February - Tenerife Property Shop

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Tenerife Property Shop Newsletter
If you own a property in Tenerife, then this is the newsletter for you! We have loads of information and news… and not all of it is bad
either! So much is happening, and there’s good news for property owners from several directions.
The rental market appears to be booming, as you will read further on. One reason is the population growth on the island, as shown below.
We also make a money saving suggestion for currency exchange, handy if you are paying back a Euro mortgage. Saving you more money
is the recent abolition of Patrimonio tax, a particularly popular move amongst foreigners. And there’s even good news on cost cutting if you
should choose to remortgage. There’s even more information and good advice for property owners in a new book called Tenerife Lifeline,
find out more in our article below.
Obviously, there is a recession and property is tough to sell. If you are hoping to sell your property in Tenerife, then we have some tips
about selling in a soft market, as well as a special offer that we have negotiated which will get your property noticed in the crowd. The
launch of our new Russian website (see the news section) will also help to bring new buyers to your door. If you bought your home in
Sterling, then the weak pound may not be such bad news for you, so take a look at the ‘Silver Lining for Owners’ article below.
And of course we bring you some of the latest news cuttings as well as some of the most interesting properties on the Tenerife market
today.
Enjoy!
Download a PDF of this newsletter
Two months ago nobody could see an end to the property slump but now we are at least beginning to see a light at the end of the tunnel.
Analysts are starting to be cautiously upbeat about economies, many forecasting the turnaround point between spring and summer of
2009. In layman’s terms, this means that the property market is currently ‘bottoming out’.
According to the Financial Times, some forty percent of economists now believe that 2009 will be a good year to buy property. Jonathan
Loynes of Capital Economics says: "The experience of previous housing downturns suggests that, even after prices stop falling, it could be
some time before they start to rise again at any meaningful rate." The actions of vulture fund managers, who snap up bargain properties
from distressed buyers would seem to agree. Bargains will become increasingly scarce, possibly drying up as early as the spring.
David Miles of Morgan Stanley comments, "Assuming that credit availability improves somewhat, a further sharp decline in house prices
over 2009 does not seem the most likely outcome." Academics such as Patrick Minford of Cardiff Business School, believe 2009 will be a
good year for buying property. Dieter Helm of New College Oxford sees 2009 as a good time to buy because "house prices are likely to be
much lower and the real assets may increasingly be seen as a protection against currency debasement".
Property owners can take some heart from the growing number of analysts that support a 2009 recovery. Those with sufficient assets may
even consider increasing their portfolio now: When purchase prices were high, it was hard to get a decent yield because of the original cost
of the investment. Now that property prices are low, it's possible to get a steady 8 or 9% yield, which makes shares look very unappealing.
Although there is guarded optimism that property prices may have ended their fall, it will still be some time before it is a ‘good time to sell’.
Although 2009 may be a good time to buy, we will still have to wait until 2010 / 2011 when buyers return in force… good news for anyone
buying right now at rock bottom prices.
Rock bottom prices make it a good time to buy!
Apartment in Pebble Beach
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Apartment in Jardín de San Miguel
Apartment in Aguamarina
Reference: AMG00210
85.000 Euros (Appx. 80.249 Pounds)
Type: Apartment
Beds: 1
Baths: 1
Localty: Amarilla Golf
Complex: Pebble Beach
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This sunny 1 bedroom ground floor apartment is
a perfect first rung on Tenerife´s property ladder.
Click here for more info
Reference: GOLF00948
89.500 Pounds (Appx. 91.460 Euros)
Type: Apartment
Beds: 1
Baths: 1
Localty: Golf del Sur
Complex: Aguamarina
Sit on your spacious southwest facing terrace
with a cool drink catching the afternoon sun or
the sunset & enjoy that view to the new marina
just a minute´s walk away as are restaurants,
bars & shops.
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Reference: OG00020
Type: Apartment
Beds: 2
Baths: 2
Localty: Las Chafiras
Complex: Jardín de San Miguel
Why pay tourist prices for a residential
apartment? This brand new ground floor 2
bedroom 2 bathroom apartment features all the
mod cons wrapped up in a traditional Canarian
style. Unfurnished, separate fitted kitchen, utility
room & spacious terrace outside.
If property sales are not buoyant, it certainly seems that rentals are! Clearly, people will always need to move, regardless of the economic
situation. In fact, with the rise in the number of people coming to Tenerife to escape the recession in the UK, there may be some
connection! Rents have been rising above inflation in the canaries by 3.7%, one of the highest growths in Spain, while the population has
continued to increase (see the article below).
There are three types of rentals in Tenerife: holiday rentals, short term (less than one year) leases and long term lettings. All three sectors
are enjoying a boom time at the moment.
According to a survey from rental portal Holidaylettings.co.uk, some 43% of international holiday homeowners on its site had entered the
lettings market recently, compared to 30% the year before. The Canary Islands have seen a substantial growth of 52%. The renewed
interest in rental is largely prompted by the potential returns and income potential as more and more owners look to offset their mortgage
and maintenance costs.
The growth in short term (por temporada) rental is slightly more difficult to quantify as these contracts are not necessarily officially
registered, however they constitute a substantial sector of the market. The number of rented homes in Spain will reach three million in
spring of 2009. Credit restrictions and unemployment increases create favourable conditions for families to rent a home rather than buying
one. In combination with this, favourable tax conditions on rental income and a slowed housing sales market.
Residents of Spain are taxed on only 50% of the net rental income and there are many deductions that can be made to arrive at this net
figure. The usual day-to–day running costs can be reduce the figure, including local taxes, repairs and maintenance, managing agents’
fees and commissions, interest on loans for purchase or improvement and depreciation of 3% per year of the cost of the property
(excluding the land value).
A non-resident is taxed in Spain on income arising from Spanish property at the rate of 24% on the gross income without any deductions for
expenses or interest costs. It is the tenant who is meant to withhold 24% from the rents and file a tax return to submit the tax to the Spanish
tax authorities, although in the case of short holiday lets the owner or agent would in practice take responsibility.
Renters benefit from new tax laws which allow them to deduct 10.05% of the rent paid if it is their main home, provided their taxable income
is less than 24,020 per year. According to information from Arrenta, a private organization that promotes rentals in Spain, one million
families need to find a home each year, and resort massively to rentals. The organization predicts that the rental market will reach three
million properties in the first quarter of 2009, one million more than just two years ago.
Properties for letting are enjoying better returns
Studio in Panorama
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Apartment in Jardín Botánico
Apartment in Garden City
Reference: LA01286
Type: Apartment Studio
Baths: 1
Localty: San Eugenio Bajo
Complex: Panorama
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If you´re looking for a rental investment, pull out
your cheque book quick! This superb studio
apartment is fully furnished & ready to start
earning for you.
Reference: LA01277
Type: Apartment
Beds: 1
Baths: 1
Localty: San Eugenio Bajo
Complex: Garden City
On a sought after complex near all amenities & a
5 minute stroll to the sea front & beach is this
first floor 1 bedroom apartment with a sunny
south facing terrace. Kitchen & bathroom have
been refurbished & the apartment is fully
furnished.
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Reference: OUT00798
Type: Apartment
Beds: 1
Baths: 1
Localty: Adeje
Complex: Jardín Botánico
Located within a few minutes of the very
exclusive Costa Adeje Golf & a short drive from
Las Americas is this 1 bedroom apartment at a
great price, with good rental potential.
Holiday rental properties
Apartment in Compostela Beach II
Apartment in Sunset View
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Type: Apartment
Beds: 1
Baths: 1
Complex: Sunset View
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You have really struck gold with this fabulous 1
bedroom furnished apartment on this very well
maintained and popular complex.
Reference: LA01320
Type: Apartment
Beds: 1
Baths: 1
Localty: Playa de Las Americas
Complex: Compostela Beach II
Adjacent and overlooking the sweeping fairways
of Americas Golf, this lovely 1 bedroom ground
floor apartment has potential to convert to 2
bedrooms.
Studio in Pueblo Torviscas
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Reference: LA01321
Localty: Torviscas Bajo
Complex: Pueblo Torviscas
Here´s the perfect little rental investment with a
low investment required and reliable income
potential: this spacious, extended studio
apartment is based in a well maintained, part
timeshare complex, very popular with
holidaymakers.
One major reason why rental prices are on the increase is Tenerife’s growth in population. Though many consider Tenerife to be an island
of romance, the main reason for growth is not the number of babies that have been born, but the number of expats who continue to make
the move.
The National Institute of Statistics have just published their 2008 figures which show that the population of Tenerife now stands at a huge
1,005,936. Previous figures published in 2006 put the population at around 850,000, a growth of about 18%. The large increase is
attributed mostly to high levels of migration.
Recession is likely to increase the flow of expats to Tenerife, as workers are made redundant in the UK and the doom and gloom
depresses the nation’s spirits.
Properties for residents are likely to become more popular
Apartment in Vista Hermosa
Townhouse in Los Menores
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Reference: OUT00771
Type: House Townhouse
Beds: 3
Baths: 2
Localty: Los Menores
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This spacious 3 bedroom townhouse is situated
in the quiet residential area of Los Menores.
Reference: LC00419
Type: Apartment
Beds: 3
Baths: 2
Localty: Los Cristianos
Complex: Vista Hermosa
With lovely views over town and to the sea, you
may fall in love with this 3 bedroom apartment?
and you´ll certainly fall in love with the price!
Quality interior, fully furnished and based on a
very well maintained gated complex with 2 large
pools, attractive gardens and parking
underground.
Townhouse in Residencial Malvasia
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Reference: OG00084
Type: House Townhouse
Beds: 4
Baths: 2
Localty: Las Chafiras
Complex: Residencial Malvasia
Here´s a great family home at a great price.
Suspicions that banks are clawing in every penny they can are confirmed by recent statistics which indicate that British overseas property
buyers were ripped off by banks and other currency providers, such as bureaux de change offices, to the tune of over £242million last year,
by not being transparent enough with how their foreign exchange charges are calculated, according to estimates.
The chief culprits are banks, many of whom are not complying with UK Consumer Protection Regulations introduced in May 2008, which
require companies to openly tell buyers how a price will be calculated and thinks the problem will grow in 2009 as poor economic conditions
force more Brits to buy abroad.
Banks tend not to give the most competitive currency rates and specialist currency providers can often save about 1% of the value of the
transaction. Banks often wrap up these transactions in apparently commission free exchanges, but make their money back again by
offering a worse rate of exchange.
Paresh Davdra of Rational FX commented, “In some cases, we are managing to save clients literally thousands of pounds. Its tragic to
think that so many people still use the traditional banks to move currencies.”
Further investigation by the Office of fair Trading is likely, but until then anyone moving currencies abroad, whether is smaller regular sums
for mortgage repayments or larger sums for the sale or purchase of a property should consider using a currency company.
“Although anyone buying a property today through Tenerife Property Shop will be advised to use a currency company,” said Mary Spencer,
a Director, “There are thousands of people who are still paying their mortgages every month and losing money in the transaction”.
If you are still using the banks for your foreign exchange,
click here to start saving money now!
If you live on the island, then you may already have heard of a new
book aimed at residents and property owners, called Tenerife
Lifeline. The book is the first guide to living in Tenerife and its 240
pages contain a huge amount of useful information for property
owners. You’ll be able to find out about taxes, communities,
refurbishment, decorating, selling… every aspect of property
ownership, as well as all the information you’ll need of you are
considering settling in Tenerife.
In addition to all this, there is a chapter dedicated to buying a
property, and the book recommends that a prospective buyer only
uses an agent covered by Professional Indemnity Insurance, and
that after purchasing a home, it should be covered by title deed
insurance. There is only one estate agency in Tenerife that offers
buyers these two forms of security, and that’s Tenerife Property
Shop! You can read a real life experience of a property buyer in the
book too.
The book costs 9.95 and you can pick up a copy at any of our
offices or order it from the website, where you can also read an
extract and read reviews.
Find out more about
Tenerife Lifeline
and order your copy here
We all know that selling a home in Tenerife right now is not easy. Although buyers exist, they have the luxury of choice and know that they
hold most of the aces. Even so, you can make sure that your property stands the best possible chance by sticking to a few simple
guidelines.
The keys are the key – It’s a buyer’s market, so you need to make your property available for buyers to view whenever they need to.
Giving a key to Tenerife Property Shop is ideal. Buyers won’t wait around: they’ll just go and view something else and sales advisors won’t
try to motivate a client about a property they are unsure that they can access. So rule 1 of selling a property must be to make it easy to
access!
The big drop - Inching the price down doesn't work. Make a statement to attract new people and create competition. Buyers must believe
that if they wait months, the house might not be there. Properties that are being bought in Tenerife at the moment have all had recent
substantial drops in price, some as much as 30%. (It may not be so bad, read the ‘Silver Lining for Owners’ article below.
Don't go too low - The big drop should be carefully calculated. Remember that buyers are still going to want to negotiate, so you need to
factor this in. It's all relative - If you're buying and selling in the same marketplace, what matters is the price difference.
Accept there are no miracles - If the property is on a second-rate street or there are things wrong with it, undercutting the price won't be
enough in the current market.
Kerb appeal - Given that there are many properties on the market, outstanding condition can set one apart from the other. Time spent on a
coat of paint and thorough clean is not time wasted.
Don't look a gift horse… - An estate agent had an offer of 200,000 for a property on the market for 250,000, the vendor said no and in
the end the apartment was repossessed.
Stand out from the crowd… Marketing is rapidly changing and you need to stay ahead of the changes. One example is maps… people
on the web love to see where a property is, and Tenerife Property Shop are one of the few companies in Tenerife to use Google’s mapping
to do this. Another way is to improve the presentation to attract more visitors to your property by offering a virtual tour (see below).
Just reduced and worth a second look
Apartment in Bellamar
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Reference: LA01252
Type: Apartment
Beds: 2
Baths: 1
Localty: Fañabé
Complex: Bellamar
Located in Tenerife´s most exclusive area, a 5
minute walk to the manicured beaches of El
Duque, with its 5 star hotels, restaurants &
shopping. Tastefully decorated, this 2 bedroom
apartment is offered in immaculate condition.
Villa in La Quinta
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Reference: AMG00144
Type: House Villa
Beds: 3
Baths: 2
Localty: Amarilla Golf
Complex: La Quinta
REDUCED BY 25%!! This detached villa has one
of the best positions in the area .
Studio in Paraiso Royal
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Reference: PP00008
Baths: 1
Localty: Playa de Las Americas
Complex: Paraiso Royal
Looking for an easy rental investment? You´ll
know that location is the key to a steady income.
If you’re selling or renting a property, then you will be interested in a new service that is sure to make your property stand out from the
crowd. Flash video presentations are becoming increasingly popular on the web, which is where the huge majority of property buyers
(84%) are starting their search nowadays. Market research indicates that those properties which have virtual tours available are more likely
to generate more interest and enquiries than those with just photographs.
A virtual tour allows anyone with internet access and a computer to look around a room or view from anywhere in the world at any time of
day. In the past, however the results have been frankly disappointing, but we are now able to offer a service to create a quality virtual tour
of your property, and it couldn’t be easier.
We have negotiated a preferential rate with a professional company who will come to your property, capture the images, create the
panoramas, and upload them to a Tenerife Property Shop server. From there, we will add them to your property details and highlight them
on our Russian website, attracting more visitors. We will also be adapting our main www.tenerifepropertyshop.com website to
accommodate them in the near future.
Click the image to see the sample
You can download the tour and use it wherever you want, or save it on disc. This is a also great facility if you are letting the property as you
can send discs to potential clients.
Designing a tour for the average property (up to 150m2) costs only 99, a tiny investment to make. But if you are selling your property with
Tenerife Property Shop, then we will refund the cost when we sell your home… so it will end up costing nothing!
Book your virtual tour by clicking here
Thanks to recent dramatic changes in the Euro / Sterling exchange rate, British owners of Spanish property can realise a profit when they
sell - even if they purchased at the height of the Spanish property market.
In September 2007 - the height of Spanish property prices - 1 Pound would have purchased 1.45 Euros. Today, it will buy 1.07 Euros - a
drop of 26%. Whilst this is cause for concern to Brits who have not yet purchased property in the Eurozone, it allows existing property
owners to price their properties competitively - if they intend to repatriate the proceeds of the sale to the UK.
Example 1: Mr. Smith purchased a Spanish property for 200,000 in 2007 - for which he exchanged £138,000. Due to personal
circumstances, Mr. Smith is now a motivated seller, but property prices have fallen. He won't even get viewings for the property unless it's
priced at 160,000 - a 20% reduction from when he purchased.
Eventually, Mr. Smith agrees to sell for 150,000 - netting him a significant loss of 50,000 in Spain. When used to buy Sterling, however,
this equates to £138,000 at today's exchange rate. Although Mr. Smith has made a paper loss in Euros, he has broken-even in Sterling.
Although over-simplified, this example neatly demonstrates that, thanks to Sterling's 26% slide against the Euro, property owners can afford
to discount their properties by 26% - without incurring a loss in Sterling.
Those who purchased before the height of the Spanish market, when Sterling was even stronger against the Euro, could fare better still.
Example 2: Mrs. Jones purchased property in Spain in mid 2001 for 200,000. At an exchange rate of 1.64, Mrs. Jones paid £122,000 in
Sterling. At it's peak in 2007, Mrs. Jones’ house was valued at 350,000 - although the market price today is hovering around 250,000.
Again, due to personal circumstances, Mrs. Jones needs a quick sale and agrees to do so at 230,000 - a 35% reduction of it's peak
market valuation.
Whist a 30,000 profit in Euros over 8 years is not an impressive return on capital invested, things look better when converted back to
Sterling. Today, 230,000 is worth £250,000 - meaning that Mrs. Jones has doubled her money in Sterling - enough to pay a hefty slice of
Capital Gains Tax in the UK.
Even so, after a CGT liability of £25,600, Mrs. Jones will have realised a net profit of £102,400 - equivalent to a net interest rate of 10% on
her invested capital.
Of course, buying and selling costs will eat in to her profit, but Spanish property owners looking for a quick sale, and wishing to take the
proceeds to the UK, now have an ace up their sleeves. The sliding value of Sterling against the Euro means they can price their properties
to sell - and minimise the impact of that price reduction.
Those in Mr. Smith's situation may well be able to break-even in the UK, while those like Mrs. Jones can still make a healthy Sterling profit
on their Spanish property investment.
Story from Kyero.com
New on the market
Linked in Las Adelfas II
Apartment in San Marino
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Reference: LC00421
Type: Apartment
Beds: 1
Baths: 1
Complex: San Marino
1 bedroom top floor apartment with views over
parkland, town and ocean? with the beach only a
short walk away. This spacious home is in the
heart of Tenerife´s busiest resort, with everything
you could possibly want on your doorstep. .
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Type: House Linked
Beds: 2
Baths: 2
Complex: Las Adelfas II
This 2 bedroom bungalow offers a spacious
90m, with the possibility to extend. Based on a
complex popular with residents with 2 pools and
pool bar, its a short walk to shops, golf and
restaurants.
Apartment in Castle Harbour
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Reference: LC00420
Type: Apartment
Beds: 1
Baths: 1
Complex: Castle Harbour
Based on the ground floor of this incredibly
popular complex, this 1 bedroom furnished
apartment is an excellent choice as an
investment property.
One thing we all want to do is to reduce our mortgage costs, but it used to be difficult to swap lenders in Spain because of the costs
involved. Changes in law have made it much cheaper to remortgage a property. However, even though it has become easier to reduce
costs with a different lender, finding the right deal to suit you can be difficult. Not only is there a language barrier that prevents many
foreign mortgage holders from accessing some of the best offers on the market, but the market itself is rapidly changing.
Some lenders are actively marketing products where all other costs like existing redemption penalties and Notary and Registry costs are
covered by them making the transfer of a loan either free or certainly cost far less. The new legislation will also reduce dramatically, the
cost of taking a re mortgage with another bank where subrogation is possible. Because it allows any changes to terms to be included on
one deed instead of the previous three.
Recent legislative changes ratified
in December by the Spanish government
have been developed to reduce the costs
of a re-mortgage in Spain when you are moving
your mortgage to a new lender. In some circumstances, you
can avoid having to pay the mortgage deed tax applicable on
all borrowings in Spain and currently set at 1.8% of the
mortgage.
One problem for the borrower is that many mortgage products
are released with a cap on the number of borrowers that can
take advantage of it. As soon as enough borrowers have
enrolled, the product is removed. This makes it difficult for
even Spanish people to sift through the rapidly changing array
of mortgages, let alone foreigners.
Finding an independent mortgage advice in Tenerife, that you
can trust, is not an easy job, but there is one firm that we can
recommend. Tenerife Mortgage Solutions are highly
experienced with in depth knowledge of the mortgage market.
Call them on (0034) 922 17 88 88 or you can save time by
filling in a prequalification form on their website to find out how
much you can save.
Click the logo to visit the site
New legislation which came into force in January affects British foreign property owners in Tenerife. The new Rome II regulations affect
cross border legal disputes and leaves foreign property owners open to public liability challenges from the UK. Over 90% of British
overseas property owners are now under insured, and the figure is likely to be similar in Tenerife.
If a UK national suffers an injury in a Tenerife Property and both owner and tenant live in Britain, then action can be brought in the UK.
Whereas previously any legal action would have had to pass through the Spanish courts, where compensation is lower, this new change
will open the floodgates to the much higher claims common in the UK. It will also make people more likely to claim as it can all be done in
their own language at minimal expense. It is expected that the specialist law firms, who already generate a huge amount of public liability
claims through their television advertising, may start to target holiday makers.
Holiday home owners are at particular risk. Many who may think they are adequately protected by Spanish home insurance policies will
find that their Public Liability (Responsabilidad Civil) is woefully inadequate for this type of claim. Policies in Spain normally only carry
100,000 to 160,000 of indemnity, whereas any meaningful compensation claim in the UK courts will easily exceed this, leaving the
owner to find the money elsewhere.
If you are worried about your levels of cover, then Tenerife Property Shop can help. We are able to offer a policy specifically designed for
expatriate homeowners which offers the most complete coverage available, at the best price.
If you have your home insurance through Tenerife Property Shop, then your public liability cover can be increased to 600,000 for just 21
and up to 1,000,000 for 36. If you are renting your property and you are resident in the UK, then it cannot be stressed highly enough
that you should upgrade your policy now.
To increase your cover or get a quote for home insurance, click here to send us an email and let us know.
Do you know anyone who might be interested in receiving this monthly newsletter?
If so, simply enter their email address in the subject line and email to [email protected]
Don't want to receive the newsletter? Simply just send an email to [email protected]
Tenerife Property Shop S.L. does not accept liability for any errors or omissions in the contents of this newsletter,
or for any damage caused as a result.
Copyright 2008 Tenerife Property Shop S.L.
Tenerife Property Shop S.L. | C.C Puerto Colón (head office) | Las Americas | Adeje | Tenerife | 38660 | Spain

February - Tenerife Property Shop

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