Market Pricing

The property market on the island has seen something of a boom in recent years. To the degree that this level of growth simply could not be sustained. Historically it has been easy to get a mortgage here, as banks have tended to value properties at above the asking price. This is no longer the case. The credit crunch has hit here too, valuations are much lower and banks willingness to lend has reduced considerably.

Buying to rent out

Firstly, this isn’t an original idea…. many before have had the same idea to the degree that there is currently a huge over-capacity of apartments to rent in the main tourist areas.

This comes about because the Tour Operators and hoteliers are locked in a never ending cycle of use and abandonment.  This is how it works:

The Hoteliers commission a new hotel, when it is finished it is all bright and shiny.  The Tour Operators strike a deal with the hotelier.  However the buying power of the big Tour Operators is such that they pay real bottom dollar for the rooms.  The result is that the hotelier doesn’t retain enough capital for ongoing repairs and renewals.  Over time the complex deteriorates and complaints from customers start to come in.  When those complaints reach a certain level the Tour Operator pulls out and goes to another new complex.  What they leave behind is a complex in need of a revamp; but the owners don’t have enough cash to finance this.  So what they then do is sell off a number of apartments or maybe the whole thing either to individuals or to investment groups to revamp.  This is where the problems begin.

Firstly the Tour Operator is usually the airline provider as well.  With the exception of, XL Airways & Ryanair,  there are only direct charter flights by operators into Fuerteventura, so they know how many beds they will provide and how many seats they will provide on flights.  When they cant fill the seats with package holidaymakers they release them to bucket shops or sell them direct to the public.  The logic is, if there are empty seats there will be empty beds too.. which they then sell at REALLY silly money.  Take a look at Thomson’s site for example, and click on Hotels, you will regularly find rooms for £5.00 a night!!!  How are you going to compete with this?  Another irony is that it is often cheaper to book a package than a flight only…. same logic applies.

Secondly, there is the complex Management.  Their economics are historic and geared to high occupancy.  With the lower occupancy that inevitably occurs after a tour operator has pulled out the price of servicing each unit, maintaining the pool and gardens etc is to a degree fixed as regulations and licences dictate the number of times per week a pool has to be cleaned.  With lower occupancy the price each apartment owner has to pay will rise.  So generally speaking complexes with a previous history of tour operator occupancy will have a high overhead cost.  If the complex owner retains a majority holding of the apartments then it follows that they will have the majority of votes in the ‘community’ so basically they can do whatever they like with community charges either immediately or in the future and individuals will be powerless to resist this.  History shows that places that have previously been Tour Operator hotels have a VERY high community charge which makes them difficult to resell.

Thirdly, and fairly obviously, the ‘new’ complex the Tour Operator moved to offers an additional number of rooms to those which existed before, so yet more capacity in beds and no more seats on planes……. The cesation of XL and the withdrawal of Ryanair will limit the numbers of seats available, and probably cause a rise in prices also. All of these factors plus the huge swing in pound to euro exchange rates has made the situation for existing property owners more difficult. Many are trying to sell their properties and prices are falling (in euros). However the effect of the pound to euro rate has not led to a values significantly falling in terms of Sterling value.

Financing your Holiday Home

If you need to borrow to buy your holiday home and you are anticipating that income from rental will pay the majority of the costs, then you need to THINK AGAIN.  In this circumstance our advice would have to be DON’T do it!!!!

Study the figures below, they accurately reflect the current market economy.  At this time an apartment costing €100,000 would cost to buy by mortgage.  €12,000 in up front costs, €30,000 in deposit and €492 per month in repayment costs.  Not including community charges and or water and power if these are not included in the community charge.  So even at a very low community charge of say €80.00 per month including water and power, you need to generate €572 per month to cover your outgoings. (Figures correct at 1st Jan 2009).

Long Term versus Short Term Rentals

Long Term

For…

• Only need 1 or 2 tenants per year
• Lower maintenance costs, probably only need a clean when there is a change over of tenant
• Less wear and tear than constant change of visitors

Against…

• You may not be able to use it yourself
• Lower gross income
• Possibility of non payment of rent
• Difficulty in evicting tenant

Short Term

For…

• Higher Weekly income
• You and family or friends can use it when you like
• You are paid in advance
• You can take a deposit

Against…

• You need lots more customers
• You need to advertise it continually
• More wear and tear
• Maintenance charges of at least  €50.00 per week, plus and keyholding if not in hotel complex
• Time wasted (to be paid for ) for late arrivals

The sums

Short term.   Say €250.00 (charge more and you won’t fill it)
Minus maintenance
Minus advertising
Minus possible keyholding
Minus breakages and deterioration
Net income say €170.00 per week

Lets say you manage to let it for 26 weeks of the year and for each week you kept €170.00 …. that works out at €4,420 per year.

If you let it out long term at €500.00 per month and each tenant changed every six months.  You would lose 2 months rental in commission and be left with a max of 10 months at €500, total €5,000.00.  Lets say it sat empty between tenants for a further 2 months, you would have 8 months at €500.00 equals €4,000.00.

So the economics are;  you stand to gain more if you let short term, but long term is less hassle and less return, but more regular income.  But with either option if you are borrowing to finance the apartment your income WILL NOT match your outgoings.

The only possible exceptions to this are:-

1.    Buy something in a developing area, NOT Caleta or Corralejo
2.    Offer something nobody else has
3.    Buy for your own use and treat any income as a bonus
4.    Buy for capital growth as your main aim

Comparing prices

Bearing in  mind all the foregoing, if you going to proceed, then you need a good tool for comparing prices.  This needs to include the infinitely variable community charge.  So the best rule is to add the current equivalent of 5 years community charges to every apartment for sale.

Only nothing is for free………..

You will probably have seen on certain websites properties that seem to be VERY cheap……there will be a good reason for this which could be any or all of the following:-

1.    In a bad area
2.    High community charge
3.    Property already sold but left on website as a ‘come on’

You may also see the same property on sale with a number of different agents at different prices.  This is because in Spain the seller fixes the price, tells absolutely every agent they can find and all those agents have their own rules as to how much they mark it up by.  Typically agents in resorts or with websites add a MINIMUM of 5%.  I know of some who add €10,000 to  €20,000 on every property they handle.  Typically English Speaking people think they will get a better deal from their own countrymen or have a fear of dealing with a Spaniard.  I’m sure that the language element plays a big part too.  The fact of the matter is, that more often than not a property will be cheaper if bought in the ‘Spanish’ market than in the countrymens  market.  The reason being the local people just won’t pay the prices that the agents in tourist areas ask.  It could well be worth your while to employ a Spanish speaker to act on your behalf and buy through the Spanish market.

Taxes and Fees

You will often see or hear a figure of 10% bandied about to cover legal fees and taxes.  That 10% is not actually true, it’s just a rounded figure.  The costs are made of some elements that are fixed and some that are variable so each case is a little different.  A good deal depends upon how you are going to finance your purchase as all banks and lenders have a 1% to 1.5% arrangement fee, and additional conveyancing costs plus 2 lots of notary fees. So if you bought with your own money your costs would be that much less.  You don’t actually need a lawyer here to act for you, but many prefer one.  They generally charge 1% or a minimum of €1,300, so this again can be reduced or eliminated.

As illustrated above, a property of €100,000 will cost you around €11,500 in fees etc. IF you finance it by mortgage it could easily be more. I suggest you use a budget of €15,000 if the property is to bought via a mortgage AND is priced under €140,000.
Agents historically have charged 5% for their fees. However there is clear eveidence that in many cases they are charging MUCH more.

Buying Land to Build Your Own House

This is often thought to be a less expensive option than buying something already built.

Theoretically this should be the case, but very often this can actually end up costing more than buying an existing house.  The main benefit of building to your design is that you get all the features that you want in a house, whereas often when you are looking at houses to buy there is usually some feature you don’t like or something you would rather have.

If you built an exact replica of an existing house, in close proximity, it could probably be built for less than the existing house is priced at.  However, many factors can combine to make this cost considerably more.  Some of those factors are:-

• Your fixtures and fittings including tiles etc are more expensive than a house ‘built to sell’ or your ‘project’ does not include certain items.
• The accumulation of fees and taxes can easily add €30,000 plus to a build
• The cost of the plot will have included commissions and taxes
• The location of the plot will have a big influence on material transport costs
• There are a number of things that you can easily overlook, such as boundary walls or fences, driveway, gates, garden, levelling the plot after build picon or gravel, garden stock, wardrobes, water heaters, kitchen appliances, kitchen units and fittings, curtain poles or blinds, light fittings, furnishings etc.  On a 1000m2 plot with a 3 bedroom house, these items could easily exceed €30,000.

You may hear from some sources that the cost to build here is around €900 per metre.  A far more realistic budget to include everything above and a plot of land, is more like €2000 per metre.  Even this can be easily exceeded if you choose things like lots of wood or marble and expensive tiles, fixtures and fittings.  I don’t know of a single person who has built and finished a house completely for less than this.  None of this takes into account the costs of overseeing the work, accommodation or flights and travel during construction.

Probably more important is the process of buying land.  MOST of land on the island CANNOT be built on.  Those areas where construction can take place have limitations on dimensions, styles and amount of construction possible on each site.  So many people have bought land with building in mind only to discover after the event that the person selling it was not authorised to do so and that the buyer does not actually have legal possession of the land.  The person they bought it from has disappeared and the buyer has lost their money.

If you ARE committed to following this course, you will need experienced help, which is also not included in the above figures.  Our charges are published on the website, using our service will save you literally thousands.

Some of the decisions you will have to make will be, who to choose to build, who to select as your architect, who will oversee the work.  If you don’t live here already and don’t have the local contacts you can very easily be caught out.

For example, choice of builder…   The building system here is TOTALLY different to the UK or mainland Europe because of the nature of the geology.  You will have to ask yourself how relevant an English or European builders experience is for this area?  Then there is the economy.  Just like the property market in general there are two very distinct economies here.  One for the locals and one for the tourists or foreigners.  Not speaking Spanish WILL cost you more for virtually everything.  The same applies to ‘tradesmen’ if they don’t speak Spanish they will be paying top dollar for everything they buy. The same applies to the wages of their workers.  Local wages are not high, Northern European workers have an expectation of high earnings so they charge more.  This isn’t limited to builders, it goes right across the board.

In building particularly, what you can’t see is more important than what you CAN see.  Here the construction method is predominantly concrete.  There are a number of different grades of sand and concrete mixes.  In order to cut costs and gain more profit some builders use local sand and lower strengths of concrete, or just less of it.  The appearance isn’t changed at all, but the stability and / or integrity of the building is changed vastly.  Unless you know what to specify and know how to tell which materials is used in what quantities then your ’cheap’ build can actually become something of a nightmare.  Some examples are…….it does not rain much here, but when it does it really means it….I know of new builds where they leak like sieves.  I also know of builds which have subsided because the foundation wasn’t sufficient, houses where the rainwater just floods into parts of the house in storms.  I also know of two very nice looking houses built recently that have no waste water system….. the drain pipes just end up in the ground UNDER the house….imagine how expensive that will be to rectify and how unpleasant it is now.  To avoid all these things and others, you need t know what you are doing and be here all the time during construction, or have somebody that does know and is here to look after things for you.

Where to Buy / Live

Location will be a major factor in any decision either a holiday home or a permanent residence.  Quite often people who have only been to the island for holidays base their choice upon where they have stayed and have knowledge of, or where they have visited and been attracted to.  Each area of the island has its ‘for’ and ‘against’ points.  There are a number of factors that you may not be aware of that could impact on your decision making process.  To attempt to cover them all here would not be appropriate as each persons circumstance is different.  Some things that people take for granted are not necessarily so easy to obtain here.  Things like mains sewerage, telephone lines, internet and mains power are not always the norm here.  For those thinking of living here, and those considering building here, this is even more important.

Before making any commitment to any property or land, you should arrange a meeting with us and have to hand all your requirements or ‘wish list’ so that it can be fully investigated in detail and advice on suitable locations given.  The cost of these meetings is published on the website.

Intimations and ‘Prospects’

People with a vested interest in parting you from your money, will quite often tell you whatever you want to hear……or perhaps gild the lilley.  As covered earlier in this précis you only get what you pay for.  If an area is cheap then there is a good reason for it.  In some areas, you may be told that a new golf course or marina or shopping centre or water park etc etc…. are planned.  My best advice would be believe it when you see it.

My experience is this:
If a developer wanted to command a high price for his properties he would make the area attractive by the addition of one, or a number of these features at the outset.  Ask yourself what incentive anyone would have to add these features after the building phase is finished and the properties sold?  These types of features all take up land…  In areas where it IS possible to build, modern day developers squeeze as many units per area of land in as possible, because land in these areas is expensive.  In addition any of the aforementioned features or facilities have an ongoing maintenance or running cost to them, which would be a different type of business.  The developer is not interested in taking on long term obligations, merely to build, finish, sell and move on the next project.

A typical case is where a new “urbanisation” has been started or built. The developer will as a matter of course build commercial premises such as shops, bars, clubs, cinema, restaurants etc in mind.  Those intent on selling you property there will be quick to point this out. The realities however are that for ANY business to be succesful a certain amount of trade is required. It is therefore always questionable when or if these locals will be filled, and if they are initially let or sold how long they will remain in business if they dont get sufficient patronage. There are many examples of this to be seen around the island, particularly in those areas developed or being developed a little way outside Corralejo.

Power and Water
These are 2 very important elements and essential to bear in mind particularly if you are considering building. Or those buying a newly built house. DO NOT ASSUME that you can get electricity.  A plot of land with water and power is probably worth between 20,000 and 35,000e more than a plot without, depending upon location. If you are considering using solar and wind energy, this is a viable option here, but the installation cost for a good system is likely to be about €35,000. Water is much easier to lay on, but there still needs to be a mains pipe running somewhere close by.

The buying procedure

We are often asked how the buying procedure works, many people hear snippets of information and get nervous at some of the things they hear or see on TV. Below is a basic guide to how it all works.
1…NIE  is a of national identity number, without it you cant buy or sell any asset of substance, such as property, cars, phones, water or electricity supply etc. And without this you WONT get a mortgage. They are REALLY easy to get but take about 6 weeks, we can help any potential buyers with this. Before coming over get a photocopy of your passport, thats the only thing you need to give in with the form.

2…MORTGAGES. the Spanish banks work just like British ones so far as lending is concerned, they will need to see that you can pay the mortgage by payslips etc They now also require an ‘experian’ credit check. So bring these with you, better still open a Spanish bank account while you are still in the uk…. As mentioned previously an NIE is ESSENTIAL to get a mortgage or buy property. As a rule of thumb, if you are intending to buy via mortgage you will need about 1/3rd of the total price FROM YOUR OWN FUNDS.

3… BANK ACCOUNTS  at least 2 Spanish banks have the facility to open accounts within the UK, they are BARCLAYS  and BANCO POPULAR. you can find both on the net, both have offices in London. Both have the facility to manage your account IN ENGLISH via their websites. With just a phone call, a fax and or an email you can be up and running, and both speak English.
4…FUNDS. have funds available if you are intending to buy, you will need about 10% of your budget to make an offer by OPTION CONTRACT
5…OPTION CONTRACT,  when you find your ideal property you make an offer, if that is accepted you make an option contract by paying a deposit, usually 10%. Each agent has their own version of this contract. It is very important to have it checked BEFORE signing.. Making this contract removes the property from the market, in the contract you jointly agree a timescale to complete the transaction, in front of the NOTARY. If you pull out by choice you lose your deposit. If the seller can´t produce all the paperwork or can´t sell the property the deposit is refunded. Be very careful with option contracts. The seller or their agent has an interest in making the time to complete as short as possible. This may not be to your advantage, we suggest you select 3 months as a time to complete. This ought to allow those needing finances sufficient time to have the funds in place. See example of contract with this precis and pay particular attention to the coloured sections. This may sound obvious, but dont sign ANYTHING you dont understand

PURCHASE CONTRACT
From the OPTION CONTRACT a PURCHASE CONTRACT will be drawn up, if you buy through us, this will be provided in English and Spanish

6…NOTARY. The notary is a kind of independent public licenced official, the transaction is done with the BUYER and the SELLER in person in front of the notary. The notary checks all the paperwork, if it isnt 100% he wont let the sale go ahead.  Money changes hands (bank cheques only) in the notary office & when you leave his office, the seller has your money and you own the property. the Notary records the transaction which is used later to register the property in your name and you will get a new deed (escritura)

7…PAPERWORK & DEBTS ON THE PROPERTY. Under Spanish law debts transfer with the property, this causes potential buyers some concerns, it is the sellers responsibility to produce all the paperwork, including unmortgaged deeds, tax receipts, certification of habitation, certification of final construction etc. Ourselves or your lawyer ( we can recomend english speaking ones if you want a lawyer) will have checked all this for you so there is no need for concern, the notary will also check this so you are safe.

8…TAXES. property tax would be payable by the purchaser at the rate of a max of 6.5%, we say 6.5% because it can be less in some circumstances, but generally unless buying a new property DIRECT from the constructor it WILL be 6.5%. Another tax briefly mentioned earlier is PLUS VALIA. Under Spanish tax law this is the responsibility of the SELLER. However in the Canaries it is common practice to pass this tax to the BUYER (see option contract example) . Unlike many taxes it is very difficult to say how much this will be for any particular property. The reason is in how the tax is calculated which is as follows:-  Each local council, periodically, fix a value on LAND in each location they control. The difference between the LAND value between the time the current owner bought the property and the time they sell the property is the element that is taxable However this value which the council fix has absolutely no relationship to the COMMERCIAL value or selling price of any property.
IMPORTANT NOTE. In some circumstances the buyer can later become liable for this tax. We take a special precaution against this which NO other operator does. This saving will pay our fees on its own.

9…FEES, allow at least  10% of the purchase price for taxes, and fees. Some of the fees are percentage driven , others are fixed, each case is a little different and will be driven by how you are financing the property and whether you use a lawyer or not. If you tell us how much you are going to spend and how you are proposing to finance the purchase, we can prepare a very close estimate of the costs for you. See note above.
10..ASKING PRICE. unlike the UK the seller fixes what he wants for a property, he or she will then put the property with any number of agents to sell as there is no sole agency as we know it in the uk. This can lead to the same property appearing with a number of agents for different prices… this is because the agents will use their own judgement to make their mark up to get their fee. It also generally means that there isnt a huge margin for negotiation….. but always worth a try Those with a pressing need to sell will be more open to offers than those who dont have this same pressure on them.

Black Money

This is a term used when an amount of money is asked for in cash, that is not recorded in the notary office or in the property register. We advise against becoming involved in this practice. The motive behind this is avoidance of tax by the seller. Unlike PLUS VALIA any profit made from the sale of property is taxable as if it were income. Although prevalent in the past my understanding is that the tax authorities here are working VERY hard to eradicate this practice as it results in many millions of Euros being lost in taxes. If you were tempted to enter into this type of arrangement it will almost certainly be to your cost at some future date. When the practice IS eradicated, which it surely will be, and  the time comes for YOU to sell the property, your ‘gain’ will be the difference between what was recorded in your purchase and the amount you ACTUALLY sell the property for. The tax rate for these gains is 18%.

Dont Be Pressured

At this time, January 2009, there are an enormous amount of properties for sale and not many serious buyers. Basically its a buyers market. Those with an interest in parting you from your money may well try to convince you that you need to act quickly…. dont beleive it!
Take your time, ask for a copy of the option contract to show to your lawyer or representative BEFORE you sign ANYTHING. Do NOT believe intimations of refundable deposits or ANYTHING that isnt recorded in black and white AND that you understand. Any successful salesperson will be plausible and personable and try to win your confidence and trust. Please rememeber that they are working primarily for themselves and the seller Their prime objective IS to make a sale. Unless you use our service the only person looking after your interests will be YOU. Armed with the information in this precis you will be much better prepared to look after your interests but you will be up against professional people who are looking out for THEIR interests.

Living and Working here

Visisting the island on holiday, whether in your own accomodation or rented is one thing. Living here full time is VERY different.
It is a sad fact that 8 out of every 10 people who come here to live end up leaving the island within a year, some last a little longer but very few more than 2 years. Many find they have lost so much money in their move that when they return to their native land they cannot re-enter the property market.  The main reasons why people dont stay are Lack of work or income, boredom, family ties or problems. Those who come here with school age children face even more obstacles.
Your chances of success will increase dramatically if you learn Spanish !!!  If you dont then you will be paying more for virtually everything. You will also be paying other people to either assist you or to do things for you.
Property in “Spanish” areas is much cheaper than property in “tourist” areas, both to buy and rent. This goes for accomodation type properties and business premises. Therefore a supplier based in a tourist area will have much higher costs than one in a “spanish” area. So you will pay more if you live, shop and eat in tourist areas.
Excluding accomodation like rent or mortage it will cost a couple living here AT LEAST €1000 per month. If you are proposing to run any kind of business, self employed for example, the MINIMUM cost of doing so will be and additional €500 per month.  Wages are not high here, yet many northern europeans have a high expectation of earnings. That is one of the primary reason why NOT speaking Spanish will cost you more. This is because you will be inclined to use suppliers in your own language, perhaps your countrymen. These also have to make a living and their living and operating costs mean that they MUST charge you more than a Spanish couterpart, particularly if they themselves do NOT speak spanish.
Example  “English” mechanic, charges €40 to €50 per hour and does not have direct access to manufacturers parts or specialist analysis equipment. Any parts they buy will be at retail prices.  The main dealers, who mainly speak only Spanish charge €29 per hour, have proper facilities and direct access to parts. There are many other similar examples in virtually every trade, and a great deal of people who portray themselves as accomplished  trademen are not necessarily what they seem.
Fuerteventura is a developing area, many of the official process´s like enforcment of trading standards and tax or social security controls are not yet as developed as other more developed areas, although these aspects are continually evolving. Your consumer rights here are much less than in the U.K, and if you encounter a problem it may well have to be resolved through the courts which of course are Spanish.
As a result their are many rouge traders here who work illegally, taking only cash. Although they MAY be a little cheaper you can run into big problems using these people. Many are not what they say they are, almost all will want a substantial deposit (50%) before they start. They may turn up and do the job they may not. The quality will be variable and they too may not last the distance so if and when you encounter problems and need them back they may well not be either here or in business anymore. (its easy to offer long guarantee periods if you have no intention of fulfilling ) Furthermore if you employ these people YOU will be held responsible for their taxes and social security payments.

Dont rush to buy….

As mentioned earlier, the vast majority of people who come here to live end up going back within a year. During their stay they will have probably purchased a property, car, furniture fittings and a great many other things in the race to set up a new home.  When they find out that it isnt for them for all manner of reasons they will have lost a great deal of money, they may have been using their former property equity to live on. Perhaps too much has been lost to be able to re-enter the property market in their native country. A far more practical solution is to take 3 to 6 months to see if you can get along here. We always suggest that new settlers rent out their home in their native country and rent something here. The income from the one should about equal the outgoing of the other. Within 3 months you will have a good idea is this can be a full time home or not. By the end of 6 months you will be certain one way or the other.  Also during that time you will have time to become acquainted with the local market conditions and be more aware of who to have confidence in and more importantly who NOT to.

Working here

People able to speak more than one language will find more opportunities, both existing and unexploited. Although it has to be said that unemployment is rising here with the economic downturn. Learning Spanish will be the best investment that you can make.
Those only able to speak one language will find things much more difficult. English speakers will find themselves limited to English based activities such as tourism or services to tourists. The number of people in this sector seeking work far outweighs the number of vacancies. The wages in these sectors are also very low.
The population here is also low, the whole island has a smaller population than most medium sized towns in the U.K  (100,000)  but is spread over a far greater area. As a result the number of clients for any business is very limited, many people find they have to do more than one thing, and works lots of hours just to make ends meet.
There is a huge overcapacity of bars, and eating places, so if your plan is to enter one of these fields then you will face stiff competition.  Trying something new, that does not presently exist is a good option, but you need to be sure that there is likely to be sufficient client uptake to make the venture viable.
Many other people will also be looking for ideas, so if you DO come up with a seemingly unopposed business venture, you can be certain that within a very short time period somebody will be copying you.  The more difficult & costly to set up, and the more personal skill  involved in a new venture the more difficult it will be for others to copy you.
If you plan to operate your own venture there are costs attached. The minimum social security contribution is around €250 per month. In addition you will need a book keeper to do your accounts and submit your tax returns and make payments. The cost of this will be not less than €120 per month. If you need a shop type premises in a tourist area you can expect to pay upwards of €2000 per month in rent, then electricity, water, Local taxes and rubbish collection. They may also be other costs depending upon your activities such as insurance, health and hygiene, fire precautions and equipment, cleaning maintenance etc. So in very simple terms the first €100 you earn EACH DAY will going to line somebody elses pocket. If you add your own living expenses to this you will be spending around €4000 per month just to exist. So you need to earn €1000 per week, (after material costs,)  to not dip into your savings. (not an easy task).
If you employ anyone you can expect to pay roughly 50% of their wages again in tax and social security payments.
As mentioned earlier, there are a considerable number of people who work illegally here, although they may have got away with this in the past, this is highly unlikley to continue.
The authorities here know full well what has been going on and their net is closing in. The powers of the authorities to seize property and assets including bank accounts and any other tangiable assets  is far greater than most northern europeans will be accustomed to. Our only advise can be, that if you cannot work economically & legally then dont work at all.

Schooling
As previously mentioned briefly, those with school aged children face even more hurdles. There are NO English schools here. Some schools have a limited amount of english support but your child should have at least a grounding in Spanish before entering the school system.
Children can be cruel at the best of times, your child will instantly be the “outsider” with all that it entails. Before you can enter your child into school, you will HAVE to be a social security and tax contributor. You will have to have an address here. The address alone, will drive which school your child goes to..
There is an English school in Lanzarote. Which is fee paying, in addition there will be travelling costs to the port and ferry to Lanzarote. In addition this travelling could impact upon your ability to work if you need to trasnport your child to and from the port each day. In all the costs will probably amount to well over €3500 a term.

Medical care
The standard of medical care here is good. But the facilities are not as great as in the U.K or other developed northern european countries. There is only one hospital, which is Puerto Del Rosario. If you are anything other than a tourist with a new style E111 card, you will need to be registered with social security to get treatment (see above for contribution).  You will also need to be registered with a doctor on the island and be able to speak spanish. If you cannot speak spanish you must take an interpreter with you. This rule also applies when attending a notary office. Both for obvious reasons.
Anyone with ongoing illness who requires ongoing medical care should think very carefully before settling here.
For specialist treatments, or advanced tests, or anything above basic dental care, it is often necessary to travel to Gran Canaria.
More medicines are available over the counter here than in the U.K but the costs are much higher.

This article was very kindly provided by John at www.fuertetrips.com – Thanks  John!