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Lanzarote Buyers Guide

The Right Way to Purchase a Property in Spain

Quick Links: First Steps | Banking & Mortgages | Legal and Lawyers

Please take the time to read this introduction to buying property in Lanzarote. The information below is not intended as a comprehensive guide to purchasing, and Puertodelcarmproperty.com always recommend clients to use the services of a Spanish lawyer.

 

First Steps

Before you Purchase

As there is a wide variety of property for sale in Lanzarote, it pays to give some thought to the type of property you are looking for. Whether you or looking for a one bedroom apartment in Puerto del Carmen or a luxury country villa as a long term investment, we can help you find the right property. We will listen to your requirements and advise you of your options when choosing your Lanzarote property. If you are planning a visit to the island, contact us in advance and let us save you time by preparing viewings of the best properties.

Finance

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. Click here for more information on mortgages.

Once you have decided on a property, we will negotiate the best price on your behalf. The next step begins the conveyance and at this stage we recommend you use a lawyer.

Conveyance

Your lawyer will investigate the Escritura (Title Deed) for the property you wish to buy and will carry out the local Land Registry Search (Nota Simple). This is to make sure that everything is in order, for example that the sellers are indeed the lawful owners and that there are no charges, encumbrances or legal problems with the property.

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 Valía, 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 finalise 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.

Mortgages

If you are purchasing with a mortgage, your lawyer will liaise with your bank in order to process the transaction as smoothly as possible. See below.

After completion

Once you own your new property you will probably still need advice and help. We at Puertodelcarmproperty.com provide a dedicated after-sales service and will de delighted to help you with sourcing furniture, property management, translation services, or any need that may arise.

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Banking and Mortgages

As part of our service to all our buyers, Puertodelcarmproperty.com will help you open a Spanish bank account. We work with the bank that is the easiest and most convenient solution for all your banking needs in Spain:

  1. Lets you make national and international transfers
  2. Provides you with credit cards and debit cards
  3. Offers access by telephone or online
  4. Direct debit and standing orders service for utilities payment.
  5. Personal Mailbox Service
  6. Safety deposit box rental
  7. Statements and other documents in the language you choose
  8. Mortgage facilities
  9. Current account and deposit account
  10. Money transfer for house purchase.

How to use your mortgage to negotiate a better price when you buy

If you have seen prices rise steadily and are considering investing in the property market in Lanzarote, sound advice for all Lanzarote property buyers, is to arrange your finance before you look at real estate. If you have a pre-arranged mortgage, you will be in a very strong position to negotiate a better offer and save money when you buy your dream home on Cesar Manrique’s island.

Fortunately, getting a mortgage to finance your property here in Lanzarote has never been easier. Essentially you have two options: obtain the loan in your home country (if you are a non-resident) by remortgaging your existing house, or apply for a mortgage on the house you intend to buy with one of the Spanish banks here on the island (both residents and non-residents)

If you do need finance for your purchase, we at Puertodelcarmproperty.com will help organise a competitive mortgage for you. We work with several banks offering various types of mortgage, and we will do our best to find the right deal for you with the most attractive rates. Please contact us if you need more information.

Lending criteria

As is the case in your home country, you will need to provide proof of earnings in order to get the best deal on your mortgage. The bank will require you to supply the following:

  1. Recent bank statements
  2. Last three pay slips
  3. Your last tax return or if you are a resident your Spanish Tax Declaration (IRPF) for the last financial year
  4. Letter of reference from your bank manager and/or employer.
  5. Passport / Residence permit / Spanish Identity Card of applicants.
  6. Proof of other income, if applicable.
  7. Declaration deed for new building from developer (new building) or
  8. Property deeds of the current owner (second hand home).
  9. Private sale-purchase contract or letter containing offer.
  10. In the case of self-employed or independent professionals:
  11. Proof of income tax payments made during the current financial year and declaration of assets and accounts for the last three years
  12. N.I.E. (Foreign Resident’s Number)

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 maximum of 70% of the purchase price or bank’s valuation (whichever is lower) for a maximum loan period of 30 years.

Residents may obtain up to 80% 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 (terms and conditions apply).

Additional information on the legalities of Spanish mortgages:

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. This means it is important to check that the property you buy is free of outstanding debts and mortgages before you sign for the property, regardless of whether you are buying a villa, apartment, finca or a plot of land. Here at Puertodelcarmproperty.com we will of course check the title deed, but we recommend you always use a Spanish lawyer. This is advice on buying property in Lanzarote that will ensure your transaction runs as smoothly as possible. If you need an independent English-speaking lawyer who specialises in property, contact us and we can refer you to a reputable professional based here in Lanzarote.

Advice for buying property in Lanzarote

You will need to allow 10% on top of the purchase price to cover stamp duty, taxes, lawyer’s fees, notary and all legal costs.

Puertodelcarmproperty.com – special advice for mortgage applicants

You need to be aware that if you require a large mortgage, the bank will lend you up to a maximum of 70% (non-residents) or 80% (residents) of the either the purchase price or of the bank’s valuation. Please note however, that the bank will usually put a prudent valuation on the property, effectively lowering the amount that you can borrow. We at Puertodelcarmproperty.com are on hand through all stages of your property search and will make sure you avoid potential pitfalls. With many years experience selling property in Lanzarote and obtaining mortgages for our clients we have the knowledge to ensure you get the right property with a minimum of fuss.

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Legal/Lawyers

We at Puertodelcarmproperty.com strongly recommend that you always use the services of an English-speaking Spanish lawyer. Good legal advice will ensure the safety of your investment.

Can I choose my own lawyer?

Of course. We recommend an independent and reputable lawyer who speaks English and is based here on Lanzarote, but you can choose your own legal counsel if you prefer. The important point is that you find a professional that you are happy with, and that your interests are always protected.

Your lawyer will provide sound legal advice and representation and a good professional will offer the following services:

  1. Property acquisition in Lanzarote
  2. A Full Property search in the Land registry
  3. Provide tax advice – how your investment will affect you from a taxation point of view).
  4. Conveyance
  5. Change of title for local rates, water and electricity.
  6. Provide up to date information on any legal, planning or other issues that may affect your investment.
  7. Organise notary appointment
  8. Ensure payment of all taxes and administrative charges.
  9. Register your newly bought Lanzarote property in the Land Registry.
  10. Carry out all procedures and comply with legal requirements involved in purchasing property in Lanzarote.

Comprehensive legal services

  1. Acquiring a NIF or CIF (Spanish tax identification number)
  2. Application for planning permission
  3. Power of attorney
  4. Will of testament
  5. Legal consultation

Additional information on the legalities of Spanish mortgages:

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. This means it is important to check that the property you buy is free of outstanding debts and mortgages before you sign for the property, regardless of whether you are buying a villa, apartment, finca or a plot of land. Here at Puertodelcarmproperty.com we will of course check the title deed, but we recommend you always use a Spanish lawyer. This is advice on buying property in Lanzarote that will ensure your transaction runs as smoothly as possible. If you need an independent English-speaking lawyer who specialises in property, contact us and we can refer you to a reputable professional based here in Lanzarote.

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