Lanzarote Relocation

Despite the credit crunch in the UK, demand for Lanzarote property remains strong.  As January 2008 has been a busy month for enquiries on the Lanzarote Guidebook website – one of the island’s biggest property portals with over 1700 listings.

So how do you go about purchasing a property in Lanzarote?  Here´s a step by step guide.

Set A Budget
Buyers need to allow for an additional outlay of around 10% on top of the actual purchase price.  This encompasses standard fees and costs such as:
• Mortgage Arrangement Fees
• Lawyers Fee
• Stamp Duty — 6% (5.5% on new builds)
• Registry Fee
• Notary Fee

Agents Fees
Estate Agent fees in Lanzarote are paid by the vendor.  And their services here command a fee of anything up to 5% of the purchase price.

NIE Number
UK and Irish residents require a NIE (non-residents identification) number in order to open a bank account, which is required in turn to complete the property purchase.  Most estate agents are happy to undertake this simple procedure for their clients at a cost of around €50.

Bank Account
Once the NIE number has been acquired a non-resident bank account can be opened.  And standard procedure then is to transfer in funds to this account from your domestic bank to enable completion.

Mortgages
Despite 21 consecutive rises in the Euribor mortgage interest rates in Spain and Lanzarote are still more competitive than in the UK.

Non-residents can currently 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.

Initial Contract
A Purchase Option Contract is then prepared by your estate agent – and this document outlines and codifies all of the information relevant to your purchase, such as the agreed price and the timescale for completion.

Once the buyer pays a deposit equivalent to 10% of the purchase price this contract becomes active.

This deposit payment is non-refundable. If the vendor withdraws they must refund the 10% deposit plus payment of a further 10%.  Should the buyer withdraw after this Contract has been signed they then forfeit this 10% deposit.

Completing The Deal
Before the Purchase Option Contract runs out both parties and/or their legal representatives attend the Notary Office in Arrecife, where they will be asked to sign the final legal documents and title deeds.

It is a legal and obligatory requirement that all non-Spanish speakers are accompanied by a translator – as the documents and deeds are read in Spanish only.  The buyers estate agent will normally arrange this service – which can cost up to €120 depending on the complexity of the paperwork.

Kindly donated by Nick from Lanzarote Guidebook

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