It's already June, and we're battening down the hatches to prepare for the annual tourist inundation here, having enjoyed a tranquil May. In this month's newsletter we kick off with an interesting article showing why the property market in Tenerife has been so different from mainland Spain. We also take a less than nostalgic look back at life in the dear old UK, and reveal some shocking differences with life here. New developments in Amarilla Golf are making fantastic progress, and we bring you some pictures from Royal Marina Golf, where foundations have now been laid. And as usual, we bring you cuttings from the local news as well as the newest instructions, best bargains and the cream of our resale portfolio. We hope you enjoy the read.

Tenerife is one of Spain's oldest colonies, a political status that is a remnant from times past. Like many colonies in the world, there are many economic, political and social factors which make it so separate and unique that it is almost a nation unto itself. With its all year round perfect weather, winter does not make Tenerife become a string of ghost towns, like those that litter the Spanish coastlines, rather it is a time when the island is at its busiest and most vibrant. Indeed, as hosts of one of the world's biggest (and best) carnivals, February and March see Tenerife at its most vivacious. Comparing the sunny south of Tenerife to the Costas in the mainland is like comparing chalk and cheese.

One very good example of the difference between the two is the property market. As a small island, the influence of foreign property buyers is much greater. Estimates say that a massive 42,000 homes in Tenerife are owned by the British alone, a huge slice of the total market. It's no surprise that many of the factors that affect mainland Spain, like unemployment or government housing schemes, have little or no influence in southern Tenerife. For the last ten years, the Costas have been experiencing a huge property boom, and greedy developers have been building apartments on every last inch of land, whether they had planning permission or not. Corruption was rife, profits meteoric, riding on a wave of media hype to foreign buyers. We are now at a point when it looks like the bubble there will burst, and it's hardly surprising.

While all this was happening, Tenerife went its own way. In 2001 the island government voted a moratorium on new touristic building, putting the brakes on the supply of new homes. Without the artificial media frenzy that property developers incited on the Costas, price rises were more moderate. In fact, with the high number of foreign buyers, the growth was similar to the UK: strong and sustainable.

Today, property in Tenerife continues to rise in value, while the Costas stagnate. The foreign buyer market is as strong as ever, which parallels the number of tourists this small island welcomes. With a record 6 million tourists in 2006, and even more predicted in 2007, the future is looking even brighter. Property owners are achieving rental income that their friends on the mainland can only dream about. We all know that millions of people in the UK are aiming to purchase somewhere in the sun, and Tenerife is perfectly placed to receive them. The lure of eternal sunshine has had the low cost flight operators scrabbling to get routes to this island paradise. Tenerife is sitting smugly while the Costas are starting to panic.

But that is not all that is fuelling the steady demand. Tenerife's resident population is one of the fastest growing in Europe. Local demand remains strong, and with new mortgage lenders on the market offering all sorts of products, it has become so much easier for residents to borrow. And new mortgage applications are on the increase in Tenerife, rental costs are high here, a very persuasive reason for locals to buy as soon as they can.

So, just like the weather, the immediate future for property in Tenerife looks sunny. But it doesn't stop there. Looking deeper into the crystal ball, the outlook is even more positive, at least for Tenerife. The impact of global warming is going to be in the headlines for the next few years. Climatologists agree that Tenerife will be relatively unscathed. A report commissioned earlier this year by Halifax Holiday Insurance Services identified that while almost all popular destinations of today will experience dramatic change by 2030, Tenerife may only experience a few more tropical storms and some coastal erosion. It is only a matter of time for property pundits to jump on the global warming band wagon and start to analyse the effects on the international property industry, and when they do, Tenerife will benefit enormously. 2030 may seem a long way off, but it is within the timescale of many mortgages taken out today.

Global warming will affect other areas to a much greater degree

Many of us working at Tenerife Property Shop have been expats for some time. We can sometimes be a bit naïve about life in good old Blighty, remembering it with some nostalgia. We often don't realise how lucky we are and appreciate some of the smaller benefits of living here that make a big difference to our lives. For example, a shocked colleague came into our office the other day, fresh from having met with a client. “Do you know that they only collect domestic rubbish once every two weeks in the UK?" He asked us all. Now some of us, more recent evacuees from the lands of rainy weekends and two hour traffic jams, were unsurprised. Those of us for whom the UK is a warm fuzzy memory of village cricket greens and strawberries and cream were aghast. We are spoilt here, it seems. Rubbish is carted off on a daily basis. In fact they even do it at night, so it doesn't offend anyone. To us, the idea of leaving festering rubbish for a whole two weeks is appalling. Especially when we learn that council rates have more than doubled since 1999... what is it exactly that you are all paying for? Stop dithering, come and move here, to civilisation

The conversation moved onto what else makes living in the UK so expensive...

Getting around in the UK is extortionate! Not only do you have to contend with the incredible parking costs, but also urban tariffs and tolls.


Converting the Tenerife rates to sterling, you can see that the difference is staggering. Another factor is that the distances we drive here, in Tenerife are much shorter, and we don’t waste nearly as much fuel idling in traffic jams.

Diesel is exactly half the price here!

The average energy bill in the UK is ₤900 – about Euro1200. A straw poll around the office suggests that average energy bill in Tenerife is closer to Euro480 per year. Of course, new laws say that all new properties being built must have solar heating, and those of us who have it fitted pay about Euro240 a year.

We went virtual shopping, comparing Sainsburys with Mercadona. Putting together a simple meal consisting of avocados, followed by pork chops with a tomato and cucumber salad and new potatoes, our intrepid researcher shopped on-line for the ingredients:


Using the exchange rate at the time of shopping (28th May), the Mercadona bill converted to 6.93 pounds – so the total shopping bill came to 2.80 pounds less in Tenerife – a saving of 28.6%!

Income tax here is obviously lower, but it's fairly complicated to work out (as any accountant will tell you). Rates are much, much lower but vary from one local area to the next both here and in the UK. Perhaps the easiest direct comparison is sales tax; VAT, or IGIC, as we call it here. You pay 17.5% on top of everything you buy. We pay 5%. No further comment required!

We go out more here, because it's cheaper. Colleagues all have UK horror stories about the price of beer back home or the cost of a meal out. And heaven forbid that anyone should consider smoking a cigarette. Come to think of it, the UK is banning smoking virtually everywhere... but we'll leave personal liberty out of this comparison! Dinner for 2, with wine and then a few drinks seems to cost people here anything from Euro25 to Euro60 for a 'normal' night out. Some of our colleagues are obviously quite economical, but even a 'posh' night out at a top of the range restaurant will cost a fraction of the UK cost.

We could probably continue for pages and pages comparing prices and illustrating the difference in cost of living. At the end of the day, the really important thing for all of us is quality of life – slightly more difficult to calculate, but not impossible. All of us here have benefited from our move. The weather is obviously one advantage, but the real difference is in the way life is lead, and how much time you have to lead it.

UPDATE: We have just heard about the UK weather over the Spring Bank Holiday: "Britain was colder than Lapland and the Arctic Circle - even Siberia was balmier at 20C..." Perhaps we were underestimating the weather as the 'real difference' between here and the UK!

For those of you who have bought into the exciting new development, Royal Marina Golf, in Amarilla Golf, or are considering doing so, it's worth taking a stroll down to the site and looking at the progress. The development is taking shape at a great pace! Work started on time and the foundations have now been laid. Set in the midst of a golf course, the complex will have an attractive pool area surrounded by landscaped gardens. There are only 51 Two bedroom apartments, designed to take in the fantastic ocean and golf views which are just a short walk from the new marina. Prices here start from only Euro262,500... incredible value for money when you consider the quality of materials being used. If you'd like to know more, or take a look at the specification list, then email us at This email address is being protected from spam bots, you need Javascript enabled to view it and request a copy.

The proportion of buy-to-let investors selling their property at the end of their tenant lease jumped to 5.2 per cent in the first quarter of the year, according to a survey by the Royal Institution of Chartered Surveyors (Rics). The level of selling is now at its highest in two years.

But the unstoppable rise in house prices - in contrast to only modest growth in rents - has left yields at record lows. After costs and allowing for vacancies, returns are likely to be around 3.5 per cent, far below the 6 per cent or so needed to service many buy-to-let mortgages.

Rics predicted that many more landlords may bail out of the market, saying "Many landlords are -selling into the still tight housing market in light of falling gross yields and -rising borrowing costs, May's interest rate rise combined with the -prospect of another rate rise in the coming months may yet lead to further landlord sales as they come under greater financial strain." The survey found that overall tenant demand increased at its slowest pace since the start of 2005.

Meanwhile the UK taxman is preparing to clamp down on tens of thousands of buy-to-let property owners who may not have paid enough tax. HM Revenue & Customs has identified 80,000 landlords who may have claimed too much tax relief or have failed to declare the amount of rent they receive from the property, or a capital gain made on the sale of the property.

The Revenue can claw back unpaid tax from as far back as six years, which means that some of those who have bought properties to rent or are letting their own home could face tax bills so large that they may have to sell their property. It also has the power to impose penalties, which can reach the same value as the unpaid tax bill, and charge interest on the sum.

It is predicted that many buy to letters will be moving their portfolios further afield and out of the UK. As the ratios for domestic buy to lets become increasingly worse, the newer phenomenon of ‘fly to let' is likely to become the logical choice for many investors.

Timeshare Touts Banned

Have you been to Los Cristianos lately? The promenade outside our Compostela office, by the Las Vistas beach has been completely cleaned up! This time it's not rubbish we're talking about (though some might debate that), it's the absence of timeshare touts. The local council have finally managed to ban all the scratch-card scoundrels, and you can now walk from one end of the promenade to the other without the constant, “S'cuse me ... you British?" and “Everyone's a winner luv". Life here just keeps getting better.

Dia de Canarias

We all enjoyed a public holiday here on the 30th May, Dia del Canarias. This is a day when all things Canarian are celebrated and the differences between the islands and the mainland are reasserted.

The day celebrates the first session of the autonomous Canary Islands Parliament, which took place on May 30th, 1983, when the Canary Islands gained greater powers of self-governance after the return to democracy in Spain. That parliamentary session took place ten months after the publication of the Estatuto de Autonomía (Statute of Autonomy) in August 1982, which had introduced the concept of a "Canarian nationality".

Every village seemed to have its own fiesta, with guitars of all shapes and sizes out in force. Be warned though, should the infectious good humour suck you into this celebration next year, Ron con Miel (the traditional local honeyed rum) is not the best tipple if you happen to be working the next day. There were some sore heads around the offices on the 31st!

Formula 1 in San Miguel

The Town Hall in Tenerife have been reviewing plans for a new Formula 1 circuit in San Miguel. It looks like the project is going to go ahead, providing a massive pull for tourists in the future. It is anticipated that on non-race days, visitors will be able to whizz around the track in all sorts of vehicles and sports cars, a facility which will also be targeted at the corporate events sector.

Golf

Nikki Garrett won the Tenerife Ladies Open at Golf Del Sur between 3rd & 6th May. If you want more info go to www.ladieseuropeantour.com then to Tenerife Ladies Open