INVESTING IN A NEW DEVELOPMENT

Buying off plan property in Tenerife is a popular investment option for many people. Buying off plan means investing in a property on a new development before that property is built and often before any construction work has started. In some cases, even before the developer has been granted a Licencia de obra (licence to build).

You will get a great return for your money if you buy a property in Tenerife during the pre-construction period. Properties are priced very reasonably at this time since the developer is anxious to sell as many units as possible to minimise his risk factor and to negotiate decreased interest rates from investors.

Seeing as you’re being asked to buy an architect’s drawing and an empty plot of land, the earlier you make your purchase, the less expensive it will be.

Typically, investors are required to pay approximately 30 per cent of the total purchase price as a deposit and the remaining 70 per cent after completion, which can be financed by a mortgage.

As construction begins and the new development starts to take shape, it’s much easier to see what the property will look like once it’s completed. As a result, the purchase price increases at this stage. Once the development is finished, buyers are willing to pay even more for the final product. It’s no surprise that many people invest in off plan properties in Tenerife only to resell them for in a hefty profit once they’re finished. As a bonus, if the property is sold before the owner takes possession of the escritura (title deeds), the seller will not have to pay Capital Gains Tax.