Buying Property or Renting? Advantages and Disadvantages of Different Housing Options When Moving to Tenerife

Living abroad has lately attracted more and more people. Many of them are choosing Tenerife as their new home. Perhaps you too are so enchanted by this Spanish island that you are thinking of moving here. Sooner or later, however, you’ll probably ask yourself whether it’s better to rent or buy a property. The answer is not always straightforward. In this article, we will present the advantages and disadvantages of both options. 

Is Living in Spain a Reasonable Option for Me?

According to Erste Group estimates from 2023, only 20% of households in the Czech Republic can currently afford to buy an average apartment. The reason is high prices and expensive mortgages. Evidence of the unaffordability of home ownership in the Czech Republic is also provided by the “Price to Income Ratio”, which is determined by the ratio of the price of an average property to the average annual income of a household. The indicator tells us how many years it would take a given household to pay off its mortgage if all of its income were spent on this purpose. In 2023, it took 13 years in the Czech Republic, while in Spain in the same year the indicator is 8 years. 

Of course, many may argue that with a Czech salary, paying off a mortgage or buying a property in Spain is much harder. However, this may not be true at all. The average price for an m2 apartment in Tenerife is €2,300 in the city center, €1,650 outside the centre (if you don’t count tourist-exposed areas like Los Cristianos or Las Américas, where prices are significantly higher). If we compare this to the average apartment in the Czech Republic, we’ll be looking at around €4,400 per m2 in the center and €3,200 outside the city center. 

These figures show that buying a property in Tenerife can be significantly more affordable than buying an apartment in the Czech Republic. However, we don’t always have sufficient funds to put down a higher amount to obtain a mortgage or a one-off purchase of an apartment. In such a situation, renting is the best option. But can I afford it? Renting a one-bedroom apartment in Tenerife will cost you on average around €1,000 per month, while renting a three-bedroom apartment is around €1,200-1,500. However, it depends on the area you would like to live in. If you don’t necessarily need to live right on the beach, you can find housing deals starting from €500-€600 per month. 

Benefits of Buying Your Own Home in Tenerife

The main advantage of buying instead of renting is that our monthly payment doesn’t just disappear into the landlord’s account, but is essentially a future saving. With each successive mortgage payment, you build equity and save the costs associated with renting. 

In addition to this key concept, the main advantages of buying a property are:

• Customizing your home to your liking: You can customize your own property to your exact needs. You can renovate and furnish it to suit your taste. Moreover, you can be sure that the money you invest in remodeling is invested in a property that belongs to you.
• The possibility of passive income: In Spain, the average rental price is significantly higher than the monthly mortgage payment. So, if you don’t plan to live in your property immediately or only want to stay for a few months of the year, you can rent it out to earn a steady rental income.
• More stability: Owning your own home provides long-term security and peace of mind. If you are planning to settle with your family abroad, you can be sure that you won’t be deprived of your home by a rent eviction and won’t have to look for a new place to live.
• Investing in your future: With uncertainty about pensions and retirement, buying a home is a way to ensure financial stability in old age. You’ll save costs that you would otherwise spend on rent each month.
• Money valuation: Inflation gradually reduces the value of your savings. One way to preserve this value is to invest in property, the value of which is likely to increase over time. This is especially true for attractive locations such as Tenerife, where property prices have been rising at a significant rate since 2020, having already increased by more than 30% since then.

Benefits of Renting in Tenerife

Although it has already been mentioned here that in Spain the monthly rent is higher than the mortgage payment, not everyone can afford this option due to the insufficient funds available to obtain a mortgage. Therefore, we will now take a look at the benefits of renting an apartment in Tenerife.

The main advantages of renting include:

• Lower initial costs: A deposit of two to three months’ rent is usually required when renting a property. This is a much more affordable solution for many people compared to a mortgage, where you need to save at least 30% of the property value.
• Easier to relocate: If you move frequently for work or family, renting offers more flexibility. You don’t have to search for a buyer or deal with the complex administrative tasks involved in selling a property on the property market.
• Being able to adapt to your financial situation: If your financial situation changes and you are unable to continue paying your current rent, you can find a cheaper place to live more easily than if you had to continue paying your mortgage.
• Easy return to the home country: If you find that living abroad doesn’t suit you, or you just want to give it a try, renting is an ideal solution that allows you to easily return to your home country. 
• Renovations and repairs are the responsibility of the owner: The cost of regular repairs and maintenance caused by the age of the property is borne by the owner, not by you as a tenant.
• No property tax to pay: Although property taxes in the Canary Islands are relatively low, it is still a significant amount. Renting avoids this obligation.

Middle Ground: Rent With the Option to Buy

If you are interested in owning a property in Tenerife in the long term but don’t have the capital to do so, you can opt for a third housing option: renting with the option to buy. 

This intermediate option, which is becoming increasingly popular in Spain, allows the purchase price of the property to be gradually reduced by the rent paid until the sale is completed. As a result, there is no need to have so much saved up in advance.

Deciding whether you want to live in Tenerife or rent is not easy. If you are facing this decision and you are not sure, do not hesitate to contact us. We will be happy to help you choose the solution that best suits your needs.