Buying a Property in Lanzarote

Once you have found your property in the sun, you will need to secure it, and this is usually done by paying a deposit. This can be 10% of the purchase price on a resale property & can be up to 30% when buying a new one.

At this point you should also seek the services of an English speaking solicitor, and acquire a Spanish bank account.

Your solicitor will carry out a variety of checks on the property to ascertain that there are no outstanding debts i.e. unpaid mortgages, water or electricity bills or taxes.

The deposit contract will state the date of signing "Escrituras" (Exchanging Deeds) which tends to be between 8 to 10 weeks after the signing of the deposit contract. This will give the buyers time to arrange a mortgage (if required). This contract will also contain CLAUSES to protect the rights of "the parts", such as, the vendor keeping the deposit should the buyer decide to pull out of the deal or the buyers getting back the deposit plus an equal amount again as way of compensation, should the vendor be the one changing his mind.

In the case of the buyer being declined a mortgage by the bank, their deposit is usually returned.

Given the unpredictable fluctuations of the Euro/Sterling Exchange rate it is sensible to apply for a mortgage here on Lanzarote. Non residents can apply for mortgages of up to 70% of the property's purchase price and you will be expected to provide supporting documentation such as recent payslips and proof of income and other assets. Self employed applicants will need to provide at least two years proof of earnings in the form of certified accounts. Mortgage rates vary from bank to bank so it is sensible to secure a range of quotes. As in the UK banks typically charge a mortgage arrangement fee of around 1%.

Non resident mortgages are normally restricted to repayment loans only and decisions are usually processed quite quickly in around 3 to 5 working days.

Your agent will advise you to open a non resident bank account so that funds can be transferred to you in order to complete the purchase.

Taxes & Costs

When purchasing your property in the sun you should allow for an additional cost of around 10% of the declared value of the property, 7.5% of which is IGIC & 0.5% is stamp duty.