Non-Resident Imputed Income Tax in Tenerife – NRIIT

I’d like to point out that this article IS GOOD ADVICE but in no way replaces any legal or fiscal advice, so please don’t take it as such. Rates and laws change all the time and you should seek that information from your legal and fiscal advisers.

At times life can seem unfair…especially at the end of the year.

No, I don’t mean that you don’t get the presents that you want at Christmas, I mean the dreaded tax man.

“Class… does anyone know what the word – Impute – means?”

“Anyone?” “Anyone?” – a nod to Ferris Bueller.

OK…from one of the online dictionaries, the word Impute in financial terms means:-

To assign a value to something by inference from the value of the products or processes to which it contributes…ie “recovering the initial outlay plus imputed interest”

In my way of thinking…maybe imputed could mean – Assumed.

So, when the Spanish tax office, Hacienda, asks you to pay your Non-resident Income Tax at the end of the year, they’re really asking for the Non-resident Imputed Income Tax….or assumed income tax.

You see, the Spanish government have, for many years, assumed that if you have a second home in Spain, you’ll almost certainly derive a benefit of income from it in one way or another.

The government assumes that you rent your property – even if you don’t.

Whether you rent the property legally or not, you still have to send in your annual tax return and pay your Income Tax one way or another.

This generally raises some questions, so I’ll attempt to answer the most frequently asked ones below…

But what if I’ve never rented my property in the whole time I’ve owned it? – You still have to pay it.

What if I’ve rented my property legally and declared the income? – You’ll have to pay your income tax on that.

As a property owner, can I get away with not paying my Non-resident Imputed Income Tax? – Yes…but they’ll get you eventually – see below. There are LOADS (yes that’s shouting) of people in Tenerife that are not paying this tax. Generally because they don’t know about it because they were never told about it when they bought the property.

Are there any benefits to paying my Non-resident Imputed Income Tax? – Yes, you can sleep at night and when you come to sell your property and you’re deemed not fiscally resident and Hacienda retain 3% of the sale price of your property and hold it in lieu of any taxes that you may owe, you’ll probably be able to claim some, if not all, of it back.

3% of the sale price is quite a lot of money on most property sales in Tenerife, so can I get it back?

Well, if you’re up to date with your annual Non-resident Imputed Income Tax for the last 4 years, then possibly all of it – you see, there is the benefit of paying your NRIIT.

It’s assumed that this 3% that Hacienda retain not only takes into account your unpaid NRIIT payments but also takes into account any Capital Gains that you’ve made on the property.

The thing is that they’re so busy that they’d rather take the 3% and have something back rather than having to chase you for any more, so they kind of turn a blind eye in most cases.

So how do I find out if I can claim any of the 3% retained by Hacienda?

You really need to employ the services of an accountant for that. They’ll normally charge you a fee of something like €100 to work out if you will be able to claim anything back. That’s the best thing to do…work it out first before going to Hacienda to claim anything – you don’t want to open a can of worms.

In general, Hacienda are happy with the 3% to cover them for the NRIIT you owe them as well as any Capital Gains tax, so in a way the majority of you reading this will be able to sit back and relax and assume that once you’ve left your 3% behind, they’ll be happy and show no future interest in you. And that’s probably true in 99% of cases but there’ll be the 1% where the Capital Gain is enough for them to open a case and go after you for the balance that’s owed over the 3% that’s been retained…but to be honest, you’ll probably know that yourself.

If you’ve ever had to do paperwork in a Spanish office, allow yourself the 3 minutes 30 seconds to watch this…it’s actually not as bad now as it used to be….

So, what’s the best advice?

If you’re a property owner here in Tenerife, keep up to date with your Non-resident Imputed Income Tax.

OK, it’s another tax to pay but it’s not loads of money every year, in fact, in comparison to most taxes it’s quite low.

It’s due at the end of the year, every year and payable on or before the 31st December to not receive a fine.

When you do sell your property here the 3% will be retained by Hacienda…that’s a given and will always happen.

Then, if you’re up to date with your NRIIT and you feel that you’d like to see if there’s anything that you’ll be able to claim back, get in contact with a reputable accountant or Gestor.

This is one of the main reasons that I shout about NOT paying anything in black money under the table when you buy a property.

If you buy now for €120.000 and declare €90.000 on the deeds and you’re told that you’re saving tax…you won’t be saving anything in the future, because when you sell in 10 years for €175.000, Hacienda see that you’ve made a €85.000 profit..not the €55.000 that you really have…and that can make all the difference in reclaiming anything back.

As I write, Hacienda are obliged to pay back any outstanding tax within 12 months…I know, you’re bound to get it back on the 364th day but it might be worth the effort.

I should point out that this article IS GOOD ADVICE but in no way replaces any legal or fiscal advice, so please don’t take it as such. Rates and laws change all the time and you should seek that information from your legal and fiscal advisers.

The Tenerife Property market during 2017

10 years after the brakes were put on the rising prices…how is the Spanish market, especially the Tenerife property market?

During the Spanish property boom, prices went through the roof but abruptly came to a screeching halt in 2007 when the ceiling fell in on the property market – I hope you liked the use of the carefully chosen property oriented words there.

Prices crashed throughout Spain and drops of anywhere between 30%-50% were found depending upon the area that the property was situated.

The Tenerife Property market during 2017 — Of course, Tenerife was hit, and quite badly, but not nearly as badly as the mainland.

Here, prices dropped in the region of 35% in comparison to their highs of 2005-2006, but being an island with limited building land and of course an island with sun, the prices were always going to be better than a lot of other areas of Spain.

So, as we see the Christmas trees being put up and the lights being switched on in readiness for the Christmas festivities and bringing to an end 2017, how has the year been regarding sales and property prices in general?

Demand has always been and still is strong for property in Tenerife and obviously continues to rise.

Despite Brexit, Brits still lead the long list of different nationalities of buyers throughout Spain, although the total amount of British buyers has dropped slightly overall. Interestingly though, this year Tenerife has seen Italian buyers become more prominent than British buyers.

Mortgages are getting easier to obtain, thankfully not as easy as it was back in the days of the boom, but nevertheless, things are moving after the Credit Crunch.

Employment figures have eased and are falling from the 33% unemployment high we had in the Canary Islands 4 years ago.

Interest rates are still low, meaning savings returns are poor, so property investment seems like a good idea now.

During 2016, the Spanish bank – Bankinter – made a statement about the Spanish real estate sector in which they said “The price of housing will keep rising modestly throughout all of Spain. Even though the increase slowed down during the first months of 2016, the moderate upward trend of prices that we have been estimating on our reports since December 2013 is still valid.”

This showed that even then prices were starting to the rise.

A growing worldwide economy along with low interest rates and a good chance of capital gain, makes property investment a good contender for your money and so the end of 2017 and going into 2018 looks like there’s going to be a continuing rise in property sales.

A limited number of properties for sale is also pushing prices up and in this is something that we’ve really noticed recently.

Sellers will very often have an inflated view of the value of their property, of course it’s their baby, but nevertheless, there’s been a distinct rise in asking prices and there’s also now a rise in those buyers that are willing to pay them.

It’s become quite apparent that prices in the more popular areas of Tenerife have increased by maybe 5%-10% over last year’s asking prices.

In fact, earlier this year, the property portal Kyero reported that figures showed that the average price of property in Tenerife had increased to just under €250,000, that was an increase of around 5% over 2016 prices and that average matches the average property price in the mainland.

It’s not quite a sellers’ market, where sellers can ask what they like and get it…at the moment it’s a situation where buyers with cash that can move quickly still have the upper hand and can make an offer that could well be accepted.

Mind you, the days of 20% discounts on sensibly priced property have long gone. As a seller, if you price your property realistically there’s a good chance you’ll get viewings and sell reasonably quickly.

The latest figures from the land registry and Spanish notaries seem to support the view that the market is well on its way to recovery in Spain as a whole.

The information for the number of sales recorded in the Land Registry show that property transactions increased by 25% in May 2017 compared to the same month last year.

Sales increased to 40,671, apparently, this was first time monthly sales had broken through the 40,000 barrier since September 2008, so Spain as a country is now on the up and I think we can officially say that the property market in Tenerife is on the turn.

So, here’s to a continuing upward change in the property market for 2018 and I hope you all have a great Christmas and a fantastic New Year…Happy 2018.

Have you missed the boat or is this the perfect storm?

Have you ever, during your lifetime…just felt that you should have done something a while ago, but now feel that it’s too late and maybe you’ve missed the boat?

I wasn’t in Tenerife 25 years ago, but I very often wonder that if I was, would I have bought property or would I have thought it was too expensive at that time.

When I hear or see what some of my sellers paid 25 years ago for the property they’re selling now, I always think to myself that if I was here then, at that price, I’d have bought them all.

But of course, it’s all relative.

Property prices today seem a lot more expensive in comparison to 25 years ago, but of course back then, your earnings weren’t the same, so although you think that property now is more expensive than way back then, you’d have been in the same position…you were a lot younger then and probably didn’t have the savings or the wherewithal to go out and leverage those savings to buy 2 or 3 properties.

Back in the early 90s in the UK, I knew a friend of a friend, Andy his name was, and every time I saw him, he always said that he was going to buy a property because “…the UK market has hit rock bottom”, I really can’t remember how many times he said that, the trouble is, for as long as I knew him he never did buy a property.

The thing is, in the year 2042, when you’re still thinking about this, are you going to look back and wish that you’d bought that property in Tenerife 25 years ago “in 2017/18” when prices were a lot cheaper?

There’s possibly never going to be a perfect time for you to buy a property here but there’s going to be a good time…and that time could be now.

Is this the perfect storm?

Property prices have easily hit rock bottom and we’re seeing prices start to increase…and fast in some areas.

I’ve just looked at my records and when I first started selling property in Tenerife back in 2009 – all those years ago…!!!, I had a 1 bedroom apartment in Los Cristianos on the seafront for €99.995…now, in 2017, you can’t even buy a studio for that in Los Cristianos.

Prices are on the rise, if you’re seriously thinking about buying a property here in Tenerife, prices probably won’t be like this for another 10-15 years, until the next financial crisis…and don’t worry yourself too much about Brexit, as I’ve said many times before, I can’t see it affecting much at all for the British buyer…and that’s if Brexit actually happens anyway (there, I’ve said it again on record).

At the moment, if you’re a US, Australian or Chinese citizen, you can still buy here. There are about 330.000 Britons living in Spain and approximately 300.000 Spanish living in the UK…what are they all going to do? Is the British government going to tell all of the Spanish to get out and vice versa?

If Brexit does happen, then maybe British buyers will have to fill in another sheet of paper amongst all of the other paperwork that needs to be done… I don’t know, nobody does, not even the British government knows what’s going to happen…

Every month, the Notaries’ Association report on the volume of monthly property sales and it’s reported an increase nearly every month since January 2014, although property sales in the whole of Spain are still 40% less than they were in the height of 2007.

Asking prices today for a 1 bed in Los Cristianos can easily be €150.000 plus and show no obvious signs of falling in the short term. In fact, Kyero – a well-known property portal – says that property sales in the municipality of Arona, which includes Los Cristianos have increased by nearly 25% since last year and property prices have risen by 5.9%…although they’re still well below what they were in the hazy days before the crisis.

In 2015, Tenerife came 8th in the list of most expensive places to buy in Spain, behind such cities as Madrid, Barcelona and Ibiza to name a few.

Lending is still cheap ad also banks are becoming a bit more flexible, so there are plenty of buyers about at the moment, keeping prices on the rise. Once again, Kyero report that mortgage completions have increased by 33.5% over the last 12 months.

One of the things you’ll probably have some concern over is the Sterling/Euro exchange rate and that is a question only you can answer at the time of your purchase…is it worth sending the money over now or do I wait a bit?

That’s something you’ll just need to bite the bullet on I’m afraid…it’s been just the same for those that have walked in your shoes before you and it’ll be the same for those that’ll be walking in your shoes behind you.

So, is it the right time to buy now in 2017/2018?

Let’s put it this way. I don’t think it’s a bad time, prices are still good, affordable and there are still some bargains to be had.

It’s always going to be a risk, but if you think you’re going to regret it in years to come, don’t let the opportunity slip away from you.

Buying property in Tenerife

Have you missed your opportunity in buying property in Tenerife?

Have you ever, during your lifetime…just felt that you should have done something a while ago, but now feel that it’s too late and maybe you’ve missed the boat?

I wasn’t in Tenerife 25 years ago, but I very often wonder that if I was, would I have bought property or would I have thought it was too expensive at that time.

Have you missed the boat or is this the perfect storm?

When I hear or see what some of my sellers paid 25 years ago for the property they’re selling now, I always think to myself that if I was here then, at that price, I’d have bought them all.

But of course, it’s all relative.

There’s possibly never going to be a perfect time for you to buy a property here but there’s going to be a good time…and that time could be now.

Is this the perfect storm?

Property prices have easily hit rock bottom and we’re seeing prices start to increase…and fast in some areas.

In 2015, Tenerife came 8th in the list of most expensive places to buy in Spain, behind such cities as Madrid, Barcelona and Ibiza to name a few.

So, is it the right time to buy now in 2017/2018?

Let’s put it this way. I don’t think it’s a bad time, prices are still good, affordable and there are still some bargains to be had.

It’s always going to be a risk, but if you think you’re going to regret it in years to come, don’t let the opportunity slip away from you.

Getting a mortgage in Tenerife

With Spanish mortgage rates being the lowest they’ve been for years and lending in general becoming a little more flexible, mortgage lending in Spain is increasing, so let’s see how easy it is getting a mortgage in Tenerife.

It’s still not easy to get a mortgage as a non-resident…or even as a resident for that matter but nevertheless…it’s becoming a little easier.

All Spanish banks deal with residents looking to borrow money via a mortgage and they also deal with non-residents but Spanish mortgages for non-residents are more difficult to obtain and there’ll be a few more hoops for you to jump through too.

I thought I’d write an article about the process and what’s needed to get a mortgage in Tenerife because my last article was written a few years ago and also written during the financial crisis, when Spanish mortgages had all but disappeared…and the article was very negative and not very up-beat.

In this article, I’m going to write about non-resident mortgages in Tenerife because if you’re a resident, you’re already living here and can pop into pretty much any bank in Tenerife and find out what you need to do to get the ball rolling.

I’d also like to point out that as I write this article in 2017, lending procedures and criteria are still evolving, so what I’m going to write isn’t cast in stone and banks will differ to each other in their lending amounts, loan to value calculations and criteria.

As a non-resident you’re generally going to be allowed up to 60% loan to value (LTV). This means that the bank will lend you 60% of the value of the property or the purchase price whichever is the lower. So, thinking about the last few words of the previous sentence, one thing to consider here is that just because they say they’re going to lend you 60% doesn’t mean that it’ll be 60% of the purchase price.

Here’s what I mean – and skip this bit if you know what I’m about to say – if you’re buying a property for €200.000, that’s the agreed price between you and the seller, that doesn’t automatically mean that you’ll be able to borrow €120.000 though.

The bank will want to have the property valued and if the property is then valued at €180.000, then they’re only going to lend you 60% of that value, not the €200.000 agreed purchase price. This new lending figure is €108.000 that’s €12.000 less than the €120.000 you originally thought they’d lend you…and now, you’re going to have to find that extra €12.000 yourself if you want to carry on with the purchase.

One thing you could do is see if the seller will come down a little in price so that you don’t have to find as much extra cash…but as I write this article, prices have stabilised well here in Tenerife and increasing in some areas…so there may be little chance of that.

Now, if you know anything about buying a property here (and if you don’t you might want to hop over to my videos about how to buy a property in Tenerife), you’ll know that to remove the property from the market, you need to put down a 10% deposit…and this is non-refundable…so what happens if you’ve agreed to buy the property for €200.000 and it gets down valued, in the example above and you can’t find the extra €12.000?…well, you’ll lose your 10% deposit.

What can you do? Maybe before you get into signing contracts and completion dates you can ask the agent to ask the owner if they’ll be prepared to refund the deposit if you’re unable to obtain a mortgage within a certain time-frame… that’s what we do here at Tenerife Property Group. We agree with the vendor that the buyer can have 14 days to arrange a mortgage and if they can provide written proof from the bank that confirms that they can’t go ahead, they can have their deposit back. We think that’s a fair way of going about it.

Lending criteria here can be a little tougher than in your home country. Because you’re a non-resident, they’ll want to know everything about you…and a little bit more at times too.

I very often get asked “What do I need to provide to get a mortgage in Tenerife?”

Here’s a list…although not definitive because as I said before, lending amounts and criteria change from bank to bank.

You’ll almost certainly need to provide the following if you’re a UK mortgage applicant.

Last P60
Last 6 months payslips
Last 6 months bank statements
Credit report (www.experian.co.uk) for all applicants
Last annual mortgage statement (UK main residence)
Copy of employment contract if P60 is not available or if you’re working in a tax exempt industry
Proof of deposits. The bank requires proof of the difference between the purchase price & amount of mortgage requested from the lender.

For self-employed individuals: (In the UK)

Latest Self-Assessment Tax Return
Profit & Loss accounts for that return
Balance sheet up to date
Last 6 months personal & business bank statements
Credit report (www.experian.co.uk) for all applicants
Last annual mortgage statement (UK main residence)
Proof of deposits. The bank requires proof of the difference between the purchase price & amount of mortgage requested from the lender.

You’ll also need your passport and NIE number and if you haven’t got your NIE number yet, you’ll need to get that before the bank will go much further with a decision.

A mortgage application generally takes between 4 to 6 weeks to obtain, depending upon how quick and organised you are in getting the required paperwork to the lender.

There are a number of different types of mortgages but generally speaking they’re capital and interest repayment type mortgages, rather than interest only and most lenders will only lend up to the oldest borrower being 75 years old.

Rates can be fixed or variable but more often than not, they’re variable following the EURIBOR rate of interest.

As I said earlier, getting a mortgage in Tenerife isn’t the easiest of things to do but it is possible with the right paperwork to present to the lender and make sure you use one of the high street banks and that way, you’ll probably stand a better chance of getting one.

Why do the same properties for sale in Tenerife have different prices or are sold – yet still being advertised?

If ever you’ve been looking for a property for sale in Tenerife on the internet, you’re almost sure to have come across this problem in the past.

There you are searching away…all the websites look the same…most of the properties you’re interested look very similar or even duplicated with different agents but the same photos but, after plenty of searching, you come across the property that you’ve been dreaming of buying for years.

It’s perfect in every way, the amount of bedrooms, the view, the pool and the area…all perfect and then there it is…the price, “wow” you think…”that’s just over our price limit but maybe, just maybe we can afford it”.

You save the page on your internet browser and keep on looking, “There’s bound to be something else out there that will fit my criteria just as well…but hopefully a bit cheaper” you think, so you carry on with your search.

Then you see it, the same property but €10.000 cheaper…”???”, well that’s it then, you can get it for just the amount of money you’ve set aside for it, “Perfect” you think and you can’t wait for the next day to come around so that you can call the agent.

You settle down to read the local property newspaper – Tenerife Property Guide – and surprisingly you see the same dream property for sale, with yet another agency…and…at even less money, another €5.000 saving…you just can’t believe your luck.

The next morning you’re chomping at the bit and can’t wait until 9am…the clock strikes 9 and you’re on the phone to the agency with the least expensive price, they tell you they’ll call the seller and will come back to you with a date and time for your appointment to view it.

Fantastic…you can’t wait…but wait you do…

Finally, they call you back only to tell you that the property has been sold…” What???” …”but you’re advertising it in this month’s paper” you say, hoping that they’re mistaken…“How can it be sold?” you ask.

So, what’s happened? How has this come about?

Very often what happens is that a seller puts their property on the market and often want the agency to price the property at the price the vendor wants and hence, they price the property over the market price.

Here in Tenerife, an agency will often take on a property for sale at any price, just happy in the knowledge to have a property for sale on their books.

After six months of it being for sale with the first lot of agents at the higher price and having had no viewings or interest whatsoever, the seller thinks that the agents aren’t doing their job very well at all, so they search for other agents…

This time the seller decides to reduce the price and send out photos and information via email to several other agents.

Those agents add the property to their websites and wait to see what happens.

After another 3 months of waiting, there’s been nothing but crickets…even though the property has been reduced in price, there’s still very little interest.

The seller has had a couple of viewings but no concrete offers, so the downbeat seller decides to put it with another couple of agencies and one of the more switched on agents tells the seller what the true market price really should be, the seller takes the advice and the property is priced accordingly.

The seller forgets to tell the agencies that have had it for sale for the previous months that the price has been reduced to a more realistic price and to top it all, 4 weeks later the property sells.

During all the excitement, paperwork chain and notary visits the elated seller forgets to let the other agents know that the property has now sold as well.

So, let’s look at how this has played out. Estate agency number 1 has it at the highest price, estate agency 2 has it at a reduced price and then agency 3 has it at the lowest price and sells it.

Now, even if the seller managed to remember all the agencies that had it for sale at the higher price and told them about the price drop…there’s a strong possibility that not all of the agents would have acted on it anyway.

This could be lack of time, lack of staff, just plain forgetting to do it.

The seller could also have forgotten to tell them that the property has been sold…so there’s the other problem.

The same property on the Internet with the same photos and different prices…oh, and it’s sold as well.

Well, if we know the problem, what’s the possible solution?

At Tenerife Property Group, we try hard to keep in contact with our sellers on a regular basis. This way, we do our best at keeping the properties we have for sale up to date regarding availability and price.

Of course, it doesn’t always work. The day after we’ve been in contact with the seller, maybe the property sells, so it could be 3 months before we’re next in contact with them, so we could be in the same boat as agent 1 or 2…

To keep up with the changing prices of property and if they’re still available for sale, is not the easiest of things to do and it must be said that some of the lesser honest agents will almost certainly be keeping some of their better priced properties advertised in the hopes of attracting potential buyers…but hopefully now, if you come across this problem, you’ll understand why there are so many duplications and different prices being advertised for properties for sale in Tenerife.

All I want for Christmas – Mariah Carey

All I want for Christmas…

November 1st 1994 and Mariah Carey released the lead single from her 4th album – “All I want for Christmas is you”.

With sales of over 14 million copies, this song is Mariah Carey’s biggest International hit and is apparently the 11th best-selling single of all time and is reported to have earned over $50 million in royalties.

OK, so what…I hear you ask…does this have to do with real estate in Tenerife?

With her Christmas single being one of the best-selling singles ever and James Corden having just recorded a new Carpool Karaoke with the star herself singing the world-famous tune, I wondered what type of property would Mariah Carey buy in Tenerife?

In December 2013, she was estimated to be worth over $500 million, so to work out what property she might like to buy in Tenerife let’s have a look at the property that she had at the time.

– Polished hard wood floors

– A cinema room with a sofa per person

– Bedroom ceilings with pink and blue clouds painted on them

– An island…but not in the kitchen, in the bathroom…!!!

– A room that’s reminiscent of a winter mountain lodge that can seat 100 with wood beamed ceilings and an open fire

– An inside basketball court and gym

– A Moroccan style Gazebo chill-out area

– 360º panoramic views ranging from the city to the sea & to the mountains

– A swimming pool, with her initials on it tiled in the centre of the floor

OK, well that’s a start about finding out what she likes but in 2014 she sold up and moved into rented accommodation.

Paying between $250.000 and $350.000 per month (I can’t get a confirmed figure) she and her boyfriend at the time, James Packer, moved into a fantastic mansion in California.

The property is situated on over 4.000m2 of land and measures between 1.200 and 1.700 m2 inside (again, it’s hard to get a confirmed figure). Just to put that measurement into proportion, the average large town house here in Tenerife measures 90m2 inside and a large villa that you might see in the hills of Roque del Conde might have inside measurements of between 400 – 500m2. So, this rented property could fit about 3 or 4 good sized villas inside it or nearly 19 town houses…madness…

Mariah Carey’s rented property has a massive modern kitchen with the obligatory island, a cinema room (with luxury chairs as opposed to the sofas), a sauna and a gym and a fabulous natural lagoon type swimming pool, a basketball court (outside this time) plenty of parking inside and out and fabulous views.

Due to the attention to details, the property is reported to have been built over a 5-year period and is apparently on a lease with an option to buy – it’s never been on the market since it was first built.

In fact, I found out where this property was and took this from Google Maps, it’s an overhead shot of the property…

But trying to get a street view of the property from outside the front door was impossible.

Evidently, even the Google car couldn’t get any further than the guard house of the secure gated community…so this is as far as we get.

Hardly surprising because within that community she can count the Kardashian Family and Justin Bieber as neighbours, all of whom I’m sure love their privacy.

So, where does that leave us in Tenerife?

A quick search of properties for sale in the south of Tenerife reveals that there’s isn’t anything for sale of 1.700m2…but hang on, I’m sure we can still satisfy Mariah.

I’ll have to admit that I haven’t seen any properties with a full size basketball court but I have seen plenty of villas with gyms, saunas, swimming pools, massive garages and fabulous views.

We’ve got one for sale ourselves, it’s big at 625m2 but would still fit 2 to 3 times inside her rented place, it’s got great views and an infinity pool which makes the most of the views out to sea and La Gomera but at 5 bedrooms…but with 5 bedrooms and just over 600m2 – is it big enough for Mariah?

This fantastic villa has a gym and a sauna, a garage large enough for 4 or 5 cars and it’s secure with steel shutters and alarms…but as the Google car has been allowed past the house on the road outside…is it secure enough for our Mariah?

The kitchen is fabulous, a chef’s delight…oh and it’s got a great island too, but I must confess, there’s no island in the bathroom like her previous home, so is it luxurious enough for her?

And priced at less than €3 million, that’s pocket change for her, is it expensive enough to meet her tastes?

There’s only one other property that springs to mind, I’ve never been there, I doubt I ever will…if I do, I’ll let you know…but the one I’m thinking about is the Castle in Bahía del Duque.

You know the one, the one that’s on that bit of land that juts out into the sea in Bahía del Duque.

This one…

Owned by Santiago and Noelia Puig both massive land owners here in Tenerife and she a 60’s beauty queen.

It’s not for sale, well, not that I know of and if it was, I don’t know how much it would be up for.

I haven’t got a clue what’s behind the doors regarding the number of bedrooms, if it’s got a gym and sauna…I just don’t know.

it’s definitely got a pool, I can see that from the Google Maps overhead shot and it certainly looks exclusive enough, so maybe it could fit the bill for Ms Carey…

Well, Mariah, if you’re reading this article and you’re thinking about buying a villa in Tenerife and you think you might want to see some property that might suit you…let me know…you know where you can find me…

7 myths debunked about buying property in Tenerife

The government can knock down your home legally whenever they want.

This has come about over the past few years from stories of properties having been built illegally and were therefore knocked down. The thing is that the developers more than likely paid the local town councillors who then paid other relevant people and “building permission” was given.

I’m not saying that those types of envelopes haven’t been passed about here in Tenerife but thankfully the only properties that I know about that have been knocked down by the government here are the ones that have been built dangerously too close to the coast and are affected by the Coastal law.

If you’re buying a property in Tenerife, make sure you use a lawyer and if you’re concerned about the legalities of your intended purchase, get them to look into it for you.

You can declare what you like at the notary and use “Black Money” to buy your property in Tenerife.

Unfortunately, this does still go on but the Notaries and Government are trying to clamp down on it. The thing is, you can’t just declare what you want and pay the rest in Black money…or at least you shouldn’t. You might think that, as a buyer you’re getting away with taxes but there are certain things that maybe you’re not aware of.

If you’re buying a second-hand property here, you’ll need to pay a land transfer tax, today that’s 6.5% of the value of the transaction. So, if you as the buyer paying €150.000 and decide to declare €100.000 and pay €50.000 under the table, you’ll only pay €6.500 as oppose to €9.750 but…your first mistake is if you under-declare the property that you’re buying you could be liable for the complimentary tax.

This tax can be charged if the local town hall think that you’ve paid too little for the property. It may well be that you really did buy the house cheaply, so you’ll have to pay something anyway, but by paying cash and declaring the purchase price lower than what you’re truly paying could end up with you paying more on the complimentary tax than you should have done.

The second mistake is that when you come to sell it for say €200.000 in the future, because you declared €100.000 on the purchase the capital gains is €100.000…that’s when you wish that you’d have declared €150.000 because you’d have had to only pay Capital Gains Tax on €50.000 instead of €100.000…just for your information Capital Gains Tax today is 19%…a bit different to the 6.5% you’ll have to pay when you declare the full price at notary.

You won’t own the property if the UK leaves the EU, Brexit will stop all Brits from buying in Spain.

Not true at all. If the UK leaves the EU (and I’m still saying IF because I’ve still got a niggling feeling that it’s not going to happen), there’s nothing to worry about for any Brits thinking about buying property here in Tenerife or Spain for that matter.

Think about this for a minute, if you’re American or Chinese you can still buy and own a property here, even though you’re not part of the EU.

The same will go for the British property buyer in years to come, if the UK isn’t part of the EU, maybe there’ll be a little more paperwork to cope with, maybe tax laws might change a little but the reality is that non-EU buyers can buy property here today and they have no concerns at all – there’s no need to worry about any major changes like that affecting your right to own a property in Tenerife.

You can buy a holiday home in Tenerife for less than €50.000

Yes there are still bargains to be had here in Tenerife but if you’re thinking that you’ll get your holiday home in Tenerife for €50.000, think again.

As I said, there are still deals to be had and in fact, there are properties for sale for this amount of money but they’re in areas that are very residential.

Areas where the apartment buildings don’t have a swimming pool, there are very few properties with sea views and there’s no “easy stroll to the local beach” and even if you wanted to buy one of these properties so that you could get away from the tourists and “live like a local”, they’re probably not the areas that your friends and family would go on holiday to.

Brits are banned from renting their property out.

Nobody has been banned from renting their property out.

There’s no new law banning anyone from renting their property if that’s what they want to do…what’s happening is that the law that was initially passed in 1995 about short term letting has been enforced over recent years but it’s not stopping anyone from letting their property…you can still rent it out but you should read about the letting laws in the Canary Islands before you decide on what you want to do.

A Spanish Will protects you from Spanish Inheritance Tax.

False, but…a Spanish Will could help you reduce your liability or at least help you sleep at night not worrying about what’s going to happen after you’re gone.

Once you’ve bought a property here in Tenerife, use a good independent Spanish Lawyer to set your will up here and make sure you tell them of any other wills you have in place in other counties.

The taxes for foreigners are prohibitively expensive.

This might have come about due to the Inheritance tax laws that were in place until recently.

The taxes in Spain in general are no worse than your home country and in a lot of cases much less expensive.

You’ll have to pay land transfer tax, notary fees, legal and land registry fees when you buy and while you own a property you’ll have to pay annual property owners tax, probably non-resident taxes and obviously, your running costs and then when you come to sell you’ll have to pay your plusvalía and probably 3% retention to Hacienda.

These are the normal taxes you’ll have to pay but Inheritance Tax was always much higher for foreigners as opposed to Spanish nationals. However, in recent times several autonomous regions have reduced the Inheritance Taxes and the Canary Islands are one of them.

This isn’t supposed to be a full run-down of the taxes you’ll have to pay throughout the purchase, running and subsequent sale of a property here in Tenerife, I’ve got those on my website so if you need more information on this go to tenerifepropertygroup.com, contact me directly or speak with your preferred accountant or lawyer.

How much is my property worth in Tenerife?

How much is my property worth in Tenerife? – A question that arises quite often in my world.

If you’ve sold a property in the UK over recent years, you’ll have heard of Zoopla. On this site and maybe some others do it now as well, there’s data about how much the houses in your particular road sold for over the last few years – I’ve just looked at their website and seen that some records go back even 20 years.

So, the question is, how much is my property worth in Tenerife and how do you work it out?

Where can you get up-to-date pricing for a property that’s for sale in Tenerife?

There’s nothing like Zoopla in Tenerife – if only. You see, the thing is that over the years there’s been too much black money or under the table payments when buyers and sellers have been at the notary it skews the figures they produce.

If you agree to buy a property from the seller for €150.000 but the seller wants to declare that they’re selling it for €125.000 on the title deeds that get signed at the notary, the buyer must stump up the extra in black money – cash.

This leads to notary offices reporting the value of properties to the Land Registry office as they see them…and in the example I made above, the property was sold for €150.000 but reported as €125.000 – you see the problem? Even if we here in Tenerife or Spain had something along the lines of the data that Zoopla provides for the UK market, there would still be a marked difference between the true and reported sales values.

Now, as an estate agent I don’t like the black money thing at all because it leads to a number of potential future problems for the buyers and possibly sellers, here’s not the place to discuss that but the problem of black money still goes on and until we get this out of the way there’s no way to get around it, but even if it was stopped tomorrow, it would still take years to build up a good database of sold property values in Spain.

So, can we actually get a good idea of property prices and if so, from where?

There are a number of ways that you can get an idea of prices but do we look at asking prices or do we look at supposed sales prices?

As you’ve already seen, prices that are recorded at notary offices and Land Registry offices can’t be relied upon 100% but it’s a good place to start.

You could always look at the General Council of Notaries – (http://www.notariado.org/liferay/es/web/notariado/inicio) – to start with. They offer a website in Spanish and English and you can come up with some metre squared figures for municipalities. so maybe a good place to start but of course, taking the figures with a pinch of salt.

There’s always the National Institute of Statistics or in Spanish, Instituto nacional de estadisticas – (http://www.ine.es/en/welcome.shtml) – this website is a government run site giving statistics for all things Spanish, including their take on property prices in Spain and the Canary Islands. I imagine that they get their prices directly form the Land Registry offices, who in turn have been told their values by the notary offices – OK, and we already know what goes on there.

You could try the website for the Bank of Spain (http://www.bde.es) – again, figures from the Land Registry offices I guess, so probably similar to the other two sources above.

Tinsa is an independent property valuation company – (https://www.tinsa.es) – and they get asked to go out and value property by banks for mortgages so surely these guys will have a better idea. Well, the thing with this is, since the credit crunch and the big crash of 2009, banks and valuers have been a little on the careful side in recent years, valuing property at very safe numbers just in case it happens again, so although they’ll provide us with figures, they’ll be a lot less than the actual selling prices of the properties.

One thing we could think about would be asking prices. We all know that you’re unlikely to pay this price but it would give an idea of the prices people are asking for their properties in Tenerife and then we could gauge it by maybe making an assessment that the actual selling price could be the asking price less say 5 or 10%…maybe that’ll work.

The problem with that system is that some people may have a mortgage that needs paying off on their property and their asking price is based on the fact that the mortgage has to be paid off and then on the other hand there may be some people that are really motivated to sell and their price is a lot keener, so there’ll be a bit of a difference.

In fact, based upon asking prices Idealista, (https://www.idealista.com/en) – one of the property portals for Spain including Tenerife have, over recent times has developed a system where their website users can make an offer on a property and they’ve been collating the asking prices and the offer prices. They now have some quite usable data of the properties that have been advertised on their portal, in fact I think that Kyero – (https://www.kyero.com/) – another property portal has been doing the same and they’ve also got some data too.

So, is there an answer to – How much is my Tenerife property worth?

Of course, the easy answer is – “As much as someone is willing to pay for it” but that’s a very short and unhelpful answer.

You need to take a lot of things into account and as I said earlier, it’s not really that easy.

Of course, there are other things that need to be taken into account. It’s all very well for the valuers and the notary offices to tell us the cost per square metre in Tenerife, but that doesn’t narrow it down as much as the data on Zoopla in the UK does. They’ve got some really awesome data, showing the postcode and at times being able to boil it down to road number too.

Here in Tenerife, there are loads of things we still need to think about apart from the obvious number of bedrooms…

What condition is it in?

What complex is it?

Sea or pool view or maybe no view at all?

Town or countryside?

All of those things will have an impact on the value of the property, so how do we go about assessing the value of the property we have to market?

Of course we have the data of the properties that we have sold personally in the area, also we get to know the areas that we sell properties in, so we get an idea from that. We can also use general asking prices for properties in the area that other agents have for sale.

It’s not a certain clear-cut way of doing it for us agents in Tenerife, there’s always room for error, whereas the local estate agent in the UK will be able to use Zoopla and find information on the last 3 properties that sold in that street but if we can get away from the black money thing – all the better and then, maybe in the future, we’ll be able to reliably use the figures that the notary offices register and maybe we’ll be able to have our own Zoopla type figures.

Roll on the day…

Is the non-refundable 10% deposit law in Spain unfair?

Something happened to me this week… something, that during the years that I’ve been providing a service to buyers and sellers of property in Tenerife, I’ve often wondered what would actually happen if it ever came to it.

That “something” was that a buyer didn’t complete on their proposed purchase…madness I know, but totally out of the buyer’s hands unfortunately and a sad occurrence for both buyers and sellers.

This caused me to wonder if the 10% non-refundable deposit is fair or not.

What’s the law about buying property in Tenerife?

For those of you that maybe haven’t bought a property here, perhaps don’t know about the law or haven’t read our Tenerife Buyer’s Guide, I’ll clarify the point. If you intend to buy a property here in Spain, not just Tenerife, you must show your intention is serious by paying a deposit of 10% of the agreed purchase price of that property.

In my opinion this 10% should be held by an independent party, I normally recommend the use of a lawyer or gestor. Now, the law here states that if the property sale doesn’t complete due to the seller pulling out, double the deposit is paid to the back buyer and on the other hand if the buyer doesn’t complete on the purchase, they lose all of their deposit.

In our contract we have one reason and one reason only that the buyer can have their deposit back and that’s if they’re trying to obtain a mortgage. We agree with the vendors that if the buyers can’t get the mortgage agreed within a mutually agreeable time schedule, then they can have their 10% back fair and square.

Last week, it happened…the unfortunate buyers had to pull out of their purchase.

They were nearly there but sadly a few things went against them, the Sterling/Euro exchange rate went down at the wrong time and a very unscrupulous person back in the UK had been stringing them along for some months telling them that he was going to be buying a high value item from them…let’s call it a painting…it’s wasn’t a painting but let’s just say for arguments sake it was.

This back and forth with the painting buyer had been going on for some time and admittedly and rightly so the sellers were a little miffed, especially when the buyers wanted to change their plans and asked for an extension to the contract as they felt that they weren’t going to be able to complete in the agreed time that the signed contract stated.

Good on the sellers, they agreed to an extension – obviously they had serious buyers and they wanted to sell their property, of course they also had proof that the 10% deposit had been paid and was secure with the buyer’s lawyer.

The person supposedly buying the painting had, on a number of occasions, told the property buyers that the funds were on their way and that after a few more checks from the bank and money laundering department and once these checks had been done and further paperwork received, the funds would be on their way.

This went on for a good few weeks…the painting buyer telling the property buyers that the funds were on their way but by now the sellers were getting a bit hot under the collar with the buyers and the buyers were at their wits-end with the painting buyer knowing that if they didn’t complete that they were going to lose their deposit…and this deposit was not an inconsiderable sum…to be honest, just this deposit could buy an apartment in Costa del Silencio…!!!

Out of the blue having waited quite a few weeks, the property buyers had a letter from a lawyer in the UK stating that the painting buyer didn’t have any funds and in fact was considering filing for bankruptcy…this was the camel that broke the poor camel’s back…no property sale for the vendors and no dream home for the buyers.

It’s not easy on buyers or sellers…

Now, please don’t think that the sellers had it easy either, they weren’t just living in their property until completion, oh no, they had to find other accommodation, they moved into the apartment below the property they were selling and took a whole load of furniture and stashed that down there too, lived out of suitcases for a couple of months and in fact arranged to buy another property here on the island which, thanks to them using a lawyer, they didn’t end up buying because that property had an embargo on it – BIG problems.

The property sellers who were buying the new apartment had to buy a kitchen, some light fittings and some new furniture to kit out their brand new abode…OK, having been told that they weren’t able to buy the apartment they were able to cancel some of their new things but they’re possibly having to still pay for the kitchen, which they hope to reclaim from the property developer that offered them the apartment with the embargo on it…but nevertheless, a garage full of light fittings and possibly a kitchen to use or sell…not the end of the world but still…

Contract extension

Having extended the contract by a month or so, the buyers had to concede that this purchase wasn’t going to happen and they had to pull out and having knowingly signed a legal Spanish contract with the vendors, they had to leave their deposit with their lawyer knowing that it was to be forfeited and passed to the sellers.

Obviously as an agent we have individual contracts between buyers and sellers because they’re working towards different end results. In our contract with the sellers there’s a clause that says that if the transaction doesn’t go ahead due to the fault of the buyer, then we as an agency will claim half of the original commission that we would have been paid had the sale gone through. It’s not an unreasonable request, we’ve done everything that was required of us and more due to the back and forth between buyer and seller explaining the reasons for the delays and trying to keep the transaction going through…so in essence, more work and half the commission…and it’s coming out of the 10% deposit that was paid to the lawyer in the first place…so the sellers won’t be paying it from their own funds.

So, the upshot is, the clients that were coming over here to semi-retire have lost the value of a small apartment in Costa del Silencio as they haven’t completed their purchase, they signed a contract in this knowledge and although it was really out of their hands they have let it go.

The sellers had to put up with some stress about moving their furniture, buying and then not buying an apartment (luckily for them), buying and then returning some new furniture, they’ll possibly have to store a kitchen that’s being paid for by the developer of the apartment complex and we? … well, we end up with half the commission that we were initially going to charge for the work that we’d already completed and then some.

Everyone went into this transaction in the knowledge of losing or gaining and all knowing the stresses of buying and selling property but as I said at the outset…I’ve never had this happen. The buyer pulling out…awful for all parties but to lose that money and have had no complaining in the outcome is pretty awful.

The sellers move back into their property, a bit stressed but quite a bit better off financially…I’m not complaining either although it would have been better for all concerned if the sale had completed and although I feel sorry for the buyers…those are the rules and they’ve complied with the law of the country they so much want to live in and the law is there for a reason and I must say, I find this system so much better than the system in the UK

Is the non-refundable 10% deposit law in Spain unfair?

So, the question – is the 10% deposit system unfair? … I don’t think so…it certainly stops a lot of potential buyers saying that they want to buy something knowing that they genuinely can’t afford it and as a sad but exemplary example, it shows it works and that the property sellers in this case, although still in their own home haven’t been left will bills and nothing to show for it as they would have been in the UK.

The only losers in this case are the property buyers but as I explained earlier, it was out of their hands – nobody would have put down the value of an apartment as a deposit if they knew that they were messing about.

Let’s hope that buyers and sellers can find what they’re looking for in the future.

Why I think the real estate industry in the Canary Islands should be regulated

Should the real estate industry in the Canary Islands should be regulated?

I’m concerned about the Real Estate industry here in Tenerife and when I say concerned, I’m really concerned.

I’m not worried about the market itself, that’s doing well at the moment – what worries me are some of the agents and some of the people within the industry.

As the property market eases and the crisis seems to be less of a concern, there are more and more estate agency offices popping up all over the place. I’ve only got to pop into Los Cristianos or some other town that I haven’t been to for a while and see shiny new offices with their white leather chairs and glass topped desks all over the place.

New estate agents popping up every couple of weeks

It really doesn’t cost much to open an office and start selling property, what does take time though, is the trust and reputation that is built around agents and their businesses throughout the years of trading and the experience gained through that process.

The fact that it doesn’t take much to open an estate agency office is the reason that there are so many popping up but with this comes a higher risk to buyers and sellers and also a possible problem of undeclared income and unpaid taxes.

In the UK there is some sort of regulation with the NAEA, it’s a voluntary association that self regulates the industry. In the Spanish mainland there are exams and registrations to go through to join the professional college and then the agents are regulated, in the Canary Islands on the other hand, there is nothing.

I for one, although I’m certain that I’m not the only one, would like to see exams for agents and office owners and from there, regulation with regard to transactions that take place. This exam would be written in Spanish and office and company owners should take an exam to allow them to run an office and there should be a separate exam for agents that want to work in those offices.

It’s a bit like they have in the United States with offices run by Brokers and agents working in those offices.

Exams for agents

The exam doesn’t have to be really hard and doesn’t mean that there has to be months of studying for it either, nor does it have to be expensive but once completed, the relevant agent would receive their registration number for the duration that they wanted to work in the industry and then they’d be able to trade within an office of their choice and if in time they wanted to open their own office, then they’d eventually take the office or company owners exam.

If the exam idea was taken up, then each person that passed the exam would need to declare their number and the office owner’s number at any notary signing and it would be recorded on the deeds for the property transaction that they were dealing with. This would enable anyone that had problems or concerns after that transaction had completed, to be able to trace the paperwork back to the selling agent’s office.

There are just too many new offices opening with inexperienced people running them, hanging on the coattails of those agents that successfully made it through the tough years of the crisis and out through the other side and now those inexperienced agents make mistakes or carry out poor work thus adding more fuel to the fire of untrustworthy estate agents in Tenerife.

The fact is, with so little regulation that anyone can sell property here which means that it’s open to a lot of abuse, at times there are no taxes paid which could also mean that buyers and sellers are put at risk because possibly their property sales or purchase taxes are not being paid.

A few weeks ago I was asked to show one of our properties to another “agent” who showed up still smelling of the previous night’s alcohol. We showed the property to the potential buyers who afterwards told their agent that apart from being on the complex they were actually interested in, the apartment was hardly close to the property they were looking for as it had only 1 bedroom and they were looking for 2.

Estate agent’s professionalism…

When it comes to professionalism here in Tenerife estate agents probably have one of the worst records. By having registration of offices and agents, I feel that the whole industry would be better for it, the buyers and sellers would be protected better and we as an industry would be looked at in an improved light.

This could lead to better things in the future, maybe with sellers then being happy to sign exclusivity agreements and there could then be fairer competition amongst agencies rather than the scrabbling around and underhand ways some agents go through to find properties for sale or buyers to buy them.

If this all did come to pass, I’m sure there will be ways for people to circumvent the rules but it would at least reduce the number of people out there that are putting buyers and sellers at risk.

Just sayin’

What will happen to the Spanish property market and expats after Brexit?

OK, I can be wrong … just ask my wife.

The vote for a Bremain result was fully expected to win the day but after all was said and done “team Brexit” was declared the winner.

If you’ve been watching the British news and are keeping tabs on the Internet, you’ll be well aware of what’s happened and, in many people’s eyes…well 48% of the UK, the massive mistake that has been made.

I for one, and I’m on record as having said it, did not think that the UK would break away from the EU. I was confident that it would be too much of an upheaval for the British public especially when it seems to me that the 2 most important points for those voting in favour of a Brexit were 1, strict rulings against immigration and 2, wanting to have a dig at the current government and their team of “Bremainers” … now we’ll get to see if the voters that have got their way have in fact voted well … my own opinion is that I’m concerned about their reasons for voting for a Brexit and think that they haven’t voted sensibly.

It’s clearly no surprise that the shock result has had the money markets in turmoil and is affecting the Sterling/Euro rate, but lets be honest, currency rates are always up and down, although maybe for the time being there’s going to be a bit more action on that side of things.

This immediate reaction by the money markets will likely have an effect on Brits buying abroad in the shorter term until some sort of order can be achieved, but what about the future for expats living in Spain?

There’s lots of uncertainty as to how it can affect everyone whether in the UK or here in Spain but one thing is for certain we are in for a heck of a roller-coaster ride over the coming weeks and months.

As we already know, David Cameron has said that he’ll be stepping down as Prime Minister and in October a new leader will be chosen – good luck with that then. Also, by the time you read this, we’ll more than likely know how the EU itself has reacted to the UK withdrawal. On the day of the result, members of the EU were arranging a meeting of EU members for the middle of the following week but had decided not to include the UK. The EU have basically said that ‘if you’re leaving, then make it quick so that we can get on with settling things down again’ and they’ve also said that the UK must sign Article 50 of the Lisbon Treaty which will give the UK and the EU two years to discuss and negotiate in an attempt to work things out as best as possible. Once Article 50 has been signed, there is supposedly no turning back.

So it’s during the following two years, after the signing of Article 50, that we are going to find out how Spain will react to UK property owners and how it will differ as to whether they’re resident or not.

Reading some reports, some people say that various member states may have been angered by Britain’s exit and could possibly put pressure on British expats as a revenge.

Click to tweet

Reading some reports, some people say that various member states may have been angered by Britain’s exit and could possibly put pressure on British expats as a revenge. For example, if the Spanish felt like it, the authorities could ask British retirees to pay for their own medical and healthcare or possibly even ask them to move out of Spain, but what you need to remember is that there are over 300.000 British living in Spanish territories and there are 3 million EU nationals, 200.000 of which are Spanish living in the UK, and I can’t believe that there is going to be any tit-for-tat arguments between Spain & Britain. In my opinion, there will almost certainly be some sort of agreement drawn up between the 2 countries, even if it’s nothing to do with the EU directly.

I’ve seen reports saying that lawyers are arguing that British expats living in the EU at the actual time of the Brexit would have individual rights under international law as well, because they chose to live there before the referendum result was passed so, once again, I think that’s a massive positive to consider.

So what is going to happen to the Spanish property market?

I don’t think it’ll be a death knell for the Spanish property market but I’ve been pondering what might happen in the future.

Apart from the obvious movements in Sterling/Euro exchange rate I don’t really think that there’s going to be massive sell-off of Spanish property. I imagine that there are going to be a number of British sellers who are going to take advantage of the weak Sterling. This is going to give them an advantage when they sell and take their money back to the UK. That in turn could make for some good prices here in Spain for the Spanish property buyer, of any nationality, as the British seller will be a little more open to a lower sales price because they’re going to be considering their exchange rate when taking the money back to the UK.

In the future, once all of this initial excitement settles down, and we’re going into the 2 years of discussions and agreements after the Article 50 signing, you might find that there’ll be an adjustment in inheritance laws and taxes for UK owners and maybe Brits will need to fill out some extra paperwork or obtain Visas to come here to buy property or maybe even for a holiday but it’s highly unlikely that the people already living and working here will be sent back to the UK. I’m sure as time goes on it’ll be more difficult for people that want the expat life sometime in the future, especially in comparison with today’s rules and regulations, but never-the-less, I still think that it’ll be achievable.

Pensioners and their pensions.

Of course with a weaker pound, as it is at the time of writing, it makes British pensioner’s pensions worth less and will then make it seem that the cost of living has increased in Spain…but the €1 pint is still €1, OK, it might not work out to be just 79 pence a pint anymore but it’s still going to be less than 1 pound sterling…assuming that Sterling doesn’t spiral out of control.

The €1 pint is still €1, OK, it might not work out to be just 79 pence a pint anymore but it’s still going to be less than 1 pound sterling…assuming that Sterling doesn’t spiral out of control.

Click to tweet

I read on the BBC website that another factor to consider, on the subject of pensions, is that the UK Government may not update pensions annually as they do at the moment for pensioners living in EU countries. At the moment UK citizens who live in the European Economic Area and Switzerland have their state pensions protected and they’re increased by inflation annually but after the vote to leave, the UK Government will have to decide whether they continue to do that. If, at the moment, you’re a pensioner in Canada for example, you’ll still be able to draw on your pension but the fund is frozen and doesn’t increase annually with UK inflation.

What’s the worst case scenario for UK expats living in Spain?

The worst case scenario could be that there would be no agreement between the UK and EU which would probably mean that expats have to apply for visas or maybe even seek asylum in the EU, but as I say that is the worst case scenario and it’s a highly unlikely end result.

A better solution would be that there be an agreement written between the UK and the EU member states to allow the free movement of UK citizens throughout Europe but that would depend on the next two years of negotiations between the UK and the EU states.

The best case scenario would be that UK retained its membership in the European Economic Area, which could mean that most of the existing rules on free movement throughout Europe continue to apply.

As I said earlier and in a previous article about the Brexit, if there is no agreement between the UK and the EU, I really think that Spain will take a tolerant view of British property owners, both residents and non-residents alike, because the British element in Spain is quite large and there’s definitely going to be some economic advantage to keeping the status quo.

Conclusion…

Uncertainty about the Spanish property market is clearly going a make demand for Spanish property from British buyers less for the shorter term which is a shame as demand from British buyers has been growing strongly 2013 but I imagine that the Canaries will fare much better than the peninsular.

Brits who have exercised their right to live in an EU state such as Spain can probably expect to keep that right but as I mentioned earlier, that will probably only apply to people who started to live their life in Spain before the Brexit result but as I was discussing with a client of mine who is a current property owner who is considering moving here permanently, I imagine that it’ll be highly likely that people who were property owners before the Brexit will also be considered part of the fixtures and fittings, especially if you’ve got your own personal income and not going to be living off the state.

It’s not the end of the world. Don’t make any rash decisions about selling up and moving back to the UK, you really need to wait for things to calm down. I’m sure the future will more than likely not be as bad as you’re thinking now.

I’m wondering if those that voted to leave will regret their decision in the long run? It’s a bit like splitting up from a long term boyfriend or girlfriend. As soon as you split you think thank goodness that’s over, but once you’re on your own, you start to realise that in fact they used to do quite a bit around the house, they used to walk the dog or make dinner or do the washing then you realise that maybe it wasn’t such a bad thing to be a part of after all.

So until we know more about how Spanish authorities, the EU or the UK will treat us Brits in Spain, and this could take quite a while, we’ll have to keep on enjoying the sun, sea and sangria.

Tenerife & Spanish Property market – Quarter 1 – 2016 – the results

Summer 2016 is just around the corner, well in fact, by the time you read this it’ll have already started, at least here in Tenerife…if you’re in the UK it will have already been and gone…!!! – Sorry I can never resist a little dig at the UK weather, in fact I know it’s been quite acceptable of late.

It’s time to find out how the property market fared during Q1 of 2016, so let’s have a look at what happened to the Spanish and Tenerife property markets.

As I tend to point out, it’s always difficult to obtain true sales figures because there are still buyers and sellers that are not declaring the full value of the property that’s being sold. This always has an impact on the true results because not all figures are written on the property registration documents and as such, anything declared still has to be taken with a pinch…or a little more, of salt.

The other point that we need to consider is that Spain is a massive country. In fact, Spain is so large that some of the results from the various municipalities throughout the country are so different regarding increases, decreases or amount of properties sold they could almost be from different countries, so we need to consider this when looking at massive drops and increases due to the fact that some areas are not as favourable as others to buy in.

As we now know, the average prices of housing in Spain was at its peak in 2007 and since then, the crisis and lack of money lending have in turn brought down sales and this affected the average property prices throughout Spain by slightly over 45%.

During last year I reported that Tinsa produced an index showing that some of the worst hit areas were La Rioja at -56%, Navarra at -51% and Murcia at -50%. These figures have improved since but they’ve clearly got a long way to go to get back to anything like the figures from 2007 and before. A recent Tinsa index report indicated that from the peak, average house prices in Spain are still down at 41%, so although this represents a massive cut in average property prices from the good old days, it’s actually a small increase from the previously quoted 45% from last year.

Property market results for the first quarter of 2016 in comparison to the last quarter of 2015 have proved to be good for 6 of the regions of Spain. The top 3 results being Madrid, in first place once again, with an increase of 1.2% and then the Balearic Islands coming in second place with an increase of 0.7% and the Canary Islands with an increase of 0.6% for the quarter, in comparison to the same quarter in the previous year.

As always, where there are winners there have to be losers and 10 regions registered quarter on quarter losses and the 3 worst hit were Extremadura -4.4%, Cantabria -1.7% and Valencia at -1.3%. Overall, prices rose nationally for Quarter 1 2016 by 3.1%.

Looking at the figures as a whole, the Spanish property market has been hit for six thanks to the massive over-building during the peak years and although there are still no massive green shoots of recovery for the country, also not being helped by the lack of a government being in power since Christmas 2015, any increase, no matter how small should be viewed as a positive note.

A recent report showed that in 2015 British buyers still topped the table of foreign buyers, where clearly the fantastic Sterling-Euro rate helped the property market. This year so far there have been some great highs and some lows too regarding currency fluctuations but as I speak, it seems to be back on the up…but we’re still awaiting the EU referendum from the UK, so we’ll have to see how that pans out.

It does seem that after a few years of doom and gloom there are a few glimmers of hope that the crisis and poor lending are close to being over, this still seems a great time to buy as prices look good value and we’re certainly noticing that they’re on the increase in certain complexes and areas of Tenerife.

Let’s see how the next quarter pans out and on through the rest of the year. I’ll continue to report it here and you’ll be able to read it in the Tenerife Property Guide, that’s assuming that if you’re a Brit and the UK hasn’t pulled out of the EU and if they have that you managed to obtain the required visa to gain access to Tenerife and come on holiday again…only joking, as I mentioned last month, I don’t think that the UK will pull out, let’s see what happens later in the month, I may be proved wrong.

5 mistakes buyers make and tips to avoid them

If you’re buying a property in Tenerife it’s both an exciting and frightening experience and for most of you that do it, it’ll be the first time you’ll have bought a property abroad.

Don’t let the excitement or the fear trip you up into making mistakes. In this article I explain 5 mistakes that buyers make and tips to avoid them.

1. Indecision

At the end of last year we had a client that was very keen to buy a property from us, it was ideal for him in every way … but he was very indecisive.

He was particularly indecisive about how he was going to work out whether or not the property was good value for money for him. Up to this point he had made offers on 4 different properties with other agents over a 10 month period and he’d missed out on buying all of them.

I’m not sure what held him back on the last 4 properties but in this case it turned out to be his Euro cost per square meter ratio and this didn’t match his own perceived value of the property he was interested in. Not only this but he continued to change the parameters, so he missed out on any good deals and the one in particular, which we had for him, he now regrets immensely.

This story certainly doesn’t mean that you should just jump at the next property that presents itself just because the agent says it’s a good deal or that there are other people interested. You obviously need to look at the facts but all I’m saying is, don’t just rely on the facts, make an informed decision but also use your own gut reaction as well.

At the last contact with this guy, he was still looking.

2. Poor advice

Asking for advice is clearly something that makes sense but try not to take advice from one source only unless you’re happy that the advice that you’re being given is independent or at least, as independent as can be and hopefully from a knowledgeable person.

It’s better if you can try to make your own decisions about what and where to buy your property but getting information and advice from a multitude of sources to help you on your way.

Listening to people in the local bar is one of the biggest mistakes that buyers can make. OK, ask for opinions and recommendations but certainly don’t take the words of the local know-it-alls for granted, find other, more reliable avenues for obtaining your information as well.

Look on the Internet, ask other estate agents…any agent worth dealing with will give you 5 minutes of their time to let you know what they think.

3. Not using a lawyer

Some people must leave their brains at the airport when they fly over to buy a property. Who in their right mind would buy a property without having it checked out by an independent party?

In my opinion it’s madness.

OK, so you’re buying a property in a foreign country, everything is written in a foreign language and the method of buying a property is totally different to your own country and you choose not to use registered, legal representation… as I say, sheer madness.

Use a lawyer, preferably a Spanish lawyer that speaks your language rather than using the estate agent that you’re buying the property through or worse still the vendors themselves – yes I’ve heard of that too.

The vendor and estate agents have a vested interest in making sure that the property transaction goes through to completion. The vendor is making sure that they sell their property and the estate agent is earning a commission – I’ll say it again – use a lawyer.

4. Not acting fast enough

Again, this doesn’t mean that you need to just jump into buying the first property that you see – unless of course it’s exactly what you want – but once you’re pretty much decided on what you’re going to buy and you’ve done your research on the area, complex and property as best as you can, then actually make a move on the property.

Make an offer.

You might get rejected.

But make a move.

As I said in tip number 1, don’t hang about thinking up different reasons as to whether you can justify buying it. Go ahead and make a reasonable offer for the property and see where it leads you.

Don’t miss out on buying a property by not acting fast enough, use your agent to help you to find some middle ground between you and the vendor … and in a market that is warming up as I write this article, you may need to be quicker than you think.

5. Thinking that getting a mortgage is as easy as in your home country

OK, things have got easier with banks’ lending mortgages on property, that’s true, but that still doesn’t mean that it’s easy.

Here in Spain the mortgage application system could be very different to your home country, it’s certainly very different to the way it’s done in the UK.

Think things through, maybe speak with a couple of different banks to see if their offers are better than any others and try not to be rushed.

Maybe speak with your Tenerife estate agent or lawyer to seek advice as to which bank might be favourable to your circumstances.