The days are getting shorter, but fortunately the sun is still shining all day as we bring you November´s news from Tenerife. This month is packed with information: we have good news to share on inheritance and gift tax, new transparency in mortgages, and the first of our series on moving to Tenerife, concentrating on education. We report on a survey indicating just how many of you are planning to make the move away from the UK, and no wonder! Just as bad news comes from the UK about buy to let investments, it is matched by good news for those same investors here.

You may also be considering Cape Verde as a possible property investment, in which case don´t make a move without reading our analysis of the market, you just need to register your interest to receive the free report, soon to be published.

And as usual we round off with local news cuttings from the island and a collection of the best bargains and most interesting properties on the market today.

Many of you who are considering retiring or relocating to Tenerife will have noticed that we pay less tax than almost anyone else. In fact, it is a powerful reason why so many people choose Tenerife as their home... and why so many people leave the UK. In January the benefits are going to get even better, and the reasons to move to Tenerife will become even more compelling.

By far the most unpopular (and unfair) taxes in the UK and Ireland are inheritance and gift tax. Die in the UK, and your assets over £285,000 will get taxed by 40 per cent before your family get a look in. Gordon Brown has announced that this will increase to £350,000 in 2010. Considering the value of many people´s properties, this is small consolation. You could try and get round it by bestowing a gift to your children before death, but if you die within seven years of doing so, they count it as an inheritance and backdate! In the UK you have to plan when you are going to die if you want your family to inherit your estate. Die too soon and they may well have to sell the home to pay the tax.

There is a way around this. Move to Tenerife!


Finance Minister, José Manuel Soria recently announced that the Canarian government is to effectively scrap inheritance and gift tax from January. Technically-speaking the tax is a national one and therefore cannot be done away with, so the local government have found a loop-hole. They aim to pass legislation that grants a 99.9% exemption.

And if you decide to give a gift to your family... a villa, a yacht or just a pile of cash (it´s so difficult to choose a present), then that will have the same exemption.

This move fits glove-like with Tenerife´s strategy to attract high value tourists. As our environment, services and infrastructure are improved with each passing day, the island is proving to be an increasingly tempting lure for many of those tourists to consider settling more permanently. Our new property developments are built to much higher levels of quality and luxury and wealthier clients are undoubtedly buying in increasing numbers. New tax concessions, such as this, will further accelerate this migration... and increase the demand (and prices) of luxury property.

Good news for mortgage holders is forthcoming from Madrid as Congress has passed a new law regulating the mortgage market. Under the new legislation increased transparency in financial transactions for house buyers will be paramount, and those seeking to change mortgages from one lending house to another won't be penalised to the same extent as before. It is expected that the law will translate into lower costs for homebuyers and those looking to re-mortgage their properties. The law has still to be approved by the Senate.

Education in Tenerife

As promised in the October edition of this newsletter, we are beginning our series on relocating and living in Tenerife. Over the coming months we will be covering all aspects of making the move, starting this month with the thorny topic of education.

The first question any parent will ask is, "How do schools compare to the UK?" And unfortunately there is no answer. Schools in the UK vary enormously and different types of school may get the best out of different types of children. Ask twenty parents in Tenerife what they think and you will get twenty different answers, none of which may be relevant to your child and their own circumstances. It´s a tough one that can only really be answered by some research on your part - after all you are the expert on at least one side of the equation - your child.

Just as in the UK, there are two systems; private and state schools. State schools naturally conduct everything in Spanish, so have the advantage that your child will be immersed in a new language, and therefore will learn it quickly. Younger children tend to respond well to this, but those in their teens can find the cultural change detrimental. Those who need to catch up on the language will often be put a year behind, which may also dent delicate teenage pride. Certainly, if it is your intention to make your permanent home in Tenerife, then fluency in Spanish will increase your child´s career prospects later. Some parents find that they need to complement the Spanish system with additional English lessons as their written English may fall behind.

There are Spanish private schools, but British expatriates will tend to choose English ones for obvious reasons. With the ability to transfer directly into an equivalent system to the UK, taking up the reigns with minimum disruption to their education, there are powerful reasons for taking this option. Moving country is a big change in a child´s life, so the familiarity with teaching style and curriculum may help make the transition less traumatic.

Having decided whether to choose the English or the Spanish system, the next step will be to narrow down the actual school. As in the UK, state schools have catchment areas, which may limit your options. Some schools have buses, but even so, you will need to be fairly close to whichever one you choose. Nothing will replace actually visiting the school. You´ll get a feel for the level of discipline, the character of the school and the facilities. Look at the class sizes, and the academic achievements which should be available for your inspection.

Tenerife has a fast growing population, especially in the south. Make sure that education is one of the first things on your list of priorities, because schools can often be over subscribed. The earlier you register your child for a place, the more chance you have of enrolling them in your first choice of school.
 

Bad Weather Driving Brits Abroad

This summer's bad weather has led to almost half of Britain considering buying a place in the sun, new research has found. A survey conducted for Yorkshire Bank found that 43 per cent of people were thinking about purchasing a property abroad.

The poll of 1,000 people found the biggest draw for buying an overseas home was the prospect of guaranteed sunny weather, cited by 66 per cent of respondents. A further 55 per cent said the dream of a more relaxed pace of life enticed them to buy a foreign pad.

Spain and the Islands were found to be the most popular destination for prospective overseas property buyers, with 45 per cent of respondents saying that they would invest in a holiday home here. An additional 31 per cent of people said that they would buy a property in the country as part of their retirement plans, while 32 per cent of those questioned said they would buy a property abroad as a long-term investment. Meanwhile 15 per cent said they would consider buying a home abroad as their best option to get a foot on the property ladder.

However 44 per cent of Britons said they feared they could taken advantage of as they did not understand the buying process abroad and 35 per cent said they thought they would find it stressful trying to recruit the necessary professionals, such as estate agents and solicitors. A further 34 per cent said they were concerned about how they would negotiate a sale in a foreign language.

Commenting on the results of the survey, one of Tenerife Property shop´s Directors, Mary Spencer, smiled and said, We´ll have to assume that those with all those fears are considering buying on the mainland because we have been taking the stress out of buying in Tenerife for the last 21 years... and with an unblemished record: in all that time every single property we have sold has been transferred with clear and unencumbered title deeds!

Buy to Let...or Fly to Let?

Property Investors have been having a hard time in the UK, but their counterparts in Tenerife have had the opposite experience.

The Buy to Let market has been suffering in the UK and Gordon Brown´s adviser on the housing market, Kate Barker confirmed that the market is heading for a slump. The problems have been due to the rise in interest rates which have brought mortgage repayments over their rental income threshold and an oversupply of rental properties. Many investors took out fixed rate mortgages in 2004 or 2005 and interest is now being recalculated on many of these. Some 300,000 buy to let mortgages were taken out last year, and the stock of rental properties has risen to record levels. Rents in many parts of the country have been dropping.

While this has been happening, investors who decided to opt for rental properties in Tenerife have been receiving some good news. Many investors had been put off by long term lettings because the law favoured the tenant. But now legislation is changing to allow express evictions, which is likely to woo many away from holiday letting to the allure of a steady income that does not require constant marketing.

But policy makers are going a step further to increase demand for rentals. Many young and low paid Spaniards are priced out of their country's housing market, and so plans have been unveiled to launch two new schemes to make it easier for people to be able to afford to rent the sort of home they need. Tenants, no matter what age they are, will be entitled to tax relief, and 22-30-year-olds will be entitled to a direct accommodation subsidy of several hundred Euros a month.

Combined with the meteoric rise in population, and the availability of bargains on the market, Tenerife is set to become the darling of the property investor. John Socha of the UK´s National Landlord´s Association says, "Professionals look at rental income, not end profit. Novices do the opposite." Tenerife´s market is certainly ripe for this type of investment, with such a high level of rental demand set to get even higher.

FREE Cape Verde Research Pack

There has been a frenzy of media interest in Cape Verde, a group of Atlantic islands to the south of the Canaries. This has prompted many of you to ask us about the viability of investment there, and we have been spending a large amount of time and resources in researching this market on your behalf.

Those of you who have experienced Tenerife Property Shop´s services will know that we are thorough and extremely protective of our unblemished reputation. We place the safety and security of our clients above all else, so you can imagine that our research into the property market in Cape Verde has been exhaustive, analysing a multitude of projects on the islands and assessing its viability, as well as performing due diligence on the companies who are behind the developments. We are unimpressed by hype, dismissive of hard sales tactics and meticulous in our approach.

If you are interested in this market, and would like to know more, we will soon be in a position to release our findings. If you would like to share this information then click here and fill in the form so that we can send you the report.

Lineker in Tenerife

Gary Lineker has been recently spotted in Puerto Colón... in front of our offices actually. The erstwhile footballer, taking a break from the cold weather, was spotted by us trailing a line of teenager autograph hunters.

Population up 12% in 5 years

The registered population in the Canaries increased by 12%, the highest growth in Spain in the last 5 years. Even these official figures are thought to grossly underestimate the true population, as many Europeans, including British and Irish, do not register themselves.

Water charge on tourists

Experts in the Ministry of Environment are proposing an additional charge on the water consumed by tourists to avoid an increase in the price of water for the resident population. Experts in the Ministry stressed that tourists represent 12% of the private consumption of water.

Ritz-Carlton Buy Abama

The luxury Abama Hotel and Golf course has been acquired by the North American hotel group Ritz-Carlton. They plan to market the resort to Americans, telling press that this strategic decision was made because the island is set to become one of the main holiday resorts in Europe. They expect other luxury hotel groups to follow their lead.

Formula-1 to coming to the Canaries

Two of Formula One´s biggest wheels, Bernie Ecclestone and Flavio Briatore, have indicated their willingness to fly over to the archipelago to help close a multimillion euro operation involving plans for a top class international circuits to be built in Granadilla.

Euribor - the interest rate most commonly used to calculate mortgage payments in Spain - dropped last month to 4.647 percent, the first monthly fall since September 2005. This is due to the recent decision of the European Central Bank not to raise interest rates in the aftermath of the summer credit crunch, and will mean slightly lower monthly mortgage payments for borrowers whose mortgages reset in the next few months.