Lanzarote Tourism and Growth
Lanzarote and it's adjoining Islands are seeing enormous growth both in tourism, property sales hotel and individual owners rental bookings.
The number of foreign tourists taking holidays in Lanzarote rose by 20.7% last month versus June 2010, according to the latest data just released by AENA, the Spanish airport authority. And total arrivals for the first half of 2011 are now up by 21.1% against the first six months of last year.
Whilst over the last six months Lanzarote has welcomed 842,561 foreign tourists, 176,937 more than during the same period last year. Equivalent to an increase of 21.1%.
Across the islands as a whole, the increase in foreign tourist numbers is even greater, with 24.4% more people visiting one of the Canary Islands than between January and June last year. This translates into an additional 996,598 visitors in total, according to figures compiled by the Vice-consul of the canarian government, using statistics supplied by AENA, the Spanish airport authority.
The combination to the growth of the Islands is due to the all round warm climate, investment by the budget airline companies and not forgetting the unrest in the middle eastern countries has had a desired effect on the island tourism growth.
The Right Way to Purchase a Property in Spain
First Steps
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,
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.
The next step begins the conveyance and at this stage we recommend you use a lawyer.
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 organize 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 finalize 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.
Banking and Mortgages
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
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.
The bank will require you to supply the following:
Recent bank statements
Last three pay slips
Your last tax return or if you are a resident your Spanish Tax Declaration (IRPF) for the last financial year
Letter of reference from your bank manager and/or employer.
Passport / Residence permit / Spanish Identity Card of applicants.
Proof of other income, if applicable.
Declaration deed for new building from developer (new building) or
Property deeds of the current owner (second hand home).
Private sale-purchase contract or letter containing offer.
Details required for the Self-Employed:
Previous 2 years income tax returns
Payments on account of income tax for previous 2 years
Justification of other income, if applicable.
Justification of assets (Net worth)
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)
Legal/Lawyers
Your lawyer will provide sound legal advice and representation and a good professional will offer the following services:
A Full Property search in the Land registry
Provide tax advice – how your investment will affect you from a taxation point of view).
Conveyance
Change of title for local rates, water and electricity.
Provide up to date information on any legal, planning or other issues that may affect your investment.
Organise notary appointment
Ensure payment of all taxes and administrative charges.
Register your newly bought Lanzarote property in the Land Registry.
Carry out all procedures and comply with legal requirements involved in purchasing property in Lanzarote.
Acquiring a NIF or CIF (Spanish tax identification number)
Property Buying Guide
Taxes and Costs
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. 5.75% (VAT and stamp duty for new properties).
Notary fees
Property registration fees
Translation fee (If you do not speak fluent Spanish)
Legal fees (If a Lawyer is required)
Plus Valia- This is capital gains tax on the LAND ONLY, Not on the building.
Mortgage fees if a loan is required plus .75% stamp duty on mortgage deed.
These extras should add up to approximately 10% of the new declared value as it appears in the new title deed.
Rental Investment
As always when it comes to making any type of investment, please make sure that you take professional advice before making any decisions. Lanzarote is a great place to buy a new home or investment property.
Putting your property on the rental market which can become a quite lucrative source of income on your investment.
With all year round sunshine makes this for an extremely buoyant tourist industry with no glaringly quite months. .
So, what sort of returns can you expect? Well it depends on the property, its location and its rental history. However, as a general rule of thumb, for short term lets you could be realizing between 7% and 12% return on your investment per annum if you choose and manage the property well. For long term lets, between 4% and 8% net is more realistic.
If renting is the preferred option, then there are a couple of ways to rent your property.
1) long term rental, where this is a continuos set monthly amount. There is also a growing number of local professional workers, who along with their families, have created a huge demand for long term rental properties.
Normally you will have less return on this basis but there is really no input by the property owner to get involved with situations like weekly cleaning, linen and towel changes, etc.
2) The weekly holiday rental market. This has seen enormous growth in the past few years. With the event of the Internet and the ease of which individuals can now find, book and choose a airline to reach their preferred destination is the main reason for this growth in the rental market.
Advertising your property on specialist websites such as Owners Direct, Home & Away Holiday lets, Espanabreaks, Holidaylettings, Premier-holidays, are to name but a few, where clients can book your rental property all year round. Promote your property correctly and you can exspect well over 45 weeks per year rental income.
There are many cleaning companies and individuals on Lanzarote, who are geared up for looking after your rental property. They will make sure that your property will have the correct clean and change over for your clients. Prices vary from the type of property you have and the amount of clients that are staying in your property.
Questions and Answers
QUESTION
:
How do I apply for a mortgage in Lanzarote?
ANSWER
:
QUESTION:
How much deposit should I have to put down to secure a property?
ANSWER:
It is customary to pay a 10% deposit, then the balance when signing for the deeds.
QUESTION:
When can I move in?
ANSWER:
You can take possession of the property when the title deeds have been signed.
QUESTION:
Does Lanzarote have a national health care system?
ANSWER:
Yes, it's free to any EU citizens above the retirement age.Younger investors should take out medical insurance if planning to live in Lanzarote.
QUESTION:
Can my UK State Pension be paid to my Spanish bank account?
ANSWER:
Yes, and we can help you set up a bank account on the same day that you apply at the bank.
QUESTION:
Do I need a UK solicitor as well as a Spanish one?
ANSWER:
No, this would only serve to increase your legal fees, but do make sure that your Spanish lawyer speaks and writes fluent English. We have
English lawyers and accountants available for you.
QUESTION:
Can I take my car to Lanzarote?
ANSWER:
Yes, assuming you have owned it for six months or more. If you're planning on keeping it here you'll need to get an export certificate from the
DVLA, and if you take up residency you'll have to register the car in Lanzarote and get Spanish number plates. We can advise you on the
best freight service to use for Lanzarote, and for all your furniture too.
QUESTION:
What about the Spanish education system?
ANSWER:
It is excellent and free of charge
.
QUESTION:
Can I take up employment in Lanzarote?
ANSWER:
Yes, if you are from a country that is in the EU.
QUESTION:
Can I bring my pets with me to Lanzarote?
ANSWER:
There's no problem with this providing you have evidence of the relevant vaccinations. Don't forget to apply for a pet passport if you want to
bring your animals back to the UK.
QUESTION:
Will I need an ID card?
ANSWER:
Yes and this can be easily obtained from major police stations, we will show you where and how.
QUESTION:
Should I have a Spanish will?
ANSWER:
Yes, definitely.
QUESTION:
Is it easy to move all my belongings to Lanzarote?
ANSWER:
It's very easy, and the whole process only takes around 3 weeks and they will even pick up and deliver you to your new house in Lanzarote.
