The information that we have provided below is a rough guide to purchasing property in the Canary Islands, and what to look out for when doing so. Please be aware that regulations may change, so it is always advisable to consult an independent commercial lawyer and the local town hall to get a more comprehensive understanding about specific properties and developments.
Here are a few things to look out for when purchasing a property in the Canary Islands:
1) The owner of the property for sale should be registered on the property register as the legal seller of the property. You should use an independent commercial lawyer to check that the owner is named on the property register, and the register will also show any outstanding debts charged to the property, that could be passed on to the purchaser. This is often the case in Spain, where debts are charged to the property. A Nota Simple will confirm if a property has any of these debts on it.
2) Proof must be given by the seller of all relevant planning permissions and the building licence, as well as a legal description of the property and its boundaries.
3) It is important to note that purchase costs in the Canary Islands are on average 10% of the property price. Here is a rough break down of these costs:
- V.A.T tax in the Canaries is only 5% and is know as the Impuesto General Indirecto Canario. This is applied to new build properties, whereas resale properties are taxed at 6.5%, and is known as Impuesto Sobre Transmisones Patrimoniales.
- Notary fees, cost in the region of 3% of the property price, depending on the number of pages of the title deeds (or Escritura), its complexity and the value of the property.
The title deeds, or Escritura, are extremely important when investigating the legality of a property. This document shows who the legal seller (and buyer) is and provides a fully detailed description of the property. This must be signed in front of a Spanish Notary and is then sent to the Land and Property register.
- Lawyers fees amount to 1% of the property price, depending on the lawyer and the price of the property.
- Document tax is 0.75% of the property price, this tax is known as the Impuesto sobre Actos Jurídicos documentados.
4) If you have decided to buy a property off-plan in the Canary Islands, than the developer of the complex/property is required, by law, to show the following documents to genuine buyers:
- The developer must provide an insurance policy or bank guarantee so that buyer’s are protected in the event that the property is not completed.
- The developer must provide proof of ownership of the complex/property, as well as all planning permissions and licences that they have obtained.
- Since 2002, the developer must also show an insurance policy against any building defects.
- The developer must be registered at the Registro Mercantil, with its trade name, address and date of registration.
- The developer should provide you with a Memoria de Calidades or a specifications list of the fixtures/fittings and gas/heating networks etc.
- The developer is also obliged to intervene, at no cost to the buyer, to correct any faults with the property or to indemnify the buyer for any damages caused. The type of construction fault determines the timeframe.
- 10 years: Serious structural faults that affect construction elements such as the foundations or retaining walls
- 3 years: less serious structural faults that nevertheless render the property or parts of the property uninhabitable, for instance, leaking roofs.
- 1 year: minor problems with the fixtures or fittings, such as cracks in the plaster or badly fitted windows.