Buying a property in Gran Canaria is much easier than you might think. Follow the steps below to make your purchase the perfect “Home Sweet Home”.
Obviously you know Gran Canaria already from your vacation and fell in love with this wonderful island like millions of others before.
And you´re dreaming about being an owner of a nice domicile in the world´s best climate to start your next (or even your first) adventure in life.
But while you have experience in buying a property in your home country, take into account that Spain is different.
No matter if you want to rent it out for investment or relocate yourself to Gran Canaria: There are some steps to do until you can open the door the first time with your own keys.
And there are things to be aware of. Be prepared.
Buying a property in Gran Canaria – Step by step.
1. Be very clear about the best location to live
Gran Canaria is not that big. But even though it´s one of the best places to live in the world, you can make a huge mistake by choosing the wrong location for your property.
And it´s not only about the climate or geographical location.
From the south to the north of the island, you only have to drive 80km.
While you start in the sun in Maspalomas or Mogan, you can end up with dark clouds and even rain in the north, in Las Palmas de Gran Canaria.
You can go from summer to autumn in just 40 minutes.
(Or 45, if you don´t want to risk a traffic fine)
Gran Canaria is a miniature continent with different climate zones.
The more you search your property in the north or up to the mountains, the “colder” it gets.
Well, it´s not colder there than maybe in your home town. Instead, the first six month feels very hot everywhere.
But your body gets used to the Canarian climate in more or less six month. You will regret that you left your winter clothing at home.
And trust me, if you live in the capital in the north, you will need the thickest socks you can get.
Those are the type of socks Reinhold Messner is using for climbing Mount Everest.
That sounds funny, I know.
But it´s reality. You will feel cold by 20 degrees.
And your family far away in your country will laugh about you because they won´t understand that you´re suffering….
What they obviously don´t know is, that we do not have radiators in the Canary Islands. Plus, the walls don´t have any insulation (More about that in Step 2).
That´s why you should be very clear about where you want to buy your property.
If you go for 365 days of sun and beach, than you might get lucky in the south of Gran Canaria.
If you love the weather variety, a mixture from sun, rain, wind, clouds, sun again, than you will get lucky in the north.
When you have that point clear and find an area for living in Gran Canaria, you have to think about living near supermarkets and public transfers.
You´re still young. You feel fit and healthy, and you´re in your best age.
But as we are humans, we have one unavoidable handicap.
We are getting older every day.
And until a clever scientist discovers a way to stop that silly idea from Mother Nature, you have to think about getting older.
You want to get a convenient home – maybe barrier-free – , where everything is easy and fast reachable. Doctors, supermarkets, and even the beaches.
2. The property’s physical features
If you want to buy an old Canarian house in the “Campo”, which is called “Finca” you´re luckier than people who buy a newly build house or apartment.
The 150y old Finca has 50cm walls out of heavy stones.
A new build house or apartment is a cardboard box.
In the past 20 years, they´ve built like crazy in Spain. The construction companies built the cheapest way they could to make the most profit possible.
That´s why the word “walls” has to be inbetween quotation marks.
Because those are not “walls” like you might be accustomed from your home country.
So…If you´re not a millionaire who´s able to buy a separate house with garden with a large distance from the next neighbour, you should bear in mind that you will live together with your neighbours.
You hear them talking, watching the TV, you hear them cooking, discussing or speaking on the phone.
You can even hear the exact reason they went to the bathroom.
Or what the couple nextdoor is doing at night.
(Of course, for some people that could be a pleasant experience.)
It´s no solution to think that an apartment on the top floor will rescue you. You will always listen to the people below.
Keep these things in mind before you buy a property in Gran Canaria to avoid later complaints.
Personally, I would always ask for a month or two living in my favourite property before making a final decision. That´s the only way you can “feel” the atmosphere.
3. Find a trustful Estate Agent in Gran Canaria
One of the most important steps.
Buying a property in Gran Canaria may cost some money.
Your hard earned money. Maybe all your savings.
That´s why you have to find an Estate Agent, who not only knows his or her job. It has to be an accredited Real Estate Agent in Gran Canaria!
The world is full of shady fortune hunters. It´s very easy to build a website for catching foreigners and lot´s of people fall into the trap, which costs them more money than they wanted to invest.
How can you find a professional Estate Agent in Gran Canaria:
3.1. Wherever you find a property of interest, search for the Name of the Company or Agent, who published the property.
Search for the Name in Google (or any other Search Engine) and type in:
“[Agent Name] experiences” or “[Agent Name] fraud“
3.2. If the specific Estate Agent has a website, search for the imprint. Look for the complete name, business address, phone number and tax number (“CIF” – Registro Mercantil de Las Palmas).
Also, search for badges like from Awards or Organization Memberships.
3.3. When you are in Gran Canaria to find properties and you are in a hotel, ask the staff – the receptionists for example – if they can recommend you a Real Estate Company.
4. Check the property´s legal documents (Nota Simple)
Never sign anything or pay money in advance before you or your Estate Agent checked the registry of the property.
You need to know
- who the owner is
- are any mortgages or injunctions affecting the property
- if all association dues have been paid
- if the public administration holds the right to buy the property
- much more things…
To find out all the important and necessary information about a property, you just need to go to the property registry (Registro de la Propiedad)
It´s also possible to get this information by Fax, E-Mail or Post and of course, usually your Estate Agent will do this job.
For Gran Canaria, search the appropriate office for the property location here.
In this case, only 9€ will prevent you from sleepless nights.
5. Get your N.I.E.
Without a N.I.E., you won’t get anything.
Without speaking Spanish in a local authority office even less.
This Number is the “Número de Identidad de Extranjero”. That number you need for ordering a phoneline, to open a bank account, for buying a car, for everything official.
Buying a property in Gran Canaria is included in this list.
It´s the tax identification number for foreign citizens in Spain.
How to apply for your N.I.E?
First at all: You need time.
The Spanish bureaucracy can make your hair gray faster then you´d like. How long you have to wait in a queue before getting attended It depends on the time and day.
If you´re a lucky person, the main part is done in 30 minutes or less.
Get up early in the morning and follow these steps:
To apply for a N.I.E, you have to visit a police station (Policia Nacional) which includes “Oficinas de Extranjeros”, preferably in the area where you buy a property.
For the south of Gran Canaria, you find the place here.
Pull a number and wait until your number appears in the display.
Papers you have to show to the officer:
- Two copies of the Ex-14 application (Solicitud de NIE). Fill everything out but do not sign! You sign them in front of the officer.
- A document that justifies your reason for applying a N.I.E. number. That can be a private purchase contract or mortgage approval.
- Your passport and a photocopy of the main page of your passport (the page that includes your photo, name, passport number, address, etc.).
Don´t forget copies plus the originals! It will save you time.
After the officer has verified your documents and the EX-14 is signed, he or she will give you a receipt with bank transfer information.
Go to a bank office and pay the Tax of about 15€.
You will get a proof of your payment (a stamped receipt).
Go back to the police office and hand out that receipt.
Done. The application process is complete.
Your N.I.E. will now get registered and in 2-3 weeks you can show up again in the police office to pick up your official document with your N.I.E. number.
NOTE: You can authorize your Estate Agent to get the N.I.E number for you.
6. The Handshake between Buyer and Seller – Signing the purchase option agreement
You finally found a nice property to buy in Gran Canaria.
To make the very first official step to get your own keys and start living in the Canary Islands, you CAN MAKE a verbal offer and writing down a sales agreement.
This private sales agreement is a private deed which includes the terms of conditions of the sale and is generally not signed by a notary.
That´s why you have to be very aware of the closing conditions, which are not easy to reconsider later.
There does not exist a law regarding property reservation fees, but it´s quite common in Spain to pay 10% of the sales price.
One piece of advice: Never hand out cheques to the owner or pay him directly. Use your new bank account to make a deposit of 10% on your notary´s bank account. That will be your safeguard.
I personally recommend you to skip the step above and follow the official and most common one, which will give the document’s contents authenticity.
(This stage can be skipped if you don´t need a mortgage.
Is this the case, you can go forward to the next step)
In Spain, your notary does not the job of researching and investigating the property you are willing to buy.
Instead, it´s you or the Estate Agent´s job to check the property´s legal documents.
When this work is done, and the owner accepted the offer, you sign the private contract of sale.
Which includes all the terms and conditions of the offer and sale.
At the same time, you´ll be given a date for the notary to sign the deed, and you have to make 10% deposit of the total purchase price.
As I wrote above: Use your new bank account to make a deposit of 10% on your notary´s bank account. That will be your safeguard.
Anyway, those 10% are not refundable, when you cancel the sales contract.
7. The deed of purchase (Escritura de Compraventa)
This is your “Gran Dia”.
The final of all the weeks or months of searching and visiting properties, waiting, paperwork and some doubt that everything will end happily.
All people in the sales involved meet today with the notary to sign the “Escritura de Compraventa”.
The signing of the deed of purchase and your last payment of the missing 90% from the sales price will formally complete the sale process under Spanish law.
At this moment, you will get your keys for your new home.
The notary will fax a copy of the signed “Escritura” to the local land registry. The Estate Agent will manage the account transfer with the local utility providers.
It takes up to two months until the property registration process is done and all names are changed to yours.
8. How much in taxes do I have to pay?
That´s a point most people don´t like to talk about.
But yes, even in Gran Canaria, somewhere in the Atlantic Ocean, you have to pay taxes. I guess that doesn´t surprise you much.
There are income taxes and taxes on capital gains and retentions, when you are buying a property in Gran Canaria.
8.1. Transfer Tax
Let´s imagine that you are buying a second hand home. In this case, you don´t pay VAT. You only have to pay the transfer tax to the autonomous community where your new home is located.
This amount will range between 6% and 7% of the property sale price.
The official Spanish name for this one time payment is “Impuesto sobre Transmisiones Patrimoniales”
8.2. IBI – The Annual Property Tax
The IBI will be calculated on the basis of cadastral valuation of the land assigned by the Spanish tax authorities.
Rates vary from 0.4% to 1.1%.
8.3. Income Tax
If you´re planning to rent out your new property in Gran Canaria, you have to pay 24,75% annually in tax on all rental income.
Even if you don´t rent it out and just use your apartment or house for a view weeks or month a year, there´s a special vacancy-tax.
They charge you for not being in Gran Canaria all the time.
So, for your own enjoyment you have to pay 1.1% of your properties castral valuation at a rate of 24.75% every year.
For example, let´s say your property has an official value of 50.000€: your annual income tax would be 136€.
9. How do I get a mortgage for my property?
As a resident in Gran Canaria (which means you are living more than 183 days a year in Gran Canaria), you can acquire a mortgage of 80%.
If you´re a Non-Resident, you only get a maximum of 60% of the official property value by a bank.
Interest rates start at around 5-6% and can change every year according to the Euribor rate.
A loan or mortgage can not exceed 30% of your monthly net income.
To make sure, that you are able to pay the monthly rates, the bank is checking thoroughly your personal situation and will include all your existing loans in their calculation.
Also, the mortgage contract has to finish the day you turn 65 years.
So, if you are 55 years old, you have 10 years to the total amount.[spacer height=”50px”]
In conclusion, good luck with your property search in Gran Canaria – a year-long vacation!
Hopefully this article will give a good overview about the main steps for buying a property in Gran Canaria.
However, the Estate Agent or your “Gestoria” can go deeper into details.
Plus, if you found a highly regarded professional Real Estate Agent or Company in Gran Canaria, most of the steps above will be done by them.
All the best for you in Gran Canaria!
Oh, almost forgot: The agent´s commission will be paid by the person, who engaged the agent. In most cases, this is the seller.
Flickr Creative Commons Image via Katinka Bille Lindahl