Information on buying a property in Gran Canaria

Every year, around 17 million tourists visit the Canary Islands, of which more than 4.2 million choose Gran Canaria as their holiday destination, to be enchanted by the beautiful and varied natural surroundings, the pleasant year-round temperatures, the Atlantic Ocean with its beautiful, endless sandy beaches and the Canarios' hospitality.

It is not unusual for an initial holiday mood to lead to the desire to spend more time on the island of eternal spring. This is how prospective buyers from the most diverse European countries come to us for advice on the subject of buying property.

For many people it is also a promising investment to invest money in private residential property, in a place of interest. Real estate prices have risen steadily and significantly in recent years, or rather decades, and this increase in value will continue in 2020. Certainly the real estate market is also subject to certain fluctuations, this situation is normal and by no means unusual. The purchase of property should therefore generally be considered as a long-term investment. Such an investment should also be on a secure footing, so I advise every client not to get excessively indebted for a holiday property. In this context I would like to say a few words about financing foreign property.

Can I finance a property in Gran Canaria?

The answer is yes, you can finance a house, bungalow or a flat.
Some of our clients like to take advantage of this possibility when buying. The low interest rates, which have been low for a long time, are of course a further incentive on the way to your dream property. At this point we would like to thank the interest policy of the European Central Bank ;-)

If you do not have your main residence for tax purposes in Spain or Gran Canaria, the banks will give you about 60 % of the estimated value of the property. This means that the bank to be financed will commission a valuation office (e.g. Tinsa), which will valuate the corresponding flat, house or land. As a rule, the valuation is quite significantly below the selling prices traded on the market. The banks simply want to provide themselves with a safety cushion in order to be able to sell quickly and lucratively in a possible auction.

For example, you would like to buy a bungalow in Playa del Inglés for €200,000, the bank comes to a valuation of €150,000 by means of an appraiser, of which you would receive 60 %, i.e. €90,000. However, since the seller wants €200,000 for his property, you would have to bring in €110,000 of equity in this example.

On top of this, there are the ancillary purchase costs, which I will discuss in a moment. If you live in Gran Canaria and have your main residence (Residencia) here, the local banks usually give up to 80% of the estimated value. As a result, your equity share would fall to around €80,000. International banks rarely finance abroad unless they have equivalent securities, such as debt-free property, a guarantor or similar.

Please feel free to talk to your local bank before you arrive. Here in Gran Canaria I have had good experience with Banco Santander, BBVA or La Caixa. A comparison of the interest rates and credit conditions of the individual banks may well be worthwhile.

Let us now assume that the financing is secured or that you do not need any and have found the right property.

What documents are required for a property purchase in Gran Canaria and which notary's office is responsible, must be signed in a notary's office?

A very important piece of advice at this point: never buy without a notarial deed of sale. Private purchase contracts may be legally valid, but can cause a variety of problems. If Sun World Immobilien accompanies you to the notary's office, we have gathered all documents in advance to ensure a safe purchase transaction. After all, you want to purchase the property in question free of debts and other encumbrances. For this you need a current land register extract, a certificate from the municipality and if the flat is in a community of owners, a certificate from the community of owners (span. comunidad) is also required.

As buyer or seller you must present a valid identity card or passport to the notary. The N.I.E. number is obligatory and could be handed in at the notary's office a few days after purchase. This N.I.E. number (Foreigner Identification Number/Tax Number) can be obtained from the police or the Spanish Consulate in your country.

In order to bridge a certain period of time between a purchase commitment and the actual notary appointment, purchase option contracts/reservation contracts are very often used. The amount of the deposit is usually 10 % of the purchase price. This money is either transferred to the account of the seller, to an account of the notary's office, a law firm, a tax office or also to an account of the real estate agency for fiduciary safekeeping.

You as the buyer have the right to choose the notary's office freely. In Playa del Inglés, for example, there are three notary's offices: Mr. Valentín Consejo Arranz, Mr. Jose Cháfer Rudilla and Mrs. Blanca Fátima Varela Barja. We have worked with all of them for years and can recommend them without reservation.

What are the additional costs of buying a property in Gran Canaria?

The one-off additional purchase costs are approximately 8.5 % of the purchase price. The largest part of it goes to the Spanish tax office with 6.5 % land transfer tax. The costs for the notary's office and land registry together amount to approximately €1,500, the fees for a tax office are approximately €1,000.

If you do not have Spanish nationality and cannot prove that you have your main residence in Spain for tax purposes, you must appoint a tax representative at the notary's office. If you would like to rent out the property after the purchase is completed, the subject of tax returns will be somewhat more extensive and is a separate issue.

What should you pay particular attention to when buying a property in Spain?

Gran Canaria is a continent in miniature format with 14 mini-climate zones, the island has a diameter of approx. 50 km and an area of approx. 1,560 km².
Therefore, my tip at this point is to inform yourself well about the different locations and regions of the island before buying.

The north around Las Palmas, Galdár, Agaete, Santa Brigida, Tafira or Telde is in the winter months clearly cooler and more humid than the south of the island with Maspalomas, Playa del Inglés, San Agustín, Meloneras etc.

Many of our clients come to the island because of the sun and the pleasant year-round temperatures, so pay close attention to the location of the property. Have a close look at the property you are buying, preferably with a craftsman or expert. Make sure that it is not an illegal "black construction" (especially for fincas in the mountains) and that the documents are in order.

Do not buy without a notary, calculate the additional costs of the purchase, visit the house or flat at different times of day, ask the respective estate agent any questions you may have. The purchase of a property should be a pleasure and for this you need a good feeling as a buyer.

Now I could certainly list many more points and go into individual topics in greater depth. However, according to my experience, internet sites do not replace personal and individual advice, but they do give a good first impression. If you are interested in buying or selling your property on Gran Canaria, you are welcome to use our various contact possibilities. Thanks in advance.