Buying Guide Details

Buying Property on the Spanish Islands

Overview

The Canary Islands and the Balearic Islands have been very popular with overseas property buyers since the early days of the package holiday in the 1960s. Having had a taste of the terrific climate, stunning beaches and spectacular scenery that these two island groups have to offer, holidaymakers became property owners with their own summer getaway or retirement property.

There is great diversity within Spain’s islands – brash resorts, tranquil rural idylls, exclusive properties in the mountains, beach hideaways on secluded coasts. Some of the islands are easily reached direct from the UK; others are harder to get to, requiring connecting flights or ferry services.

Located off the coast of northwest Africa, the Canaries benefit from having warm, sunny weather all year round, making it a great place to go outside the regular summer season – good news for property buyers who want winter sunshine at their holiday home and for investors looking for rental returns when they’re not in the property themselves. The weather and beaches are as good as on the Spanish costas but property prices are generally cheaper in the Canaries.

The Balearics have been very popular with British and German property hunters in particular for many years. Richard Branson and Claudia Schiffer are just two of the rich and famous to own properties here. Big demand for properties coupled with restricted supply has led to some of the property on these islands being among the priciest and most exclusive in the whole of Spain. Those that can afford to buy property on the Spanish Islands have good opportunities for rental to holidaymakers in this popular tourist destination.

View property for sale in the Balearic Islands (Islas Baleares)

View property for sale in the Canary Islands

The Process of Buying Property on the Spanish Islands

• Anyone wishing to buy (or sell) a property on the Spanish Islands must first obtain from the state – in person – a fiscal number for foreigners known as NIE (numero de identificacion de extranjeros)
• Once the property buyer has received the NIE number, the property buyer’s lawyers can make an offer on their behalf. When a price has been agreed, it is recommended that both parties sign a preliminary agreement which outlines details such as the completion date
• A deposit of 10% is the normal amount placed to secure the deal. After this, if the property buyer pulls out they lose the full deposit but, should the seller decide not to go ahead, he/she must return double the amount of the deposit – i.e. 20% – to the property buyer
• If buying property on the Spanish Islands off-plan, it is usual for payments to be broken into stages, the balance being paid when construction finishes
• On completion, when all the necessary checks have been carried out, both parties sign the escritura (title deeds) in the presence of a notary. The property buyer then pays the balance, plus all other fees and taxes. Copies of the deeds are sent to the Land Registry and the tax office.

Homes Overseas Property Club

Homes Overseas has joined forces with a collection of IFA specialists to form the Homes Overseas Property Club (HOPC), designed for existing and prospective overseas property homeowners.

The Club – which has access to international lawyers in no fewer than 43 different countries - has been set up in order to guide people through some of the various issues relating to buying and maintaining a property overseas. It offers advice on a range of topics, including financial, legal, insurance, taxation, property management and foreign currency matters.

For further information please telephone 0845 838 7142 or email info@homesoverseaspropertyclub.com

Fees & Taxes

• Taxes and fees usually amount to around 10%  of the total purchase price of the property on the Spanish Islands
• Taxes payable depend on whether the property on the Spanish Islands being purchased is new-build or resale. Currently, transfer tax of around 7% is applied on resales, which includes stamp duty. For new-build properties, VAT (IVA) of 7% is payable in addition to 1% stamp duty
• On top of this there is also plusvalia (capital gains tax), which is set by the local authorities and depends on the area concerned and the amount of profit being made on the sale. This is usually paid by the seller
• If the property buyer is purchasing land or commercial property on the Spanish Islands rather than residential property on the Spanish Islands, VAT is 16% as opposed to 7%. Stamp duty remains the same
• Most Spanish lawyers charge around 1% of the final purchase price, and notary fees are around 0.5%
• Agents’ fees can vary anywhere between 2% and 15% – so be careful not to be ripped off

View property for sale in the Balearic Islands (Islas Baleares)

View property for sale in the Canary Islands