Whether you or looking for a one bedroom apartment in Puerto del Carmen or a luxury villa as a long term investment, If you don’t need finance or you have a pre-arranged mortgage, you will have a distinct negotiating advantage when it comes to settling a price. If you require a mortgage, but have not yet arranged a loan, we recommend you do so before looking at property. The next step begins the conveyance and at this stage we recommend you use a lawyer. Your lawyer will investigate the Escritura (Title Deed) for the property you wish to buy and will carry out the local Land Registry Search.

 

Deposit Contract:

As soon as your lawyer confirms that everything is legally in order, a deposit contract is drawn up between you and the vendor. This states the conditions of the transaction, identifies the property and the parties involved, as well as the deadline for completion. It will state if the property is being sold furnished or unfurnished. If the property is being sold furnished, it is advisable to include an inventory signed by both you and your vendor. Once the contract is drafted and both parties sign, you transfer 10% of the sales price to your vendor (or to your lawyer, who will then pass the money on) and you have entered into a contract which is regulated by the Spanish government. If you change your mind after this stage and decide not to buy, you will lose your deposit. If the seller fails to sell after this stage, they will be forced to repay your 10% deposit back to you, with the same amount again as compensation. The law on deposit contracts is regulated by the Spanish Civil Code, and is designed to prevent gazumping. Between the deposit contract stage and completion, your lawyer will work on your behalf to organise all paperwork and prepare final conveyance.

 

Completion:

Your new Escritura will be signed by you (or your lawyer if you have granted power of attorney) in front of a Spanish notary and the outstanding amount will be paid over to the vendor. Before this happens, the notary will require the vendor to provide the evidence that municipal rates are paid and up to date. In addition to the purchase price, you

will need to pay notarial costs, Land Registry fees, Impuesto sobre Transferencias Patrimoniales - Transfer taxes (stamp duty), lawyer's fees and legal costs, as well as several minor taxes including the Plus Valia, which is a land appreciation tax paid to the local municipality. Utilities bills will be transferred to your name and direct debits will be set up to pay future bills. The same applies for telephone (if relevant) and the community charge, if your property is on a complex with a community of owners. After you sign your deed of purchase in the notary, your lawyer will finalize the paperwork by submitting the Escritura to the local Land Registry. Once the title deed has been registered in your name, you will receive your registered deed which is your proof of ownership and should be kept in a safe place. The entire process from signing in the notary's office, to receiving your registered deed takes about 2 months, but you are entitled to receive a Copia Simple (shorter pre-land registry deed) within 2 - 3 days of signing.

 

Banking and Mortgages :

Terms and Conditions vary, depending on the bank and type of mortgage you require, but as a rough guideline non-residents can borrow up to a 60% of the purchase price or bank’s valuation (whichever is lower) for a maximum loan period of 30 years. Residents may obtain up to 70% mortgages on the purchase price or bank’s valuation (whichever is lower) and again the maximum loan period is 30 years. Interest rates in Spain are currently among the most competitive in Europe and are probably more competitive than similar rates in the U.K. or Ireland. Discounted first year rates start from as little as 2.5% depending on your circumstances. Mortgages in Spain differ from those in the U.K. and Ireland in that they are levied on the property, not on the person who owns the property.

 

 

If you calculate to add approximately between 8% and 10% for taxes and costs on top of the sale price of the property. This applies to both a resale and newly built properties.

These costs are made up of the following: 

 

 • 6.5% ITP Tax (Impuestos sobre Transmisiones Patrimoniales) for resale properties. 

 • Notary fees

 • Property registration fees

 • Translation fee (If you do not speak fluent Spanish)

 • Legal fees (If a Lawyer is required)

 • Plus Vallia- This is a local tax on the property value, that is shown on the deeds.

 • Mortgage fees if a loan is required then plus 0.75% stamp duty on mortgage deed.

These costs add up to between 8% - 10% of the sale price.

 

Documents required for Mortgage Application.

 

Details required for Employees:

 • P-60 from all applicants

 • Credit Report

 • Photocopy of all applicants valid passports

 • Last 2 payrolls

 • Justification of other income, if applicable.

 • Justification of assets i.e. Current mortgages etc.

 

Details required for the Self-Employed: 

 

 • Photocopy of all applicants valid passports

 • Previous 2 years income tax returns

 • Credit Report 

 • Payments on account of income tax for previous 2 years

 • Justification of other income, if applicable.

 • Justification of assets (Net worth)

 

The investment for the rental market place: 

 

1) long term rental,

where this is a continuos set monthly amount. There is also a growing number of local professional workers, 

who along with their families, have created a huge demand for long term rental properties. Normally you will 

have less return on this basis but there is really no input by the property owner to get involved with situations 

like weekly cleaning, linen and towel changes, etc.

 

2) The weekly holiday rental market.

This has seen enormous growth in the past few years. With the event of the Internet and the ease of which individuals can now find, book and choose a airline to reach their preferred destination is the main reason for this growth in the rental market. We can advertise your property  correctly and you can expect well over 40 weeks per year rental income. There are many cleaning companies and individuals on Lanzarote, who are geared up for looking after your rental property. They will make sure that your property will have the correct clean and change over for your clients. Prices vary from the type of property you have and the amount of clients that are staying in your property.