The Guru Guide To Buying Property In Gran Canaria

Beach front property in Gran Canaria

Beach front property in Gran Canaria

Buying property in Gran Canaria is a relatively straightforward process if done correctly. The island property registry is excellent, property rights in Gran Canaria are clear, and all contracts must be signed in front of an independent notary.

However, there are pitfalls and we advise all buyers to use a quality estate agent and / or a local lawyer to check their chosen property and contracts.

Estate agents in Gran Canaria

Estate agents in Gran Canaria vary from the average to the excellent with a couple of outlying dodgy outfits (targeting non-resident buyers in the resorts).

Estate agency fees are 5% of the sale price of a property but are paid by the seller. This means that their services are free to buyers; All non-native Spanish speakers should use one when buying property in Gran Canaria.

The risks of going it alone are just too high to bother with as disputes takes a long time and oodles of cash to resolve.

To find a good estate agent in Gran Canaria, look for the following…

  • An estate agency with an office you can visit and a good local reputation.
  • An agency that is connected to the BOICAN shared property database and can, therefore, show you almost any for-sale property in your chosen area.
  • An agent that speaks your language and good Spanish.
  • Above all, choose an estate agent that cares about you, rather than about selling you a particular property.

The benefit  using a good estate agency include their ability to value a property accurately (many sellers list their property at the price they’d like to get rather than what it is currently worth), the help they provide with paperwork, and good relationships with reliable local banks.

In Las Palmas and the north of Gran Canaria, we recommend Las Palmas Property.

In south Gran Canaria, just go to Cardenas Real Estate; One of Gran Canaria’s oldest and most trusted agencies.

NOTE: Do not buy a rental investment property in south Gran Canaria without getting expert advice:

The cost of buying property in Gran Canaria

The total cost of buying a property in Gran Canaria is roughly 10% on top of the price you pay.

This sum includes:

  • Fixed property purchase tax (the exact percentage varies depending on property type and Municipality)
  • Notary costs (a fixed percentage of the value of the property)roperty registry costs.
  • Property registry costs.

NOTE: The 10% figure is approximate. It can be up to 12% if you buy a cheapie under €100,000 and lower if you buy something substantial.

NOTE: Seek expert advice if a seller wants you to pay a percentage of the purchase price in cash under the table. This is illegal and has tax implications as the government knows what property is worth and asks for extra taxes on properties that are bought too cheap.

Ongoing costs include:

  • Monthly Communidad fees (if you buy in a building or complex)
  • A small annual tax on the value of the land your property sits on (known as the IBI)
  • Utility bills.

There are no council tax bills in Gran Canaria.

What you need to buy a property in Gran Canaria

All buyers must have:

A Spanish NIE number; This fiscal identification number, which you will soon learn by heart, is the same number that goes on your green Residencia paper. Getting a NIE is a faff unless you have a job contract or a pre-contract to buy a property (or are a non-EU citizen investing 500,000 euros in Spanish property; Hello Golden Visa).

A local bank account; Opening a non-resident bank account is straightforward. All you need is a passport. Change to a resident’s account once you get Residencia as the fees are lower.

Getting a mortgage in Gran Canaria

Spanish banks learned their lesson rather too well during the crisis and are now cautious about lending money to home buyers. You need a minimum deposit of 20% (unless you earn big money) and a work contract to even be considered (or a long track record of earnings as an Autonomo or self-employed person).

New arrivals often have to wait a year to get a mortgage, even with a permanent work contract. This might seem infuriating, but it’s no bad thing if you consider the number of people who go home after a year in Gran Canaria; not everyone can handle the sunshine and the rum.

Spanish banks currently won’t lend you more than you can pay back with a third of your total income.

Non-residents need a larger deposit (typically 40%) and proof of earnings in their home country going back six months. Spanish banks are unwilling to lend to older non-residents who are due to retire before their mortgage term is up.

Mortgage applications are long-winded (up to three months at some banks) and hampered by top-down management at Spanish banks. Your application is submitted in Gran Canaria but goes to Madrid (it’s always Madrid) by post for approval. Any missing documents cause delays that nobody is accountable for; Be vigilant and don’t be afraid to push as silence is often a bad sign.

The best advice we can give you is to apply to several different banks; They all require the same paperwork so all you have to do is spend a few hours at each one and feed them with photocopies.

At the moment, the best banks are the international ones such as Deutsche Bank and ING Direct, rather than the local banks like Bankia, Santander and BBVA.

International banks are faster, often offer better rates, and are more flexible with foreigners than hidebound Spanish banks.

Renting Your Gran Canaria Property

See this article for details on how to rent your property in Gran Canaria.

Summary

Use a good estate agent

Factor in costs

Apply to several banks if you need a mortgage

Be determined and patient

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