizing new contracts with service providers (electricity, rates, community fees etc), introducing you to a local lawyer (if required). GOING THROUGH A REPUTABLE AGENT WILL PROTECT YOUR INTERESTS!
The sale is agreed. What next?
1. Having chosen your property and agreed terms and method of payment, you will be asked to place a 10% deposit in our “Clients holding account” – this will ensure that your money is held safely until completion and the property can be taken off the market. If you are buying a brand new property or one “off-plan” the deposit terms may be different and may involve stage payments through to completion. We can carry out a legal search at the Land Registry to ensure that the property is debt free (in Spanish Law all debts belong to the property, not the person). You will be asked to sign a Contract of Agreement to buy the property at the agreed price and to complete the purchase by a mutually agreed date.
2. A few days before completion you will be asked to pay the outstanding balance into our “Clients’ holding account” to ensure funds are cleared by the agreed completion date.
3. On the day of completion will will be taken to the Notary to sign the new deeds.
4. You will be responsible for all charges (water, electricity, rates, community fees etc) from the date of completion.
What about legal costs?
You should budget for a maximum of 10% of the purchase price to cover all legal costs such as taxes (IGIC), notary fees, land registry and conveyancing costs. (In practice, this normally works out at approximately 8%).
VENDOR: the person selling the property;
ESCRITURA: Title deeds;
NOTARY: An official, impartial legal witness to the signing of documents relating to the purchase;
NIE: Foreigner’s Identification Number (Issued at the main police stations – essential for non-residents buying property in Spain).
(For a full list, see the separate list of Useful Spanish words and phrases – below.)
Need a mortgage?
We can help with introductions to appropriate Banks and Mortgage providers to suit your particular needs. As Tenerife is within “Euroland”, mortgage rates are normally significantly lower than in the UK.
Do I need a Spanish account?
Yes, you will need a Spanish Bank Account to pay your bills- electricity,water, telephone etc. (usually done by Direct Debit), rates and, if you have one, your mortgage! Again, we can help you set this up with English speaking bank managers.
Selling a property in Tenerife
We offer a full service to clients wishing to sell their property. In addition to matching your property to the requirements of clients who have registered with us to buy, we will advertise your property, free of charge, in local newspapers and publications (English language and Spanish), on our website and on other appropriate websites. We will visit your property, give you a valuation and take photographs for advertising and particulars. This visit gives us the opportunity to view the property and gain full information to aid the sales process. When we have a client interested, we will telephone you for an appointment to view and personally escort the client around your property.
If you are unavailable or abroad, we can hold keys to your property on your behalf so that every opportunity to sell your property is taken. Once we have a confirmed purchaser, we will prepare a pre-sale contract for them to sign and take a 10% deposit from them, which we will hold until the completion of the sale. You will also be required to sign this contract, which will state the agreed sale price and proposed completion date. This contract bids both parties to the sale and purchase of the property. If, once you have signed this contract, you decide not to proceed, you would be liable to pay costs of double the amount of the deposit to the client. Similarly, if the buyer pulled out after signing the pre-sale contract, they would lose their deposit which would be given to you.
Documents you need
The documents you will need to complete the sale are: **A copy of your Escritura (Title Deeds) **UP TO DATE receipt for your Local Rates IBI(Contribucion Urbana) **UP TO DATE receipts for Utilities (water, electricity, rubbish etc) **Photocopies of your Passport / NIE or DNI **Signed certificate from the administrator stating that your community fees are paid up to date **If there is a mortgage on your property, we will need the name of the provider (bank) and the mortgage account number, so we can make arrangements to cancel the mortgage.
We work either on a fixed fee basis or we agree a net sale price with you and include our fees in the gross sale price as advertised. Our fees will be deducted on the day of completion before the signing of the Escritura at the Notary.
If you are a non-resident in Tenerife and you have owned your property after 1st January 1987, there is a Tax Retention Fee of 3% of the declared purchase price of the property -ie the value of the property as stated on the new Escritura. This is payable whenever the vendor is a non-resident of Spain, to ensure that any taxes he or she may owe to the Spanish Inland Revenue are paid. The purchaser or his/her representative is responsible for the retention of this tax and for paying it to the Spanish Inland Revenue within 30 days of the signing of the Title Deeds. It is then up to the vendor’s fiscal representative to claim the money back if no tax is due.
The 3% tax retention fee will be taken from you at the Notary. You will be credited with the monies for the sale (less our commission and the tax retention) upon completion at the Notary. If you are a resident of Tenerife, then you will not need to pay the 3% tax retention as you will be expected to be making your own tax returns on a regular basis. You will be required to present a Fiscal Residencia Certificate (available from the Hacienda) to avoid paying this 3% tax. *Please note: the 3% tax retention only applies to resales – not to new constructions.
Power of Attorney
If you cannot be here for the final signing at the Notary, you can appoint us as your agent to appear before the Notary and for us to sign on your behalf. To do this, we must be officially appointed with a Special Power of Attorney, called a Poder in Tenerife. The Notary will prepare this for us so that we can act on your behalf in your absence.