The total cost of buying a property in Las Palmas
You often hear that the cost of buying a property in Gran Canaria is about 10% on top of the price of the property.
But is it true in Las Palmas, and where exactly does all the money go?
The 10% figure is a good guideline, but the percentage varies. Costs for properties under about 100,000 euros are closer to 11%. Costs for a more expensive property are lower than 10%.
The costs that add up to approximately 10% are as follows…
Property purchase tax
The ITP (Impuesto sobre Trasmisiones Patrimoniales) tax is 6.5% of the purchase price of a second-hand property in Las Palmas. New-build property tax is 7%
The buyer pays ITP and new property purchase tax.
The Spanish tax authorities can demand extra ITP if you underpay for your property. This happens if you pay less than the official market value or if you pay a percentage to the seller in cash.
Read this article if you are tempted to skip ITP by paying for your property in cash.
Notary Costs
All Gran Canaria property purchases must take place at a Public Notary Office. The notary is an independent witness who checks that contracts are legal. He is obliged to check that all parties understand a contract before they sign.
Notary costs in Gran Canaria vary from 600 to 1000 euros per property. The cost depends on how many pages are in your purchase contract. Older properties and ones with multiple owners mean longer contracts.
The buyer pays the notary fees.
Property Registry Costs
You pay registry costs once the property is inscribed. This is often several weeks after you sign the compraventa contract at the notary.
The cost of registering a property in Las Palmas varies from 600 to 1000 euros (it’s a page number thing again). The buyer pays the registry costs.
Mortgage Costs
Getting a local mortgage takes time as most banks like their paperwork.
Non-residents need a minimum deposit of 30%. And to provide detailed information about earnings, credit history and financial situation.
Residents need a 20% deposit.
Local banks are wary of lending to older non-resident clients. This depends on the bank and the borrowers profile.
Bear in mind that many local mortgages come with extra costs. Banks include property and content insurance, and life insurance up to the value of the mortgage. They also want your utility bills paid from their account.
These extra costs vary depending on the value of our property and mortgage.
A property valuation or tasación is essential if you want to get a mortgage with a local bank. It costs between 200 and 300 euros depending on the size and location of the property.
The upfront cost of a local mortgage in Las Palmas is between 0.5% and 1% of the amount you borrow. This commission is spread over the term of the mortgage so it effectively disappears.
Gestoria Costs
Many foreign buyers use a gestoria to handle the paperwork needed to buy a property in Gran Canaria. They are good value for money as they know exactly what paperwork you need and how to get it.
Using a gestoria to do your paperwork costs around 250 euros for a standard property in Las Palmas.
If you get a mortgage in Gran Canaria, your bank will arrange a gestoria. If you buy in cash, a gestoria still makes life much easier. Ask your estate agent to recommend a good one.
Gestorias in Las Palmas ask their clients for an upfront sum of money called a ‘provisión de fondos’. This is for all the taxes and fees associated with buying a property. You get back any money left over once the process is complete.
Survey costs
You may want to have an architect look over a property that you plan to buy. The cost for a basic structural survey depends on the size of the property and the detail required.
A survey, including a check of the structure and the state of plumbing and wiring, starts at 250 euros.
If you have any questions about the process of buying a property in Las Palmas, contact me.