In last months article I wrote about how the Canary Islands are really the diamonds in the crown of Spain.
I made mention of an idea that the government of the Canary Islands could make property buyers.
I suggested that if people that want to come and live here, they could pay for the privilege which could increase funds for improving the lives of the local Canarian population.
If you want a diamond, you have to pay the high price for it…so why not here in the Canary Islands?
You can find the article here.
This article is going to be hated by certain people…in fact, I think I may even get some backlash from certain parties about it, but never one to fear a bit of negativity, here goes.
In this article, I want to highlight another area of potential income that could be generated for the original inhabitants of the Canary Islands – the Spanish Canarian people.
Can more funds be generated?
The Canary Island government wouldn’t have to do much to be able to generate another healthy chunk of change and…assuming they did the right thing with the extra funds, they could use that money to build schools, increase teacher’s and medical professional’s salaries, improve hospitals and build more social housing…all of which would be welcomed by the Canarian population.
Here’s the idea – the real estate industry could quite easily afford to dip their hands into their own pockets and pay something back into the very community that’s allowed them to make a good living over the years.
The industry is not only prevalent throughout all of the Canary islands but also, maybe shockingly, totally unregulated and unlicensed.
There isn’t any mandatory licence that needs to be held by anyone practising within the real estate industry and not only that, there isn’t a single governing body to oversee agents and their offices.
Too much client abuse
I’ve been in the business since 2010 and have seen, first hand, many instances of abuse of clients funds and properties and this all goes by unknown by the buyers and sellers – they either know no different or don’t get to see it.
It also goes unnoticed by the legal side of things as well and, although some of it could quite easily be overseen and checked, it isn’t and this is where I’d like to start off regarding how we, the real estate agents of the Canary Islands can help the Canarian population.
What happens elsewhere?
In my last article, I mentioned the island of Hong Kong and that every property transaction is subject to a property transfer tax and if the buyer isn’t a local resident buyer, then there’s another tax levied on top of that.
Hong Kong is, in basic terms 1,000 km2…and according the the internet, there are somewhere in the region of 40,000 to 45,000 estate agents and all of these are registered in one way or another.
Let’s take the US…New York City to be precise, it’s just under 800 km2…a bit smaller than Hong Kong and it has a stated 40,000 to 50,000 registered real estate agents.
Los Angeles is an area of approximately 1,300 km2 with 50.000 to 60,000 registered agents.
In these regulated real estate sectors, there are 2 licences that agents apply for.
A basic sales person’s licence that allows the holder to work for a business or under a licensed broker or the other option is a Real Estate Broker’s licence and this licence allows the holder to open an office and have licensed sales agents working there.
Tenerife is, in basic terms 2.000 km2…so, twice the size of Hong Kong, just over twice the size of New York and just under double the size of Los Angeles.
Tenerife isn’t as built up as Hong Kong or New York, so we don’t need as many agents, but…how many are there?
The internet can’t tell me how many agents there are in Tenerife, because there aren’t any registered agents here.
Actually that’s a lie, there are some that are registered with some small groups generally from the mainland, but my personal feeling is that any sort of trade association should be in the area of what it actually controls.
Can there be a trade association for the Canary Islands?
If there’s a trade association here within the Canary Islands, that not only keeps an eye on any unruly agents that are over stepping the line with some of their poor practices, they might actually be able to make a direct difference to the agents practising on the islands and could have a direct impact on the sector as a whole.
And, just like in my article about property buyers being in a position to help the local population I think agents can quite easily help the same population and islands that have enabled them in building up businesses and earning a living from them.
Canarian Government – why don’t you set up a trade association for the real estate agents within the islands.
Licenses for the professionals.
Each agent should have to pass a written course – in Spanish – that might make the industry a little more ethical and transparent and eradicate those that can’t speak Spanish, which obviously helps when needed to deal with the unending problems of property transactions.
So, back to how many agents there are throughout the islands, the number rises and falls as the market improves and declines.
To give you an example, I might not go to a certain area of Tenerife for a few months and when I do end up going there, I’ll often see a new shiny office with properties for sale in the window.
At least they have an office, there are many people walking the streets, with no office to talk of and no affiliation with any office either, but they’re still selling property to buyers who have no idea about what’s happening and how the process works.
OK, we all have to start somewhere, but why not make some regulations that new agents must work two years with a Broker’s office.
What happens?
The office and the agent would have to be licensed.
The office would train the agent in the best (and listen in please, some of you unethical agencies out there) and most ethical way in handling buyers and sellers transactions.
The licence would cost something like 1,000€ per sales person and say 2,000€ per Broker’s office and this fee would be paid once a year. 
Of course we all…actually, I’ll rephrase that.
Of course, many of us, pay our taxes, so why the licence fee?
I think it’ll go to show the public that we’re a little more qualified and professional than we’ve been in the past and this could also be a way of weeding out the lower quality agents.
It shows a bit of dedication from the agents involved.
Licences would also be a way that the governing body and maybe the notaries could keep an eye on things.
OK, let’s bring in the notaries…
If we had licences for agents and brokers, we could have another line of text, written into the title deeds of every sale, where it could be mentioned which agent was involved in the transaction.
As soon as this was done, the non-licensed agents would shy away from going to the notary and that might make any buyers of sellers wary and maybe not do business with them.
Now, the agents that did show up to the notary to assist their buyers and sellers would be happy to give their licence number and this would also go to help Hacienda, the Spanish tax office, work out how many transactions each agent had done…therefore ensuring the agents pay their taxes on their income.
The benefits to buyers and sellers
It’s all a way to make sure that a more professional service is given to buyers and sellers…it’s safer for them and their money…and that all due taxes are paid to the tax office – I told you some people would hate me for this.
The licence fees and subsequent extra income tax being declared is another way to increase revenue for the Canary islands Government to use to fund hospitals, schools and social housing…clearly making sure the Government actually use that money for the social side of things is another set of problems and a separate article in itself.
Are there ways around the idea…?
I’m sure that there are many elusive agents that can think of ways to get around this idea and still be paid a commission without paying tax on it.
I’m sure that they’ll work out a way to not have to show up at the notary office, but nevertheless, if something was to be done with this idea, I’m pretty sure it could evolve into something much better over time.
If it happened, I’m sure it could provide another source of income for the fund that I think the Canarian locals deserve, those who have suffered throughout the years from the increase in property prices and extra traffic to the islands in general.
Look, it’s not just the income, which certainly won’t be as much money as my idea in the last article I wrote, but I think more importantly, it could improve the public perception of the industry and increase the professionalism and accountability within an unregulated sector full of malpractice and unethical agents.
It would be a long road to get to the dream of a structured, regulated real estate industry, but I think that the balance between an economical benefit for locals, paid for by those that have financially profited from the sale of real estate, would be a good all round solution.
