Compare property prices in Tenerife to Mainland Spain or any other European country and you will find Tenerife prices still sit slightly below the average…Although the property prices in Tenerife have not dropped significantly, offers are being accepted by those needing to sell, so there are plenty of bargains on the market right now. Interest Rates are good and another huge advantage is that Tenerife with its wonderful all year round climate is the perfect place to buy property and if you are looking for an investment with a guaranteed rental income, now is a good time.
Your budget will determine the area you can buy in and the property price is usually determined by what the complex has to offer: If you haven’t already, make yourself familiar with a few areas.
Not every property is suitable for rental investment. Tenerife investors need to take care in selecting the right property for the best returns.
The apartment you decide to buy may already have a rental contract in place (guaranteed income). Ask to see the annual returns on the property to ensure this is a sound investment. People renting expect to pay less for long term rentals than they do for short term…you (The new owner) still have to cover all costs incurred. Calculate your return by ensuring it covers all fees. Mortgage, Community, Gas, Water, Electric, Rubbish collection, Taxes etc all have to be paid before you make any amount profit on the property.
If there is no rental contract already in place, you can get advice from your Estate Agent. They will help you list out-goings to calculate what rent you are best to charge…they should also be aware what others on the same complex are charging.
Having purchased property here in Tenerife you may continue to live in the UK. Will you manage the property or will you decide to opt for help? Many Estate Agents have Management Services: They will collect rent, organise any maintenance required and check the property is safe and secure.
To give you an idea of what you can expect to pay and re-coup, here is an example of a 1 bedroom apartment in 3 different locations in the South of Tenerife:
Las Americas: Nicely located with all amenities nearby. Here you can expect to pay approximately €90,000 plus for a 1 Bedroom apartment, 1 bathroom with fitted kitchen, lounge/dining room and a terrace etc. There is usually a swimming pool on most complexes.
Rental return on a property like this one can be: €550 + a month for a long term contract. (€6,600) per annum.
Los Cristianos: For the same type of apartment above, you can expect to pay less here than you would in Las Americas. 1 bedroom apartments can start as little as €80,000. Again all within easy walking distance to bars, shops and local amenities.
Rental return on a property like this one can be: €450 + a month for a long term contract. (€5,400) per annum.
Fanabe: A more upper class area than both Los Cristianos and Las Americas. The area is much quieter; it is away from the hustle and bustle of too many shops and bars. Prices are higher and a 1 bedroom apartment here, may set you back as much as €150,000.
Rental return on a property like this one can be: €1,000 + a month for a long term contract. (€12,000) per annum.
Remember to check what the community fees will be as they can start as little as 80 euros / month but do increase significantly depending on the complex facilities and location.
The best rental incomes are in the popular tourist areas of the south, such as Las Americas and Los Cristianos… there is also a huge need for rental property here due to the number of residents wanting to live and work in the same area. Your property could be rented out all year round if you buy in the right area and rent out at the right price.
Before you buy, ensure you have the right to rent out your property short or long term: Recently tourist accommodation inspectors have been appointed across the Canary Islands, it is their task to clamp down on the apparent illegal renting of self-catering accommodation to tourists. Many property owners are however, unsure about the law governing renting to tourists and the implications for their own properties. Ask your Estate Agent for more details.
The law as it stands now is: Ley 7/1995 (as amended by Ley 5/1999 was introduced throughout the Canary Islands in an apparent attempt to harmonise the regulation and administration of short term rentals to tourist. This law states that on a community or complex which is legally designated as “touristic” (as apposed to merely “residential”) owners may commercially rent their properties to tourists provided that they do so through a single agent or administrative entity, which has obtained the exclusive licence to “exploit” on that complex.
Sunway Tenerife have over 25 years experience, please call for more information about buying Tenerife Property as a Rental Investment. Sunway staff are able to offer you a wide and varied selection of property across the south of Tenerife as well as one of the most professional services on the island!
