Buying property in lanzarote
Purchasing a property abroad for the first time can often be a bewildering and confusing experience and, if the correct procedures are not
followed, it can lead to serious problems, perhaps resulting in disputes over title. However, with proper advice from a company such as us, the entire transaction is relatively easy. As a help to purchasers, we set out this guide to property purchase in Spain. Although we do not recommend that you attempt to complete a purchase on your own, we believe that you should be made aware of what is involved.
1. UK Residents
Persons, companies or firms resident within the UK or scheduled territories)
There are no longer any exchange control regulations which affect the purchase of property outside the scheduled territories by UK residents and therefore persons or companies are free to invest in as many properties as they wish without limitation.
2. Non-UK Residents
Persons, companies or firms resident outside the UK or scheduled territories)
For those temporarily residing in the UK there are no restrictions applicable to property purchase by non-UK residents as far as the UK is concerned. However, all non-residents are advised to check the Exchange Control or similar controls that may apply to them for property purchase outside their country of residence.
Procedure
Decide on the property you wish to purchase.
All disputes or liens over titles are registered at the land registry and it is therefore always advisable to ensure that a clear and unhampered title exists prior to any commitment being entered into. This will be checked by your lawyer.
If you are purchasing from a Spaniard, Spanish resident, or Spanish company, then you will need to open a bank account with a Spanish bank. This should be done at an early stage of purchase to enable any transfers of money from foreign banks to be received. A convertible euro account is required for property purchase and the necessary bank forms will have to be signed, so that your will be able to make immediate arrangements to transfer the currency. On completion you will be asked to present a certificate to the Notary issued by a Spanish bank, certifying the receipt of foreign (foreign to Spain) currency within your convertible euros account, which is specifically for property purchase to the value of property being purchased as shown in the escritura. This declared value may not necessarily coincide with the total amount being paid for the property, as the full purchase price may include furnishings and it is not required by law to include for their worth within the declared property value.
If you are purchasing from a foreigner (foreign to Spain that is) who is non-resident in Spain, then the full purchase price and any deposits may be paid outside of Spanish territories and the above procedure is not required.
Sign a contract for the purchase of the property, and pay any deposit specified by this contract, to the vendor or agent. Most agents or developers will have a standard contract. However, in cases where a standard contract is not available or a purchase is particularly complex and requires a separate contract to be drawn up, your lawyer will represent you. We would always recommend that you deal with a Spanish or an international lawyer, rather than an English lawyer, as the laws in Spain are very different from those in the UK and an English lawyer will rarely be familiar with them, which may lead to delays in completion.
Completion:
Under the terms of the contract, a completion date will have been agreed. Completion involves the signing of the deed document (escritura) by both the vendor and the purchaser. This must be done by both parties at the same time, in the presence of a Spanish Notary. This need not necessarily take place at the Notary’s office in the locality of the property, nor necessarily in Spain, but if it is not carried out in the locality, then it may well lead to delays in the registration of the title at the local land registry. It is obligatory to retain 5% of the price declared in the Title Deed in some purchases, which must be passed on to the Tax Department on behalf of the seller. It is to cover any tax liability that they may have. This does not apply if the seller is resident in Spain. It is obligatory now for a non-resident to appoint a qualified tax representative here in Spain. When it not possible for both parties to be present at the same time, one or both parties should execute a Power of Attorney in favour of their lawyer, or a third party, to sign on their behalf. As a purchaser, you will most likely be required to pay the notary cost, registration fees, transfer tax and “plus valia” tax. As a rough guide these normally amount to about 10% of the total purchase price.
Registration of the new title: The escritura having been signed by both parties, the new title must be registered at the local Land
Registry.
Once the documents have been processed by the Notary (normally 14 days) the document must be presented to the Land Registry where new ownership is registered, registration fees and transfer taxes are paid. This will take approximately 5 months.
1 Decide on property
2 Check clear and unhampered title through your lawyer
3 Open Spanish bank account if required
4 Transfer of funds to Spanish bank account if required
5 Exchange contracts and pay deposit
6 Intermediary payments if applicable
7 Sign escritura and final payment
8 Registration of title
RATES
These are paid annually in Spain and must be paid between September and November of each year: they can be paid by standing order in your local bank. On new property, the purchaser will be notified of the first payment and therefore he must take care of each one. Fines for late payment are usually are usually levied at 20% per annum.
TAX
All property owners must make an annual tax declaration, preferably through a Gestoria whose staff is experienced in such matters. We can advise and assist you in your choice. Annual taxation on property usually works out much less than that payable in the UK.
HOUSEHOLD UTILITIES
Electricity and water bills are not sent to foreign addresses. Property owners must make the necessary arrangements to have bills paid through their Spanish bank account. The procedure for this involves the completion of direct debit mandates for the electricity and water companies (UNELCO & INALSA). One copy is left with your bank, one copy must be given to UNELCO &/or INALSA for processing and you retain the third copy for your records
BUTANE GAS
Butane gas is used extensively on the island for hot water and cooking, although many of the newer constructions are turning to electricity. The current price for a cylinder of gas is €16. If you are purchasing a brand new property, a contract for gas installation and bottles must be taken out with the local gas distribution company (DISA). The cylinders are delivered on request.
COMMUNITY SERVICE
All apartment blocks must form a community and there is a monthly community charge for maintenance of the swimming pool, cleaning of community areas, payment of community bills etc. Charges vary in the different blocks, depending on the services provided. It is always wise to check this amount, and what it covers, before purchasing.
PRIVATE ADMINISTRATION
This service can be carried out by management companies at a reasonable monthly charge. It ensures owners of property have a contact on the island to deal with all the problems that may arise during their absence. A maid service is available for cleaning, laundry, etc.
TECHNICAL SERVICE
We have an experienced technical service department to attend to all our client’s needs, including small repairs, electrical work and any reformation work on your property, however large or small. We can also give you estimates for the construction of a new property, with full supervision during your absence.
WILLS
sponsor:
If you have made a Will in the UK which includes the property you have purchased in Spain, then this is sufficient, providing it has been correctly processed through the local Spanish Consulate. However, if no such Will exists, then the purchaser of the property in Spain must make out a Will in Spain and we can help you with this.
We have not attempted to cover all the aspects of property purchase, only those commonly encountered by most purchasers. We hope that this guide has been of help to you.
