Canary Islands Property Investments

Buying Spanish property off plan with the intention for selling on prior to completion is an great form of investment, and has the potential to show good returns on your capital invested. However, like ALL forms of investment that offer higher than normal returns, there are always risks attached. It is for this reason that our investment group has worked hard to bring you the best property for sale in the Canary Islands.

The Primary Risk of Buying Canary Islands Property

Your property / contract is not sold, meaning that you will have to take title of the property, however, the final balance can be mortgaged, be aware though, this does though entail extra costs, like purchase taxes, lawyer’s and notary fees etc. on completion of your contract.

The moral of Buying Canary Islands Real Estate

If you are not in the financial position to take the title deeds of the property, and the property is not sold on, do not buy property for turnover!

Choose your Canary Islands Estate agent carefully

Is your agent still going to be around when you want to sell your property / contract on”? Most Agents talk of customer care, and after sales service, ours has been proven.

If you are buying property for sale in Spain for Turnover, always buy your unit unit at the beginning of the promotion with the first price release. Why?

You have first pick of the best available properties for sale at the best possible price – meaing that when you sell, you can maximise the profit obtained from the sale of the property.

Buying property for Turnover or for investment is a partnership. It is a partnership between your agent and you, the investor, because for every property you buy, your agent has the potential to make 2 sales provided that they are committed for the long term, because of this, we value trust and treat all our customers with the utmost respect and care, we are in for the long-term!

What are the financial benefits?

As a general rule, with the right development, you should see, conservatively, an estimated 15 to 20 % total capital growth, which translates to a potential 50% return on capital invested! In general, you should only investing about 30% of the original purchase price of the property.

Example: Capital cost 100,000; deposit 30,000; growth 15%
100,000 x 15% = 15,000;
Deposit 30,000 + return 15,000 = +50% and total initial investment returned
Original investment 30,000 + 15,000 = total return to investor once sold 45,000

The figures above are simplified for the purposes of the explaination, and should only be used for guidance, and are not a guarantee. Given the scenario above, you also need to discuss with your agent selling fees, tax liability, etc. If you would like to speak to one our in-house FREE financial services representatives, simply complete the contact form and our agent can guide you through the entire process.

The Timescales

How long should I have to tie my money up for, as a general rule?

You can expect for the money to be tied up for a minimum of 18 months to 2 years, however, this is though determined by the build programme of the developer of your property (which, by the way, your agent has no control over).

If you require any specific details about a development or would like to see what property for sale in Spain is hot at the moment for investment, you can contact us now.

Please note:

Like all investment opportunities, if you cannot afford to tie your capital up for a minimum of two years, do not do it. There is never a free lunch, despite what people would have you believe.

 

Canary Islands Property Buying Advice

Follow these rules for a successful purchase of property for sale in the Canary Islands or in Spain for that fact. First you must choose the right estate agent, following this, you must find a good, helpful lawyer.

Choosing your Estate Agent

In decisions as large as buying property for sale abroad, it is eddential to the success of your property purchase and your long term happiness that you find a fair, trustworthy and reputable agent. To ensure that you are shown the right properties for you for sale in that area, it is also important to get an agent with a lot of local experience and of course plenty of properties for you to look at. Your agent should be able to provide you with investment advice, local adice, prices, rental returns, area advice and so on, helping you to find the property that you have been looking for.

Your agent should provide you with information about all the local costs for property maintenance, like comunity fees, the Annual Real Estate Tax (1311), water and electricity rates, garbage collection, aswell as Property income and wealth tax asociated with buying your dream home in the Canary Islands.

If you find the property that you have been looking for, and make the decision to buy it, you will be asked for a reservation deposit to make sure that no-one else can buy the property, which is payable immediately. Contracts are then exchanged during a roughly 10-15 day waiting period, for which you should always seek professional guidance and advice.

Legal Advice and Assistance

At this point, to the stage where you are given the keys to your new home, your lawyer will deal with the many stages involved in the process of buying property in the Canary Islands. It is imperative that your lawyer speaks good english so that he can inform you of the legal requirements that have to be fulfilled to ensure that the process runs smoothly, and that the sale is Legal in every respect. For example, the property must be registered to your name, and your lawyer must check with the Land Registry that there are no mortgages associated with the property, charges, encumbances, debts or liabilities that may cause problems in the future.

Your lawyer should discuss terms with the vendor’s lawyer, which not only includes the price of the purchase but all the completion dates, forms of payment, furniture and any other details to do with the purchase of your property in the Canary Islands. The Reservation deposit is the first payment to be made, often in writing, then your lawyer will draw up the private contract which normally means a deposit fee of 10% of the price of the property on exchange of the contract, which is not refundable and is a guarantee that you will not back out of the deal. Equally, if the vendor backs out of the deal, you are entitled to the completion of the original contract.

On the happy day when you get given the keys to your new home, your lawyer should go to the public notary to sign the title deed with the final payment to complete the payment. After this, the Local Land Register will recieve a fax from the notary to change the owner details so that the property is not sold twice. Therefore, the notary and the land register act together to help you. Your lawyer will then inform you of the relevant taxes that you will have to pay to get your new property in the Canary Islands, then the title deed will be submitted to the Land Register and your name will be transferred to the utilities and services of the property.

Here is a list of the expenses that you will have to pay to buy your property in the sun:

1. Notary, who charges according to a fixed scale, his charges may range from 500 € to 600 €.
2. Land Registry, as a rule of thumb, 40% of what the Notary charges.

The Taxes :
1. If you are buying a re-sale property you are obliged to pay Transfer Tax (ITP) at 6%.
2. If you are buying a new property or a property in the course of construction from a promoter, developer or habitual trader, then you should pay VAT (IVA) at 7% plus Stamp Duty at 0,5%.
3. The VAT (IVA) rate increases to 16% if you are purchasing plots of land, commercial premises or garage spaces.
4. Plusvalia is a tax levied by the local Town Hall based on the particular area where the property is located, on the surface area of the land, on the catastral value and on the date of the previous title deed. This tax may range from a few thousand pesetas to as much as several million pesetas on larger properties with a lot of land. By law the vendor is obliged to pay this tax but it is common practise for the parties to negotiate on who is to assume this liability. Finally bear in mind that your lawyer will charge fees for his professional services, that normally will range from 1 % to 2 % of the price plus VAT (currently at 16%).

Buying Property In The Canary Islands – A Regional Overview

The perennial popularity of the Canary Islands as a tourist destination comes as no surprise. The islands offer a pleasant climate, outstanding beaches, natural beauty, and idyllic culture and architecture.

Thanks to affordable air passenger service tying the Canary Islands closer to Europe, the tourist economy is booming like never before. UK investors have grown particularly fond of buying Canary Island property for permanent relocation, holiday residence, or rental income. (Talk to us if you’re buying Canary Islands property and need help with holiday home insurance).

Are you just getting started with your island property search? Let us give you a handy rundown on some of the best destinations to consider in the Canaries.

Tenerife

Largest of the Canary Islands, Tenerife is also probably the most accessible. Multiple flights from every part of the UK arrive regularly on Tenerife. This is a superb place to buy a holiday home, as your personal retreat can also turn into a very profitable rental property when you’re not using it.

Playa de las Americas

This resort community is positively bursting with bars, nightlife, restaurants, and water sports, making it ideal for visitors who crave excitement on their holidays. If you’re looking for a slightly calmer ‘compromise’ sort of neighbourhood, consider San Eugenio Bajo. Located on the periphery of Playa de las Americas, this area is peaceful enough to unwind in but still conveniently located to all of the region’s attractions.

Los Cristianos

Just a little south of Las Americas, you’ll find this community packed with beachfront holiday apartment complexes. The extensive supply of nearby amenities makes this a superb area for holiday rental property. Los Cristianos is an extensive sheltered bay with two excellent beaches flanking its harbour. Watersports needs are met by the nearby Playa de las Vistas, and volcanic Mount Gauza is visible in the distance.
There are a few reputable Los Cristianos estate agents who can provide you with expert advice about the location and the many complexes you can purchase a property from so do your research and utilise their services.

Adeje

Spanning the stretch between Playa Paraiso and Playa Fanabe, Adeje is a popular destination offering both high-rise apartment blocks and low-rise townhouses. Accommodations are affordable and the community is noted for both its beaches and its nightlife.

Playa de las Teresitas / San Adres

These always-bustling destinations are definitely worth considering if you want to invest in rental property with plenty of guest demand. Prices are generally affordable, making these tourist hotspots quite profitable for canny property owners.

Lanzarote

The most volcanically-active of the Canary Islands, Lanzarote is famous all over the world for its beautiful, exotic black sand beaches. Lanzarote has a long-running and carefully-protected reputation as the most exclusive of the Canaries. Thanks to restrictive building regulations, Lanzarote has far less high-density development than neighbouring islands. Residential properties on Lanzarote tend to follow the same simple style of unadorned white cubism, and buildings rising more than three floors are rare.

Puerto del Carmen

As the oldest and most fashionable resort on the island, Puerto del Carmen boasts a number of historic attractions. It has a beautiful old town, a picturesque fishing harbour, and six kilometres of beautiful beaches. Located just ten minutes from the nearest airport, Puerto del Carmen is a superb place to find some of Lanzarote’s most prestigious investment properties. Property values tend to be uniformly high and offer long-term stability, but bargains are available for sharp-eyed buyers.

Costa Teguise

Located on Lanzarote’s eastern side, Costa Teguise offers facilities like windsurfing schools, a water park, and an excellent golf course. There are plenty of bars, clubs, and restaurants, though overall the community’s nightlife is somewhat more subdued than that of Puerto del Carmen. Costa Teguise is especially popular for expatriates looking for a full-time residence in the Canaries or for those looking to purchase a rental apartment or villa.

Playa Blanca

A half-hour’s drive from the airport, on the island’s southern tip, the fully-featured tourist community of Playa Blanca offers many attractions. It has outstanding beaches and restaurants, and the Papgayo Beach resort lies just a few minutes outside the town. Just isolated enough to be exclusive, Playa Blanca has more than enough amenities to satisfy even the most demanding visitor.

Fuerteventura

Fuerteventura boasts some of the very finest seaside terrain in the Canary Islands. Its pristine white beaches are lapped by clear turquoise seas. Fuerteventura is also attractive because it is one of the Canaries’ least-commercialised destinations. Expatriates tend to concentration on resort communities like Corralejo’s Caleta de Fuste. Investors will find no shortage of property opportunities, running the gamut from luxury villas to studio apartments.

Corralejo

At the north end of the island, Corralejo is well known for its strong rental prospects. The Caleta de Fuste resort is particularly popular with investors. It’s located no more than ten minutes away from outstanding beaches and shopping districts. The resort includes tennis courts, a pool, and a gym in order to make it more attractive for holiday rentals. The nearby Fuerteventura Golf Resort is also an excellent investment target. Corralejo is an outstanding holiday community, so this area is particularly well-suited to purchasing rental property.

Gran Canaria

Don’t be misled by the island’s name; Gran Canaria is actually the Canaries’ third-largest island. Where it reigns supreme is in terms of population. Almost 50 percent of the Islands’ population lives on Gran Canaria. The island features surprisingly diverse terrain from the verdant north to the desert south and the mountainous interior in between. Gran Canaria offers an enormous variety of activities to go along with its settings, covering attractions like hiking and riding as well as the common water sports and beach-going.

Las Palmas

A thriving commercial centre, Las Palmas includes many different neighbourhoods. Holiday and investment properties are available at every size and level of luxury. The sheer variety and vitality of the city is its greatest attraction, but the beaches at Playa de las Canteras are also always popular. Nicely-located property anywhere in Las Palmas presents excellent profit potential, and the city is equally attractive for relocation, rental ownership, or holiday residence.

Meloneras

Known as Gran Canaria’s version of Beverly Hills, Meloneras is an extremely luxurious community. It’s conveniently located near Playa del Ingles and Maspalomas, and there are also tons of high-end options for shopping, dining, and drinking in the vicinity. Meloneras’s gorgeous 18-hole golf course with its spectacular views also makes the area especially attractive to golf-minded visitors. It takes a significant amount of money to invest in Meloneras property, but the returns are also greater than normal.

Puerto de las Nieves

Puerto de las Nieves, clinging tight to the northern end of the island, is one of Gran Canaria’s less-developed communities. The town has a harbour, but the population is low and the coastline is wild and natural. This is the perfect area for nature-minded visitors. The surrounding highlands offer countless superb hiking trails. For investors the area’s affordable property prices are particularly attractive; it’s one of the best parts of the island for budget-conscious buyers.