Guide to Buying a Bar
The information below is provided by Mr Jon-Paul McTavy who bought The Hanging Monkey Bar in June 2004. The guide was written by Jon-Paul and is hopefully a helpful guide into the process of buying a bar and his own problems and hidden costs that come with the bar.
Where to Start
Electric and Water Bills
Learn the Language
Things to Look for...
Where to Start
It's many people's dreams to live in a different country with hot weather all year round and to of course, make a lot of money. For me and my girlfriend
we started out by visiting Lanzarote / Puerto Del Carmen quite a few times and getting to know people. This can be an important part to the whole process as there is a nice friendly English community
in Carmen who will help you out.
We of course did some research on the Internet and found many different web site dedicated to selling business in Lanzarote. After some time, doing research online and chatting to people in Puerto Del Carmen we came across a bar that we liked the looks of. After a lot of e-mails we went over to view this bar and around 3 months later we bought it.
With leasehold you are basically buying a rental contract for 5 years (this is the normal length of time although can differ).
You are buying the contract off the landlord/lady who you will pay a monthly rent to. The rent can be anything from 600 euro upwards.
Leasehold is by far the cheaper of the options but if you have plenty of money to spare you could buy it freehold.
We bought a lease on our bar funding it with our own money and so did not investigate the details of a freehold purchase.
Because we bought our bar Leasehold I cannot really give you a better insight into this. I will however find this information out soon and update this page.
Quite simply .don't expect this to be quick.
Things seem to go quick but you will always hit a snag. In addition, the Spanish can be rather laid back and will never rush to do anything. I would not worry about this though as once you have been living
out in Lanzarote for a few months you will soon be joining them for afternoon naps. I think it took us around 2 months but only a day to secure the contract. You can specify a time but
obviously both parties have to agree so in theory it could take a few weeks or could take months.
Putting down a large deposit is advised as the Spanish have a lovely law for this. If you put down a 3,000 deposit and it's agreed and the landlord/lady pulls out of the deal they have to give you double your deposit back.
If you pull out you lose the deposit so ensure that you are fully committed to buying the property before you put a deposit down.
It's wise to make arrangements to visit places first and find out as much information as possible as you will find hidden things when buying somewhere so the less surprises you get the better.
When you buy a business do not expect it to come with an apartment, a lot of the business for sale do not come with an apartments so this is your first extra cost.
When you first move over to Puerto Del Carmen (or anywhere for that matter) unless you can afford to buy a apartment outright you will have to rent. The reason I say outright for buying an appartment
is that you need to be a resident and have a NIF/NIE number before you can get a morgage, you also need to prove your income which is difficult when owning a bar as not many people keep this information.
Renting is much the same as it is in the UK. You pay a deposit and a few months rent in
advance and normally sign a contract. You will be looking at anything between 400 - 1000+ euros a month depending on what you go for.
When you have the business you need a solicitor. They are a few on the Island but we went with a company called Dye Consulting which has proven to be one of the smartest
moves we have made. The people you deal with here are very helpful with everything and anything. They will keep you on the straight and narrow with bills and all legal issues.
The tax is on the number of tables/members of staff and number of names on the bar licence, this price of this of course depends on these factors.
With me and the girlfriend our Tax is dealt by our solicitor (he/they do a lot which is great!). Below is an example of how you pay the tax for the bar you own.
An example is:-
700 euros monthly rent
100 euros of this is TAX
So the landlord/lady is actually only getting 600 euro, you would keep the 100 aside and pay the Tax every 3 months, so 300 euros Tax.
Electric and Water Bills
The electric and water bills are again paid quaterly and are quite a cheap bill. The easiest method of paying these bills is to setup a direct debit payment which can be easy enough if you can speak Spanish or have someone with you who can.
Costs you might not know of
After we had bought the bar we started to find some costs that no one had actually told us about. The first one is obvious now but at the time it could
be the last thing on your mind.
National Insurance needs to be paid for you and your bar staff. You pay this at the end of each month as normal like you would if you worked in the UK and you have to pay for anyone who you employ.
Change of Licence will of course have to happen. This cost us around 600 euros which is a one off payment. You also have to pay for advertising. Although I'm not 100% sure about this law, I do know that we have to pay to have the bar advertised twice
because we are the new owners.
Community Tax is a bill (amount depending on location) that you pay to keep the surrounding area tidy.
Bins which are located around Carmen to obviously keep the area tidy is, I think a quarterly bill you will have to pay to help keep the bins emptied
and the streets clean.
Learn the Language
When living in Puerto Del Carmen it's a must you learn some Spanish. There is going to be times when you are faced with a job or information that is in Spanish only, this could be something as simple as paying your water bill but without either some Spanish behind you
or a friend who knows Spanish you are going to have trouble communicating what you what.
Things to look for...
When buying a bar there are a few area's to look out for.
Electrics - A lot of bars are still running on 2 phase electricity which is being phased out (no pun intended) and being changed to 3 phase
Air Condition - Basically all bars should have air con (as far as I am aware) so something to check
Note: When you are going from place to place setting up direct debits ensure you take a photo copy of your NIE/NIF number, Passport and contract licence as most places will want a copy.
I hope this helps and hopefully might help others. There is so much that I've probably missed out something but this should help and get you started. The page will be updated when I get new information which I think will prove helpful
to anyone thinking about buying a bar so be sure to check back.
If you would like to print this out then head over to the Printer Friendly Version
The above is for information purpose only. Due to the laws always changing within Lanzarote the above information could be incorrect. Ensure that if you are interested in buying a bar to take the correct legal route to ensure everything is above board.