Information for Real Estate Buyers
Real estate purchase is a matter of trust; it involves large sums of money which you have worked long and hard for. Since the purchase of a property abroad is generally accompanied by some form of language barrier and Spanish real estate legislation differs quite substantially from other European real estate legislations on some points, we would like to provide you with some fundamental information about purchasing a property in Spain. The following information is in no way sufficient to replace an individual case examination and individually tailored consultation. We are happy to provide a consultation free of charge in nearly all cases – our consultation fees are included in our commission where the property purchased is one of our listed properties. If you have found a property yourself or through a contact or colleague which you are interested in purchasing but do not feel confident about or have questions, we are still happy to offer a free and unbinding initial consultation. If you require further consultation, inspection of documents or similar services, we will inform you about any associated fees and provide you with an estimate before any costs are incurred.
The largest and unfortunately unavoidable cost of acquisition expenses is the property transfer tax which is currently charged at a rate of 6.5% of the purchase price. As is standard on La Gomera, we only charge the vendor a commission. This fee includes not only the actual conveyance, but all consultation services directly and indirectly related to the purchase, assistance with the acquisition of the obligatory tax number (N.I.E.), opening of a bank account, the required preparation of the case in a multilingual reservation request, an option contract or preliminary contract, preparation of the registration of property, accompanying you to the notary and any interpreting required between Spanish/German/English. If other languages are required, we can organise an interpreter for you, who will invoice you directly. For particular questions which require expertise and professional authorisation, such as an accountant or and lawyer, we are happy to put you in touch with our network of specialists. Our support continues after the purchase and we can usually provide any integration assistance you may require, free of charge. Only in the event of more extensive requirements, such as the supervision of building measures which are no longer directly related to the purchase, will we issue a contract for the extra services.
In addition, between 500 and 1,500 Euro notary fees and conveyance charges will be payable, depending on the purchase price and the details of the registration.
As a rule of thumb, you should allow for 8.5 – 10% of the purchase price as acquisition expenses
There are plenty of quite involved stories about fraudulent practice related to real estate purchase in Spain circulating online as well as in other media. More and more of the legal loopholes exploited by frauds are being sealed by Spanish legislators but some of these stories are unfortunately true or at least conceivable. That is precisely why a professional consultation and a fundamental inspection of all documentation are vital. This work represents a substantial part of our services and facilitates an absolutely safe purchase, which is just as legally safe as if you purchased a property in your country.
Coastal Preservation Act (Ley de Costas)
Forewarned is forearmed! In light of the much discussed Spanish Coastal Preservation Act, we are happy to provide you with some information: Similar to most European constitutional law, the Spanish constitution views the protection of property as a basic right but in certain cases, it prioritises the common good above the well-being of the individual. Unimpeded access for all people to the sea coast is viewed as part of the common good. In the past unfortunately, this right has basically been ignored on the Spanish mainland in particular, but also on the larger of the Canary Islands – the huge concrete buildings that resulted are no doubt well known to you. The provision was passed in the form of a special Coastal Preservation Act in 1988. In the wake of this law, unrestricted private ownership within 20 to 100 metres of the coastline is not permitted, depending on the zoning classification. Even if an object were registered within this protected zone in the land register before 1988, there is no longer any assurance that this ownership will not be revoked. This option has existed in Spanish law since 1978. In certain cases, the coastal preservation zone can extend to up to 200 m. For this reason, we do not offer real estate which lies in this protected zone. If you are interested in the acquisition of real estate in direct proximity to the beach, please consult us even if the property is a new-build and registered in the land registry. We can show you the exact legally defined coastal line of the whole of La Gomera.
The purchase price of a property is usually paid through the notary with a certified cheque. The handover of the property is effective immediately the registration is signed and the payment has been made by the notary. You should therefore have an account at a bank located on La Gomera, and not just for this instance. It also makes sense for other, tiny but vital payments which have to be made, like water and electricity. We are happy to provide you with the details of local banks with multilingual staff or we can assist you in setting up a bank account in your absence. Other methods of payment are also possible and we are happy to advise you on the safest and most economic methods for your individual circumstances. It is no longer possible to pay the purchase price in cash at the notary. We are also happy to offer you advice in this situation.
The purchase of real estate can be financed by Spanish as well as by some European banks. At present, most Euopean banks usually offer significantly better rates of interest. However, the entry of a foreign bank in a Spanish land registry is considerably more effort and this usually translates into higher fees for you. We would recommend that you undertake the financing of your apartment with a Spanish bank. We can assist you if you decide to go this route.
If you are intent on buying a property in Spain, then you must procure a Spanish registration number (N.I.E.). You can apply and procure an N.I.E. at the Office for Foreign Nationals (Estranjeria) at San Sebastian de La Gomera, for a very small fee (currently just under 10 Euros). It can take up to three weeks for you to receive your N.I.E. certificate. To register for a number, you will need a photocopy of your personal identity card or passport (front and rear side to be reproduced on the same sheet of paper), as well as your current address (this can also be your holiday accommodation). The N.I.E. will be communicated to the tax office so that you can organise your tax returns and payments correctly. The only significant payment is the one-off Land Transfer Tax (6.5% of the purchase price). The annual property tax in rural areas (Zona Rústica) amounts to few cents a year. In more urban and suburban areas, (Zona Urbana) the tax can amount to a few hundred Euro a year, depending on the size of the property, but usually less
than in your country. Motor tax is also significantly lower. We would recommend that you make any tax payments honestly and punctually because penalty fees for delays are extremely high and tax evasion along with offences and fines represent unexpected risks. We would be happy to explain the risks to you in the course of a consultation.
We are not permitted to provide extensive tax consultation but we are happy to recommend a reliable English or Spanish-speaking accountant and, at your request, will forward your documentation on to them so that you do not have to deal with the formalities yourself. As part of the suite of services we offer, this service is covered by our commission and will not incur extra costs for you.
Residencia (Primary Residence) offers considerable benefits for the owner, e.g. reduced-price flights to other Canary Islands as well as to the Spanish mainland, and sea passage within Spanish waters. There are however certain fiscal pros and cons which can result from procuring Residencia which should be taken into consideration. The decision to apply for Residencia or not should not be taken lightly or quickly, but rather after a thorough inspection of your personal situation. In general, you can apply for Residencia if you have purchased a property in Spain and intend to live there permanently. You are obliged to procure Residencia if you regularly spend more than 186 days a year in Spain.
We offer a translation service for negotiations and registration of property in German, Spanish and English. This service is included in our commission and will not cost extra. If you require another language, we can arrange for an appropriate interpreter, who will invoice you separately.
The running costs of a property on La Gomera are considerably lower than in most mainland European countries. For example, kW/h electricity costs approximately 14 cent. The basic monthly fees for electricity connection and meter start at 9.50 Euros a month, depending on connection value. Because the electricity supply on La Gomera is substantially weaker than in England for example, it is very common to cook with bottled gas. These methods are not only far more environmentally friendly, they also cost less. An 11 kg bottle of liquid gas costs approximately 15 Euros and one bottle should provide you with enough gas for a half a year’s cooking! In areas which are not totally remote, reusable bottles can be delivered to your house so that you don’t have to carry the bottles to and from the supplier. Recently, smaller and lighter plastic gas bottles have become available.
Municipal water from the public supply (standard tap water comparable to the British water provision system) costs between 5 and 10 Euros a month. Waste water is not charged for in most areas and where costs do apply, they are approximately 3 Euros a month. Rubbish collection fees amount to 5.50 Euros a month.
Property insurance, fuel prices and motor insurance and tax are also significantly cheaper than in most of Europe. We are happy to help you with all of these issues and will put you in touch with a English-speaking contact or translate where necessary.
The water supply on La Gomera is provided using irrigation water and via the public drinking water. The island’s water comes from various sources, which are usually in the higher ranges. This is fed by the forest of the Garajonay National Park, where passing clouds evaporate or it rains.
The public drinking water is sourced from an island-wide network fed by springs, the skies and deep wells. Drinking water is guaranteed to be potable. It is municipally supplied. The system is similar to the German system in that water comes pressurised from the tap and the meter is read every two months. The bill is compiled by the local authority responsible for your property. As long as levels of water consumption are generally standard, the water supply is very reasonably priced. The prices are however graded into degrees, to prevent excessive consumption. The city water is purified and is chlorinated in accordance with the EU drinking water ordinance. It is the only official drinking water on the island.
As well as the municipal water, there is also irrigation water. It is regulated differently depending on the area. There are water rights, which are automatically linked to the agricultural land, or lands which can be purchased or leased. In more remote areas, the water laws are often regulated locally by the residents. We can of course advise you on the precise circumstances which apply to each property.
New buildings, renovations or extensions
If you intend on undertaking building measures, the construction feasibility of the property for your desired project must first be determined. Most local authorities have adopted a legally discharged zoning plan (PIOLP or PGO), so that building developments are now more strictly regulated. However, the examination is not simple due to the many different zoning qualifications and construction specifications and is also always subject to changes. Therefore, before a purchase, we inspect the actual feasibility of your desired project and request a legally- binding statement from the responsible local authority and/or submit a preliminary building application detailing your intentions. These services are included in our commission. You will however be charged extra for any local authority costs incurred.
If it comes to carrying out the actual building measures, we are on hand to assist with any queries you may have, we will recommend builder and architects or even monitor the building work for you. Supervision of building measures is obviously not included in our commission. Please ask us for a quote.
Relocating and customs
We can also provide recommendations for your relocation to La Gomera in regards to transport and customs. If you want to bring a vehicle, you will have to declare the import in your homeland at least a half year in advance. You yourself must be registered for at least one year in your home country and the vehicle must be registered on the island within a month of arrival so that any moving goods tax or tax-free registration can be claimed back. However, you will require a new motor title letter which can be quite a chore if your vehicle does not have EU papers. It may mean that importing your vehicle is not worthwhile. Your standard domestic furniture is duty-free if you observe the deadlines and other formalities. You should also consult a locally-based moving company in order to save unnecessary expenses on your move. We are happy to recommend some.