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Before
you start to view any properties, it is worth considering
what you are going to use it for. There are several options
available:
Residential
Congratulations! You have decided to take the plunge and move
abroad and are looking for a comfortable family home where
you can best enjoy your new Spanish lifestyle. Obviously,
primary considerations will be similar to those in the UK,
including size and layout of living space, how many bedrooms/bathrooms,
parking availability and proximity to amenities, schools,
etc.
Investment
Are you are looking to get a good return on your investment
with a minimum capital outlay? The best option would be to
buy at the `new launch´stage of an off-plan development
release. An average capital outlay would be in the region
of 30%, to be paid (often in stage payments) during the construction
process (generally 18 - 24 months). Upon completion, you will
then have the option of selling the property prior to taking
title or taking title and renting the property.
Holiday
Home
Many people would be horrified at how much they spend per
year on package deals abroad. Consequently, it makes a lot
of sense to buy your own home abroad, especially if you are
fortunate enough to take holidays several times a year. Depending
on your level of usage, you also have the option to gain income
through rentals, whether this is to family and friends or
through a managed rental scheme on the island.
Buy-to-Let
Traditionally a popular reason for purchasing a property in
the UK, this method also makes a lot of sense in Fuerteventura,
particularly when you take into consideration the number of
residents there. There is currently a huge demand for long
term rental properties on the Island. As with the Residential´
option, you need to take the same considerations on board
as this is going to be home to someone for an agreed amount
of time. The advantage to the purchaser is that you will have
a regular monthly income from the property - useful if you
have taken a mortgage on the property and need help to finance
the repayments. The disadvantage, of course, is that your
personal use will be restricted by occupation of the property.
Standard long term rental contracts can be for 3, 6, 9 or
12 month durations and rental management fees are in the region
of 10%.
Short-term
Rentals
If you are going to rent a property to tourists then important
criteria to consider is accessibility of amenities e.g. supermarkets,
bars, restaurants, availability of a swimming pool and proximity
to the beach. One of the main advantages of renting to tourists
is the higher income you will receive per week compared to
renting to residents/long term tenants - a guideline is that
one week of tourist rates is the equivalent to one month of
long-term rates. Another is that you can choose the weeks
you would like to keep the property free for your own use.
Obviously, the disadvantage is that you are not guaranteed
occupation all year round so will need to be flexible regarding
the income you will receive from the property.
Guaranteed
Rentals
Alternatively you can opt for a guaranteed rental option.
These are generally for a set period of time (usually one
or three years) and you will receive a pre-determined amount
per month or quarter, regardless of occupation. This can be
an excellent option for first-time buyers, however remember
to check what availability you, the owner, will have as this
will generally be restricted.
FINANCES
Fees & Taxes
Anyone who would like to open a Spanish bank account or purchase
a property in Spain needs to have a foreigners identification
number (N.I.E. - Numero de Identifi cación de Extranjero)
and a qualified local representative who will deal with tax
affairs. Throughout the purchase process, there are several
fees and taxes to be paid. As a general rule, remember to
add around 10% onto the purchase price and this should cover
all your fees and taxes. A breakdown of where the fees go
is as follows: Document tax of 0.75%; Local tax (I.G.I.C.)
which is currently 5% of the official value of a new property
(off-plan) or 6.5% transfer tax of the value of a resale property
from a private owner; Notary fee for the preparation of the
Title Deeds (Escritura); Notary fee for registering the property
in the new owners name; Plus Valia, a tax on the increased
value of the land; Solicitor or lawyers fees (dependant on
how much time and work is involved). Always use a bonded lawyer
to ensure the final bill matches your quoted fee, your Estate
Agent should be able to recommend one for you. Under Spanish
law, the vendor should pay the Plus Valia tax but in practice
the purchaser is asked to pay all fees and taxes on the transfer
of a property (resale). The fees and transfer tax need to
be paid soon after the Escritura is signed, the Plus Valia
will be asked for later on.
Reservation Fees
Once you have chosen your perfect home in the sun, you will
be required to make a reservation deposit. Depending on the
purchase price of the property, this will be between €3,000.00
and €6,000.00. Payment of this ensures that your property
is taken off the market and reserved in your name and following
this, contracts will be drawn up. This reservation fee forms
part of the 30% deposit you will generally need to make.
Mortgages
As the capital investment you make will invariably increase
at a higher rate than inflation, buying a property is one
of the safest forms of investment you can make and your home
in the UK can be used to release equity to enable you to purchase
your second home abroad. As a non-resident, you are generally
eligible for a Spanish mortgage of up to 70% of the value
of the property at completion (off-plan) or of the official
value of the property (resale). Residents can generally get
mortgages of 80% and upwards. It is relatively easy to arrange
a mortgage in Fuerteventura, with all banks providing this
facility for overseas purchasers. An added benefit of arranging
your mortgage there is to take advantage of the lower interest
rates enjoyed in the Canary Islands, between 3 - 4%. As in
the UK, various types of mortgages are available, according
to your requirements.
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