Buying Property in Lanzarote
How do you go about buying property in Lanzarote? The purchase process is simple and straightforward and is open to all – you don’t need to be a resident of Lanzarote.
ESTABLISH YOUR BUDGET
Allow 10% on top of the purchase price to cover the following items:
- Stamp Duty – 6% (5.5% on new builds)
- Registry Fee
- Notary Fee
- Mortgage Arrangement Fees
- Lawyers Fee
The standard Estate Agents fee is 5%. This is included in the purchase price and is paid by the vendor.
APPLY FOR A NIE NUMBER
Non-residents require a NIE (non-residents identification) number in order to open a bank account and complete the property purchase. This is a simple administrative process which we handle on your behalf and which costs €50.
OPEN A BANK ACCOUNT
The simple, standard way of completing your purchase is to transfer your funds into a locally based bank account.
It is easy to open a non-resident account here and your chosen estate agent in Lanzarote will be happy to assist you in opening such an account at the local bank of your choice.
SECURE A MORTGAGE
Interest rates in Lanzarote (and the Eurozone) are currently lower than in the UK. So it makes good financial sense – and is standard practice – to apply for a mortgage with the local bank of your choice.
Non-residents can apply for mortgages of up to 70% of the value of the property they wish to purchase.
Local banks will require the following paperwork:
- Payslips/payroll (3 previous months)
- P60
- Passport photocopy (for all named applicants)
- Proof of other income/assets
The self-employed will need to provide the following additional paperwork:
- Statement of accounts (last two years)
- Proof of tax payments (last two years)
Some local banks may ask to carry out a credit check on applicants in their country of residence.
PROPERTY SEARCH
Your estate agent will carry out a basic property search on your behalf to verify that the property is free of debt, including rates and community fees, where applicable.
PURCHASE OPTION CONTRACT
Once you have selected a property and decided to make a purchase your estate agent prepares a Purchase Option Contract.
This Contract outlines and codifies all of the information relevant to your purchase, such as the timescale for completion (usually 3-6 months but mutually agreeable between buyer and vendor) and the agreed price.
The Contract becomes effective upon payment by the buyer of a deposit equivalent to 10% of the purchase price.
This deposit payment is non-refundable. Should the buyer withdraw after this Contract has been signed they then forfeit this 10% deposit. If the vendor withdraws they must refund the 10% deposit plus payment of a further 10%.
COMPLETION
Prior to the agreed completion date the buyer must ensure that the necessary funds (i.e. the purchase price plus the additional 10% to cover the costs such as stamp duty and fees outlined above) are readily available for withdrawal from their non-resident bank account.
Before the Purchase Option Contract expires your estate agent then arranges for both parties and/or their legal representatives to attend before the Notary for the signing of final legal documents and title deeds.
As the title deeds and legal documents are drawn up in Spanish only it is a legal and obligatory requirement that all non-Spanish speakers are accompanied by a sworn translator.
A sworn translator will need to attend and the cost of their service ranges from €60 to €120 (depending upon the quantity of documentation requiring translation) The buyer must pay for this service on the day.
INDEPENDENT SOLICITORS
Whilst local estate agents provide a complete and impartial service for buyers it is important to note that our fee is paid by the vendor. As such we recommend that all buyers employ the services of an independent solicitor.
REGISTERING THE PURCHASE
The buyers property purchase must be officially registered with the local Land Registry Office. This is carried out by the independent solicitor – or if the buyer has not employed a solicitor – by their local bank.
TECHINCAL SURVEYS
Please note that it is standard practice in Lanzarote to purchase property without carrying out a full technical survey. Further the valuation carried out by the local bank is solely for the purposes of mortgage valuation and is not a surveyors or engineers report.
If desired, your estate agent can arrange for a full, certified survey to be undertaken on the buyers behalf by a locally registered quantity surveyor.
