Fuerteventura Property Buyers Guide

Fuerteventura Property Buyers Guide

At a Glance all you need to know about buying properties in Fuerteventura

Research has shown that buying a property is one of the single most stressful situations we put ourselves through, but it needn't be. Ok yes, the amount of money involved is not loose change - but instead of concentrating on perhaps the negative aspects of buying a property (parting with the money!) - concentrate on the positive!

Whether it is in Fuerteventura or in the UK, even in adverse market conditions, buying a property is usually a sound investment providing you have a good Estate Agent to guide you through the process

At Trade Wind Properties we will be able take you easily through all the procedures, allowing you to sit back and enjoy the fruits of your labour.

We have listed below a number of points that most people query along the way. If there is anything else you need to know then just ask one of our dedicated sales team who will be happy to assist you.

How much should I budget for on top of the basic price of a property, i.e. for legal fees and the like?

We suggest that you allow 10% of the property price this will sufficiently cover the following taxes and fee incurred such as: -

  • IGIC, the Canary Islands equivalent of VAT. This is set at 5% for new properties (e.g. Off plan) and 6% ITP tax (Impuesto Sobre Transmisones Patrimoniales) for a resale property from a private owner.
  • Plus Valia, this is a tax based on the increased wealth of the land the property is built upon.
  • Notary Fees involving the preparation and signing of the Title Deeds (Escritura) and for registering the property with the new owners details.
  • Document Tax of 0.75%.
  • Solicitor or Lawyers fees. See below.

You may find that 10% is more than sufficient to cover these charges and you will be likely to come away with some change if you budget on this figure.

Do I need a lawyer? What services can they offer?

As in the UK, a lawyer is always recommended and perhaps buying abroad, even more so. Not all contracts are translated into English. The lawyers can act on your behalf if you are not present, whereby you will need to give them Power of Attorney, they can then attend the Notary on your behalf and sign over the title deeds for you and even open a bank account in your name.

They will also arrange payment of all the purchase taxes and fees, liase with the developers and agents and arrange for the connection of Water & Electricity.

We recommend that you use a local lawyer on the island as they are in constant contact with the local town halls, know the developers and have probably come across the purchase contracts from developers on new build properties already. Instructing a lawyer from the UK or even from mainland Spain is generally more expensive as they are dealing in unfamiliar territory and more often than not, will only outsource the purchase to a lawyer here in any event. The choice of lawyer is up to you and we can provide you with a list of independent lawyers for your perusal.

Taxes

Background

Both residents and non-residents owning property or investments in Spain are under an obligation to file tax returns there. This is done yearly and on a self-assessment basis.

An individual is considered to be non-resident if he or she does not remain in Spain for more than 183 days in the calendar year and if the main base for his or her economic interests lies outside Spain.

The following taxes are payable by non-resident property owners.

Wealth Tax

This tax return shows the value of the non-resident’s assets located in Spain. This will usually consist of the house, car (if any) and balance in his or her Spanish bank account. The value placed on the house is either the official valuation given by the rating authorities at the town hall known as “valor catastral” or the purchase value as shown on the Escritura (title deeds) whichever the greater. As regards the bank balance, this is calculated as the average cleared balance over the previous tax year.

The tax payable depends on the total value of the individuals “wealth” in Spain. Typically, the tax applied is 0.2%. However this increases on a sliding scale to a maximum of 2.5% for people holding assets in Spain of 10.5 million Euros or more.

Rates and Rubbish Collection

When owning a property in Spain you will have to pay IBI (local rates) and rubbish collection.

Your annual local real estate tax is charged by the municipality. We recommend that you arrange to have this bill paid directly through your bank, in order to avoid forgetting it.
Your lawyer will send all documents (copia simple and NIE numbers) to the Town hall for you. To register your property in your name with the town hall can be time consuming as the documents are required to be sent to a central office in Las Palmas, Gran Canaria, processed there and then sent back to Fuerteventura whereby your details will then be entered on the databases here.
The bills for Rubbish Tax/IBI are usually produced in October. It is your own responsibility to check with the Town hall that the property has been registered in your name. Once they have you registered they then require your bank account details so that they can direct debit yearly these payments. Alternatively you can pay the bill in person. Don’t be worried taxes here on the island are minimal compared to what you will be used to paying in the UK or Ireland!

Water and Electricity

It is advisable to instruct a lawyer following completion of a property to arrange the above for you.

Water and electricity connections can only be applied for once the Deeds of your property have been signed. Your lawyer will then contact the utility companies and arrange the standing orders. Nevertheless the utility companies in Fuerteventura take up to 2 to 3 weeks to arrange the connections to you directly.

It is usual that the developers of new properties will supply water and electricity until such time as your own connections are made.

Community of Owners

If your property is part of urbanization you automatically become a member of the community of property owners. It is probably alien to most people from the UK but here in the Canary Islands and throughout Spain when you buy a property in an urbanization, the Community as a whole jointly owns the roads, gardens, pool, lighting system and other elements as well. Community fees are payable by law and are usually payable monthly it is necessary to ensure you have funds in your bank account to cover these fees.

The fees vary between community’s dependant on the type of development, facilities it has and the level of maintenance required. Meetings will be held with your neighbours to discuss issues regarding the urbanization.

We strongly recommend that you contact the President or Administrator of the Community of owners and you arrange a standing order for the fees. In any case you need to contact them so they register you at Community of owner’s level as new owners of the property and therefore member of the community. If we or your lawyer have all the information about the community of owners at the time of going to Notary then we will assist you in this.

I’m coming over with a view to buy, is there anything I should do beforehand to make life easier?

  • It is always advisable to make an appointment with a property consultant beforehand as often or not the keys are not always readily available and the vendors/key holders need to be given advance notice. Sometimes in new or off plan developments a site visit will need to be arranged.
  • Passports, you will of course have these with you but if you are co-investing with someone who is not on the trip then it is advisable to bring their passport too, or at least a readable copy.
  • Authority with your UK bank is also recommended as you may need to call on them to transfer a reservation deposit to secure the property of your choice if you do not have the available funds with you.
  • If your purchase involves obtaining a mortgage then it is advisable to bring the following documentation with you :
Employed Applicants Self Employed Applicants
P-60 (all applicants) 2 Years accounts
Last 3 wage slips 2 Years bank statements
Contract of purchase
(if already proceeded)		 Copies of passports
(all applicants)

 

Some banks may require additional documents than the above, though these will often assist in ensuring that the mortgage offer can be agreed in principle whilst you are in Fuerteventura. If not, you will need to supply this and any other information when you return the UK.

If I proceed with a purchase is there anything I should do whilst I am here?

It is advisable to open a bank account on the island as all your bills and taxes will be required to be paid from here, we can introduce you to a number of leading banks on the island many of which now employ English speaking staff to deal with the influx of UK and Irish property buyers on the island.

NIE - The NIE or Número de Identificación de Extranjeros identifies you to the Spanish taxman and is required when you pay your taxes or have any dealings with the Spanish Tax Authorities. To obtain this you will need to be present in the Police Station in Puerto Del Rosario with your passport and a completed application form. A form is stamped as proof of your application and the certificate with the number is collectable around 8 – 10 days later. (you do not need to be present to collect this but will need to leave your copy of the application with us or your lawyer for collection).

Miscellaneous / After Sales

As your agent we are here every step of the way for you not just at the beginning in providing informative information on the properties you are interested in and then subsequent accompanied viewing's and then so forth with the recommendations of lawyers, banks etc but also after the sale and just as important we pride ourselves in assisting with the aspects such as recommending or finding furnishing companies, kitchens, pools and the like.

Please note Trade Wind Properties take no responsibility for any changes in Taxes / fiscal arrangements we recommend at all times that advice is taken from your lawyer/gestoria.