Buyers guide

Guide to Buying Property in Lanzarote

Once you have made the decision and found the perfect property in Lanzarote, you will need to secure the property by way of paying a deposit (usually 10% of the value of the property for 2nd hand houses or up to 25% for new build). At this point I suggest engaging a solicitor who will draw up a deposit contract, and check all the documentation of the house making sure everything is correct and that the property does not have outstanding debts, encumbrances, owed taxes to the local Town Hall or unpaid mortgages. The solicitor will also check that the receipts are up to date with the community (if the property belongs to one) and also with the water and electricity companies. 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 pool off; or the buyers geting back the deposit plus an equal amount as way of compensation, should the vendor be the one changing his mind.
On the day of signing, the buyer should feel assured that he/she is buying a property free of all debts and with all taxes fully paid and with receipts to confirm this. Otherwise the Notario will make him/her aware that the buyer is signing even in absence of those receipts.


When you buy a property you should know that there will be additional costs of around 10% of the declared value of the property. This 10% will cover:
  • 7.5% (7% IGIC tax and 0.5% Stamp duty) in the case of new property.
  • 6.5% Impuesto sobre Transmisiones Patrimoniales (for a second-hand property)
  • Notary fees
  • Registration fees
  • If you buy in the name of a company you are also liable to pay IVA (VAT) or IGIC, the Canarian equivalent.
Once you own a property in Lanzarote, you will also have the obligation of paying every year the I.B.I. tax on the property (annual rates to Town Hall) and rubbish collection tax. The average property in Playa Blanca being a semi- detached 2-3 bedrooms with pool in a 500 Mts plot will pay annual rates of average 500€ a year. As a non-resident who owns a property here, you will also have to pay a non-resident/wealth tax, which is based on the "catastral" value of the house you own. The catastral value is always much inferior than the actual price you paid for the property. If we take as an example the same type of property as above, this tax will be around 100€ per year.


Obtaining a mortgage in Spain is a fairly easy and rapid process; it takes a maximum of 2 weeks to know whether you will qualify for one. As a non-resident you are entitled to up to 60% of the valuation or the price that the property is being sold for (whichever is the lowest) This 60% can be increased depending on the economical solvency you are able to prove. You will be required to submit any proof of income you have, e.g., salary slips, P-60, bank statements for the last 3 months, rental incomes if you have any, etc. The bank will also require a full copy of your credit reference. This can be obtained online through Equally you will be asked to disclose all expenditure incurred each month. The cost of surveying the property will be around 200€. The mortgage has an additional cost of 1% as opening commission and the bank will demand you take out an insurance policy for the property through them. The majority of foreign buyers opt for a mortgage with a local bank as interest rates tend to be more beneficial (4% variable, 5% fixed); and it is tax deductible.

F.A.Q´s - Frequently asked questions

What is a sales agreement? A private document signed between the buyer and seller. It must state the following points;
  • Details of the buyer and seller.
  • A legal description of the property
  • The purchase price
  • The form of payment and currency to be used in the transaction (banker’s draft, cash, etc.)
  • The completion dates and penalty clauses if these dates are not met (usually, if the buyer withdraws after signing the contract, he/she will lose his/her deposit. If the seller withdraws after signing the contract he/she will be liable to pay the buyer double the amount of the deposit that was paid).

What if there's still a mortgage on the property?
If there is a mortgage on the property you can opt for subrogating the existing mortgage or choose to pay it off. The money you pay for the property will cover the cancellation of the mortgage and the remainder will be for the vendor (in a check) . The bank that is offering you the mortgage will collect the deeds and take care of registering the cancellation of the mortgage.

What does a foreigner need in order to buy property in the Canary Islands?
  • Apply for an N.I.E. (Numero de Identificación de Extranjeros) foreign identification number.Your solicitor can take care of helping you to obtain this.
  • N.I.F. number (Numero de Identificacion Fiscal)- Tax number-. Your solicitor can take care of helping you to obtain this.
  • You'll also need to set up a non-resident bank account.

Will we have to pay tax when selling a property?

The cost involved in selling a property are:
  • Plusvalia : The administration (CATASTRO office) values the land at the time you bought the property and a the time of selling it; and upon the difference they tax you according to some charts they have that have a percentage for every year. This tax in our experience can go from anything like 500€ to 2.500€.
  • Capital Gain Tax: If you are a non resident this is 19% of the profit you made . That is the difference in price between price declared at the time of buying and price declared at the time of selling. But instead of working out this tax then and there (at the selling time), the administration says that a 3% of the selling declared price should be retained from you. Within the next 3 months you should present copies of both deeds to prove the difference in price (if any) and all other cost you paid (agency fees, notary fees, etc that will help reduce your gain). Upon presenting this documents the administration will work out you real profit and you will be able to claim the rest (there are tax agents to help you to claim this).