Buying new development in Tenerife is slightly different from a normal second-hand purchase of a home in Tenerife. In many cases, the house does not yet exist and you will proceed to purchase on paper, before the foundation stone has been laid. This is not for everyone, but the advantage is of course that the value of the property can increase considerably once the work is finished and the property and its surroundings are or will be in demand. Not everyone can see the potential and of course some buyers like to use this to their advantage. Except for possible speculative purposes, there is of course the other reason: you are the very first owner and nobody has slept in your house before you.
Buying new development in Tenerife has the same advantages as elsewhere: the latest new technologies have been used, the building is modern and built with quality new materials. Whether you buy directly from the promoter or through a brokers firm, it is best to call upon the services of an external consultant who will guide you through the entire purchase process. This is to avoid any unpleasant surprises during or after the purchase procedure and to answer all your questions, in your own language. Buying a new development in Tenerife has its own specific characteristics.
But what are the differences between buying a new development in Tenerife and a second-hand home?
Aside from the most logical aspect, that you buy a new building and are therefore the first owner, there are a number of differences regarding the purchase procedure and the financial side, namely:
- You will pay IGIC (VAT) on your purchase, currently this is set at 7%.
- On top of the IGIC, you will pay a fixed cost of 1% for new construction, which is not the case for second-hand property.
- The cost of connecting the utilities (water and electricity) can be a few hundred euros, as you are the first owner and you will have to pay for it.
- It is very likely that there is not yet an association of owners in Tenerife called a “comunidad”. It has yet to be established, so the cost of the community fees is not always known in advance.
- There is not yet a reserve fund in the community. It is therefore possible that at the first general meeting, a decision is made to raise capital from the new owners in order to have a small reserve fund.
Probably the most important thing when buying a new development, is to have all possible information about what you are going to buy. This way you can get a correct and accurate picture of what you are going to buy, what it will look like and what materials will be used. A number of requirements need to be met:
- The purchase price and payment methods must be clearly communicated and laid down in the contract.
- The promoter must provide the certificate of the end of the building works, the so-called “certificado de final de obra”.
- He must also take care of the “cédula de habitabilidad“. This is the certificate that the building has been declared habitable.
- This is linked to the “licencia de primera ocupación” which is indispensable for requesting and connecting utilities such as electricity and water.
- To have the necessary legal guarantees and insurances, both for the construction and for the liability after the delivery.
- A floor plan indicating the areas and the distribution of the rooms, etc.
The warranties to be given by the promoter to the buyers of new development can be divided into three segments:
- A 1-year warranty for material damage caused by the finishing of, for example, paint, doors, glass and floors.
- A 3-year warranty for damage that reduces facilities and causes a breach of habitability requirements, such as the presence of moisture.
- A 10-year warranty for functional damage. This means damage to the foundations, beams, supporting walls and other structural elements that endanger the mechanical strength and stability of the building.
All these legal guarantees are included in the LOE, the Ley de Ordenación de la Edificación of 5 November 1999.
There are also 2 other legal guarantees that the promoter must give if you decide to purchase property that has not yet been fully built:
- If, for any reason, the building cannot be completed or delivered, the promoter must guarantee the return of the sums already paid plus interest by means of insurance or warranty.
- On the other hand, the sums you pay as a buyer must be paid into an account that is separate from the other accounts held by the promoter and may only be used for matters relating to the construction of the property for which you pay.
Just as with the purchase of second-hand property, the purchase of new development in Tenerife involves a lot of work. From reading the purchase agreement until concluding the contracts for the connection of your utilities, it will take many months. And unfortunately, something can go wrong. Despite the fact that you are buying a new development, it is certainly advisable to have an independent consultant guide you in order to safeguard your interests in your purchase. This is also confirmed and recommended by Mr Bermúdez, deputy director of Donpiso, the largest real estate agency in Spain with more than 120 offices. Who are we to contradict him?