10 Musts for Property Buyers in Lanzarote
17. November 2016
Category: FOR BUYERS
Lanzarote property buying guide: 10 things you need to know when investing in Lanzarote real estate.
Why choose to buy in Lanzarote?
Much like all the Canary Islands, Lanzarote offers some of the best climates in Europe. With average temperatures reaching up to 25°C on a daily basis, it’s easy to see why Lanzarote
is appealing to so many people. As well as its wonderful climate contents, Lanzarote offers extreme beauty, amazing nature, dramatic landscapes, sandy beaches and enchanting shores. As the third most populous Canary Island, it is often considered paradise to many of those who visit - even if it’s just for a 2-week family holiday. However, for those seeking something a little more long term, the great thing about Lanzarote is that there’s plenty of excellent property opportunity.
Lanzarote Buying Process
Buying a property anywhere can be a confusing time, but it doesn’t have to be as difficult as it first appears. Here at Lanzarote Investments, we have an in-depth knowledge of buying property here, which is why you can count on our team to help you every step of the way. To make things as simple as possible for you, we’ve created a step-by-step guide, showing you the easiest way to buy property in Lanzarote.
1. Choosing a Property
This is where the fun begins! Whether you’ve decided to make the move to Lanzarote or you want to buy a property in a different area, browsing what’s available is the very first step. To narrow down your search, it’s best that you have an idea of what you want in mind. If you know you need something with 3 bedrooms and would prefer a view of the sea, then there’s no point in looking for 1-bedroom apartments close to the mountains. It’s also a good idea to know what your budget is. Again, if you have €300,000 to spend, you probably want to avoid looking at those worth a lot more. Knowing what you want will help when buying a property in Lanzarote. However, it’s also worth noting that you should keep an open mind during the house hunting process. Sometimes, if you’re too picky with what you want, you could end up overlooking something ideal for you, your needs and your budget.
2. Make an Offer
Once you’ve found the one and you’re 100% sure that this is the property for you, it’s time to put an offer in. Though you should take your time to consider everything about it, waiting too long could result in someone else putting an offer in before you. Most properties in Lanzarote are priced to sell, so it’s not very often that the seller would accept an offer for much less than advertised. Putting in a low offer is becoming more common, so it would be worth a try, but keep in mind that it still could be rejected.
3. Putting Down a Reservation
If it’s good news and your offer is accepted, then you may need to put down a reservation fee on the property. Some real estate agents may ask for this, some may not, it just depends on the agency you’re working with. In our case, the reserve amount is normally 1% of the price. This will be held by the agent until the contracts are ready to be completed.
4. The Private Contract
The first big legal step when it comes to buying a property in Lanzarote is the initial contract, where both parties will sign what is sometimes referred to as a ‘Sales Contract’. This is a document that goes into detail about the terms of the sale, as well as outlining the agreement between the buyer and the seller. It should include details on what is included within the sale (such as furniture) as well as an estimated completion date. It may also provide you with information about what happens to the 10% deposit you’d usually pay at this point if you decide to withdraw your application.
We always recommend that buyers of Lanzarote Property
employ a lawyer to discuss the documentation. Hiring a professional will make the process of buying a property in Lanzarote a lot more stress-free as you’ll have someone working with you who fully understands all the jargon and technical terms used within the contracts.
5. Valuation and Survey
If you’re getting a local mortgage to buy the property, the bank that is lending you the money will have to carry out a valuation. This is something you will have to pay an additional fee for, and the cost of this can vary depending on your chosen lender. A valuer will visit the property to assess its worth before confirming how much they are able to lend you.
Please be aware that Lanzarote properties aren’t necessarily subject to a structural survey. This is generally because the construction of the properties here are quite simple. However, though it may not be a legal requirement as part of the buying process, you can arrange for one to be carried out to give you peace of mind.
In most cases, the purchase of the property is generally complete 4-6 weeks after signing the initial contract. This will need to be done at the Notary’s Office: a Notary is someone who must witness any large value sales in Spain. While at the office, you - or your representative - will need to pay the outstanding balance of (90% if you put 10% down to begin with) of the purchase price and sign the Escritura or title deeds.
The Notary will go through all of the legal documentation and make sure everything is in order. They will also check that all outstanding taxes, local rates and utility bills have been paid up to date.
If you’re a non-resident buying a property in Lanzarote, you will be asked to show your passport as proof of identification. Note that, unless you speak fluent Spanish, you may need to pay for a translator to be present. This will ensure that all parties fully understand what is happening. Most notaries should have access to one, though you can also request for your lawyer to hire one for you.
7. Escritura and Registering The Property
The property and mortgage deeds, known as the Escritura, will be signed by the buyer and the seller while being witnessed by the Notary. Once this has been done and the money has been handed over, the buyer will be presented with the keys to the property and the ownership will be transferred.
Your lawyer will usually handle the final step of the entire purchase procedure, which is to register the property. This is done to verify that you are now officially the new owner of the property.
How to Choose the Right Estate Agency
Making sure that you’re working with a reputable and professional estate agency is probably the most important part of the entire buying process. Choose to work with someone who is unreliable, and your experience will be timely, stressful and unenjoyable. By simply choosing the best possible estate agent, you’ll notice that the whole buying journey runs smoothly. It’s best that you opt for a local agent who knows the area well, so that they can provide you with advice should you have any questions.
Here at Lanzarote Investments
, we pride ourselves on our high level of real estate knowledge. Our aim is to ensure a thorough, professional and complete service is delivered at all times. What’s more, we have an extensive range of property types available, including apartments, villas, country homes, luxury homes, freehold commercial units, hotels and development land, so you can trust our team to help find you something suitable.
Tips for Getting a Mortgage in Lanzarote
There are certain advantages of obtaining a mortgage in Lanzarote, for example, the interest rates here are much lower than in the UK. Providing that you submit the correct documentation, you should normally get an answer about your mortgage application within 2 working days.
The bank normally offers you as a non-resident, up to a maximum of 70% (subject to status) of either the valuation price or the actual purchase price, whichever is lower. With this in mind, it is sometimes worthwhile taking the time to compare offers made from other banks.
We, as a company, have a very good working relationship with Spanish banks who offer an excellent standard of service to all nationalities. Some banks produce documents in your language, making banking - and more importantly, distant banking - easier than ever.
We shall guide you personally through the mortgage process to ensure that everything runs smoothly for you.
Documentation Needed for Your Mortgage
To ensure that your mortgage applications goes through, you will need to hand in several documents. This allows the bank you’ve applied with to carry out checks and make sure that they can grant you the mortgage.
Details Required for Employees:
P-60 from all applicants
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 of income tax returns
Payments on account of income tax for the previous 2 years
Justification of other income, if applicable
Justification of assets (Net worth)
Taxes & Costs to Consider
In addition to the sales price, you will also have to bear in mind extra taxes and costs which amount to approximately 10% of the new declared value of the property. This applies to both a resale and newly built properties.
These extra taxes and costs are made up of the following:
6.5% ITP Tax (Impuestos sobre Transmisiones Patrimonials) for resale properties
7.5% for new properties
Property registration fees
Translation fee (If you do not speak fluent Spanish)
Legal fees (If a Lawyer is required)
Mortgage fees are Loan Arrangement fees (normally 1% of the mortgage amount) and Valuation fees, normally 300 to 500 Euro. Stamp duty is no longer aplicable
These extras should add up to approximately 10% of the new declared value as it appears in the new title deed
10 Musts When Buying a Property in Lanzarote
When you come to buying a home in Lanzarote, there are a few things you should know. Even if you’ve been tempted by the warm weather, clear waters and easy way of life, purchasing a property is a big deal. Before you go agree to a deal, here’s our advice.
1. Use a Lawyer That You Can Trust
It is vital to use the services of a lawyer when purchasing a property in Lanzarote. A professional lawyer will take care of the whole purchase process for you and look after your interests only.
2. Know the Costs of Purchasing a Property in Lanzarote
Most Lanzarote estate agents come up with the same old figure of 10% of the property price. Invariably the real costs will differ. The purchase costs may be as low as 8% or as high as 14% of the final price depending on the property price and whether or not you are purchasing with a Spanish mortgage. Also, take advice when considering purchasing a property by means of Spanish limited company. Although you may avoid some initial costs the overall holding costs are much higher and in the majority of cases will make the idea prohibitive. Talk to a tax advisor first. Our property team will be delighted to give you a simulation of purchase cots before you make your final decision.
3. Know the Running Costs
Yet again this will vary from property to property. This will include electricity, water, town hall rates, bin collection, income tax and community fees where they apply.
4. Paying a Holding Deposit (Normally 1% of the Property Price)
Make sure you are absolutely sure about your purchase and understand the conditions of the holding deposit contract. Make sure that if you are reliant on a mortgage that this condition is included in the contract. Reputable Lanzarote estate agents will also include a clause allowing for a refund in the case of poor title issues. At Lanzarote Investments, we will always refund the holding deposit should you encounter a problem with title or a legal matter that has material effect on the purchase.
5. Check Any Restrictions
When buying a Lanzarote apartment or villa on a community of ownersmake sure that you understand any restrictions that may be in place. Such restrictions may include not being able to let to tourists or a no animal policy.
6. Understand Your Mortgage Conditions
Some mortgages have an initial period with a discounted interest rate. This rate may rise substantially during the second year or 6 months. Make sure that you understand the interest rate being charged for the duration of the loan. At Lanzarote Investments, we have more than a decades’ experience organising mortgages for our clients.
7. Get a Budget When Buying a Fixer Upper
When dealing with new services such as an electrical installation an official electrician is required, which can be quite expensive. Ask for an estimate before you proceed with signing any sales documents. We have a local team of builders who will be delighted to organise any refurbishment work that you need.
8. Vacant Plots in Front of Your Property
Ask your lawyer to check the latest planning classification for the plot in front. This could have huge implications on the future value of your Lanzarote property.
9. Don't Take the Local Gossip as Gospel (Whether Positive or Negative)
Run any issues that you may have heard on the grapevine by your lawyer. Nine times out of ten there is nothing to be worried about. However, such conjecture may convince you not to purchase a perfectly legal property at a great price. Follow the advice of your lawyer!
10. Understand the orientation of your Lanzarote Property
Not all property for sale in Lanzarote is south-facing. The orientation of your property will have material impact on both the future sales price and letting returns.
Labels: 10 musts, buyer guide, buy, buy property
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