+34 689 517 404+34 695 162 652
+34 689 517 404+34 695 162 652
+34 689 517 404+34 695 162 652
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Order of the deal

Buying a property in Tenerife is a pretty straightforward process, but the deal should be handled by professionals. We take care of all the paperwork, making it easy for you to get on your way to your dreams. You can find out more about the deal from our staff in Tenerife (Contacts).

Step 1: Preparing for the deal

Foreigner Identification Number

To make deals, including the purchase of real estate, employment or the opening of a business, a foreigner will need an identification number (numero de identificacion de extranjero, NIE). This can be obtained in advance from the Spanish consulate in your country, or locally from the immigration department of the police.

Documents required for the NIE application:

  • original and photocopy of all pages of your passport
  • two photos
  • A receipt for the payment of the state duty (about €18)
  • completed questionnaire EX-15.

The NIE process can take from a few days to a few weeks, depending on the number of applications. A representative of a foreigner can pick up the document, it is not necessary to do it personally.

Spanish bank account

You will need a Spanish bank account for the transaction, so it is best to open one in advance. Many financial institutions work with foreigners.
The following documents will be needed when applying to the bank:

  • Your passport and foreigner identification number.
  • Documents confirming your income (certificate of employment and salary).

Many banks require a Spanish translation and apostille legalisation.

The euro account opening operation itself is free, but a quarterly (or annual) fee will be charged thereafter if the balance is positive. The first instalment may even be zero. The same account can also be used for paying utility bills. All banks now give access to an online account, so all transactions can easily be done remotely.

Step 2: Site inspection

Once the decision has been made to purchase a particular property in Spain, it is necessary to prepare the documents for the sale transaction and check that the property is “clean”.

When buying a property on the secondary market, the following basic documents are checked:

  • Nota Simple, an extract from the registry of ownership (Registro de la Propiedad), confirming that the property really belongs to the Spanish vendor, is not pledged and is not under arrest and its description corresponds to what you heard during the preview.

Nota Simple checks are carried out before any payment is made.

  • Escritura (Escritura publica de compraventa) with the registration stamp of the National Registry of Property, in other words – a document confirming the ownership of the property and containing detailed information about its characteristics.
  • A receipt for the payment of the annual municipal property tax (IBI), which also indicates the cadastral registration number of the property and its cadastral value. The cadastral value is an important element because it is the basis on which certain taxes are subsequently calculated.
Step 3: Preliminary contract

Once the documents have been checked, a preliminary contract of sale or contract of advance payment, known in Spanish as “contrato de arras”, is prepared, setting out the intentions of the parties, stipulating the price, payment schedule and conditions, terms and other conditions. When such a contract is signed with the Seller with the participation of NOVATEN PROPIERTIES, the payment of the deposit/avance is made. If the purchase is made on the secondary market, the deposit is usually 10% of the full transaction price, although the parties may agree otherwise.

The payment must be made by cheque or bank transfer. If, for any reason whatsoever, the Buyer later withdraws from the transaction, the deposit will be withheld in favour of the Seller. Conversely, in the event of the Seller’s withdrawal, the Seller must pay the Buyer double the amount of the penalty. In individual cases, the terms of the pre-contract may be agreed individually, subject to the wishes of the buyer and the seller. The usual length of pre-contract is two to three months after which the transaction must be closed by signing the final contract before a Spanish notary.

When buying property in the primary market, including the construction phase, the seller may be offered various payment options. It may be an initial payment for reserving the property upon signing the contract of about 10% of the total value of the property or a fixed amount of about 6-10 thousand Euros and the final settlement at the notary’s office upon signing the escrow form (bill of sale) and delivery of the keys. Alternatively the payment can be divided into several parts. This is more common with villas and houses.

A preliminary sales contract or contract of advance payment (contrato de arras) is a common, but not obligatory, element of transactions. If the Seller and the Buyer are ready and if they have all the necessary documents and funds to pay in full, the parties can immediately complete the transaction at the notary’s office.

Step 4: Notarial agreement

The sale or purchase of a property in Spain is always carried out by a notary, which ensures maximum security.

The documents for the property are handed over to the notary, who carries out his own check for encumbrances and debts. For each transaction leads to the case, which filed all necessary documents, down to the receipts for the payment of utility bills. The file will then be kept in the notary’s archives.

Buyer and seller choose the date when they will meet at the notary to sign the contract (escritura publica). Each party may have a representative, such as a realtor. When the transaction involves a loan, bank employees must be present. In addition, if one of the parties is a foreigner who does not speak Spanish, a sworn interpreter must be present.

Generally, before the deed is signed, the parties study the contract and agree on important aspects. Therefore, at the meeting the notary simply reads the document, explains to the parties their rights and obligations, and if necessary, minor amendments are made.

If there are no objections to the agreement, the Notary Public makes an enquiry to the Property Registry and locks the property, from which point no other operations are possible.

Then the parties sign the contract. The buyer signs all the documents directly with the owner. When buying on the secondary market it is an individual, when buying a new property it is a real estate developer. You can sign the purchase documents with the agency, if the latter has a notarial power of attorney from the seller to execute the transaction on his behalf.

The buyer gives the seller the bank cheques for the remaining value of the property, and the notary a cheque for the pre-calculated amount of taxes and fees. The seller will hand over the keys, the property documents and the receipts for the taxes and utilities. The buyer receives a copy of the sales agreement as well; the original can be collected after the property is registered at the Property Registry Office.

After signing the title deed, the contracts with utility service providers (water, electricity, gas) must be transferred to the new owner. Usually a realtor will assist the client in this matter.

Step 5: Payment for the transaction

The most common way to pay for a property in Spain is by bank cheques. First, the foreigner opens an account in a Spanish bank, then transfers to it funds from his account in his home country (this will require proof of source of income). Before signing the purchase agreement, the Spanish bank will issue the buyer a cheque, which he will give to the seller.

Step 6: Registering the transaction

After signing the notarial deed, the acquired property must be registered in the Buyer’s name at the State Register of Property (Registro de la Propiedad), where the relevant copy of the notarial deed is sent. The registration process usually takes 1 to 3 months, at the end of which the Purchaser acquires a definitive title and receives a copy of the Escritura with the registration stamp. In the Nota Simple extract from the State Register of Property, the buyer will be identified as the owner of the property.

Step 7: Payment of taxes and fees.

There are two main types of tax (in terms of the amount payable) that must be paid when buying a property in Spain.

The first. The analogue of the domestic VAT is IGIC (Impuesto General Indirecto Canario) or transfer tax – ITP (Impuesto de Transmisiones Patrimoniales).

Second. Stamp tax (impuesto de actos juri’dicos documentados) – AJD for short.

Third. Tax Plus Valia (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana): this tax is related to the increase in the official value of the property since its last purchase. This tax is calculated and paid to the local municipality, and the obligation to pay it lies with the seller, unless the parties agree otherwise.

Tax rate

If you buy a new property, you pay the IGIC (Impuesto General Indirecto Canario). For existing properties (second hand) you pay ITP (Impuesto de Transmisiones Patrimoniales). In both cases, the tax rate is 6.5% of the value of the property shown on the Escritura.

For commercial properties intended for private production and for undeveloped land, the tax rate is 6.5% of the value shown on the Esq. The tax is payable once at the time of purchase. It is payable at municipal tax offices.

When a parking space or garage is purchased together with a dwelling (in a single notarial deed of sale), the same tax is charged on its price as on the dwelling.

Stamp tax or tax on documentary deeds – Stamp tax (impuesto de actos juri’dicos documentados) – is payable once at the rate of 0.5% of the property value indicated in the Eskritura. The application of ITP tax by law excludes the use of AJD, so the Stamp Tax is only payable on the purchase of new properties.

What costs are paid when buying a property in Spain?

  • The cost of notarising the “Escritura publica de compraventa” of the purchase/sale is usually between 300 and 700 euros.
  • Costs of Registro de Propiedad – registration of the property purchased with the municipality register. Depends on the value of the property and the location.
  • Document fees (Gestoria). If you have a lawyer to accompany the transaction, his fees are negotiable, depending on the complexity of the transaction. Generally, the fee is 1% of the transaction value.

The following taxes and fees are payable separately and additionally when the mortgage agreement is executed by the Buyer:

  • Hacienda Tax of approximately 1.6%
  • Notary fee of approx. 0.4%
  • Registration fee of approx. 0.16%
  • Office fee of approx. 200 Euro
  • Fee for the valuation of the property from approx. 300 to 500 Euros
  • Real estate insurance and in some cases life insurance from 150 to 350 Euros

All of the above costs must be paid by bank cheques or bank transfers addressed to the appropriate institutions. If you have a bank mortgage, these costs will be met by the bank representative by reserving funds in your account in advance. Please note that the bank will reserve funds for notary fees and registration of the property in the property registry, taking into account the maximum allowable fees. Upon payment, the amount may be less and the unused part of the reserved funds will be returned to your account.

Management

NOVATEN MENEGMENT manages properties in Tenerife in your absence. We offer you two scenarios:

  • If you want your property to generate income and plan to rent it out when you are away;
  • If you want to make sure your home is secure, under control and you need maintenance – gardening or regular cleaning, taking care of the communal well-being of the property.

Many people believe that properties should work, not stand idle, so prefer to rent out for the whole time (or periods). We totally agree, especially if there are encumbrances in the form of loans and mortgages. The house will gradually pay for itself by the rental income.

We draw up a trust management of the property in Tenerife, according to which:

  • We include your home in the catalogue of properties for rent, thus providing advertising and marketing.
  • We can analyse the market and help you to find an adequate rental price.
  • Vetting prospective tenants for creditworthiness and authenticity of documents,
  • We prepare a rental agreement in favour and protection of your interests as an owner,
  • After the tenants leave, we clean and prepare the house for your return or the arrival of other tenants.

And if your property is untouchable and you don’t want to let strangers in, NOVATEN MENEGMENT will look after it while you’re away. This includes household chores when you need them. What does it mean?

  • constant monitoring and communication with the security company, transmitting information to you via video and photo,
  • taking care of your greenery, flowers and plants, pruning, spraying for insects, watering, cleaning – a permanent contract with the garden centre,
  • receiving mail for you, including registered mail, by proxy,
  • pool cleaning, maintenance and getting it ready for you
  • housekeeping, cleaning and washing the fronts, cleaning the inside and getting the house ready for you,
  • if you live here permanently, but are away from home a lot, we will find someone to take care of your dog or cat while you are away.

In NOVATEN MENEGMENT your personal manager will see to it that all bills (electricity, water, utilities, etc.) are paid on time, the gardener will make regular visits to you (in Spain punctuality is not so good), quickly and painless for the wallet will solve sewage or electrical problems, get the mail for you if you are not home, pick up the necessary staff for your family and home (nanny, cook, cleaner etc.) and much more.

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