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Quarterly Report April 2017

q-reportThis is our 13th Quarterly Report. It is originally prepared on behalf of a Bank for which we carry out many Revision Valuations, which are now required very 2 to 3 years as Banks must update the value of the assets that they hold as security for loans. So, if you have a mortgage, don’t be too surprised to see a valuer photographing your house from the street as he/she is only carrying out a ‘walk by’ inspection and valuation. Despite the recovery of the market, there are still some huge differences between what was loaned in the good times and the market value of the property now.

As part of the research we have identified a number of wider and national property matters.

The Overall Market – Increasing divergence of markets.

  • Building activity is undoubtedly continuing and increasing.
    • Many new individual villas, though the financial rational of those is uncertain as there are still so many available for sale, with those having had the choice of the best sites in the past.
    • New flatted developments are also being created with the developers presumably been reassured by the appropriate percentage of reservations off plan.
    • Older ‘skeleton’ developments that were not completed during the last boom are being acquired and completed by new developers.
  • ‘No sign of housing market overheating’, says Bank of Spain. Generally, that is probably the case. However, in certain popular areas there must be a risk that everything is proceeding along a very similar course to before the last crisis. There is increasing demand from many nationalities, with the Nordic buyers still prominent. However, the statistics show that there has been a significant drop in acquisitions by UK buyers, presumably linked to Brexit.
  • A useful source of current statistical analysis of the source of buyers can be found at https://www.spanishpropertyinsight.com/2017/04/07/swedish-demand-property-spain/
  • Having said that, we have noticed no reduction in the number of building surveys that we are being requested to carry out by UK potential buyers. These are almost exclusively of existing properties, some of which are in good locations. Buyers report that they are still able to negotiate reductions from asking prices and we refer you to the statistics below.
  • The uncertainty caused by Brexit is principally to the UK market, but this is spilling over to other nationalities, equally uncertain as to what its effects are likely to be on the EU as a whole and Spain in particular.
  • The market dependent upon Gibraltar, both due to proximity and business, is undoubtedly the most nervous of all. The effects of Brexit will be a radical and far-reaching, but everyone has to wait until the UK/EU negotiators finally agree their deals. The attitude of Spain with regard to sovereignty will be significant.
  • Comments by Ryanair and other airlines that the ‘Open Skies’ agreement will no longer apply to UK flights to the EU and thus they will be reducing substantially, is also causing concern. Ease of communications has been one of the major factors for UK buyers in choosing Spain as a place to purchase property.
  • With Easter marking the start of the main tourist season, it is to be expected that the authorities will be working strongly to enforce their rental licence requirements, which exist now in the majority of Spain. Properties that have a rental licence should have an increased value, but yet we are not seeing many being marketed with that as an asset.

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Brexit Divorce – What does it mean for us?

Brexit2-300x250Divorce has featured much in the last few days. No, it’s OK, my wife and I are still ‘two halves of the orange’ as the Spanish say, but we’ve had an increase in the number of Expert Witness instructions, where we provide current market valuations of disputed Spanish assets for the UK and other Courts. As RICS Registered Valuers, trained in UK and with many years of Spanish living and working experience, our expertise is appreciated. Especially so, as our reports are all by English language native speakers and we value to the current market without regulated variations. Our Court work also includes valuing for inheritance and tax disputes and even for the National Crime Agency where they seize the ‘ill-gotten gains’ of convicted criminals.  But the big ‘divorce’ that’s occupied our minds most this week, is Brexit. Continue reading

Recap of Legal Actions in Spain against Banks & Others

352089_1280x720This article written by Lawyer Raymundo Larraín Nesbitt, gives a complete overview of the recent court cases in Spain which may award non-residents with unexpected huge windfalls.

Several key court rulings have hit the Spanish headlines over the last months raising huge waves which ripples we continue to feel every day in the shape of glossy newspaper and radio ads soliciting litigation clients. Lawyers have all too eagerly witnessed the recent snowball of landmark rulings which have opened up new venues to litigate that were previously barred to us.

To laymen, these rulings mark an inflection point allowing them a golden chance to claw back lost off-plan deposits from developers, undue interest rates pocketed by lenders, overcharged taxes from town halls and even from the Spanish Tax Office itself. Most of this money was written off years ago, by those affected (in the majority UK nationals). These new rulings have tipped the scales, turning legal outcomes upside down enabling successful litigation (and payback, which is really what it’s all about).

The best way to go about it is to simply provide a brief overview of all the ongoing court cases, one by one, giving the likely success odds, timeframe to claim and the amounts claimed back. I close each one referencing my own articles on a matter for those that seek more information. I only list those likely to affect my readers/clients i.e. non-residents.

There are more court cases than the ones I collate below, but these overwhelmingly affect Spanish nationals (e.g. preferentes) so I will purposely leave them off the list.

It should be noted that the following blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. Continue reading

New rules on unbuilt properties restore faith in Spain’s legal system

Construction on the Costa del SolAt last, I bring good news for people who paid deposits for properties that have never been built.

For those who have paid them into developers’ bank accounts, they should be refunded by the bank even if the developer is no longer trading.

And if that’s not enough, interest is paid on the deposit.

Regarding the repayment of interest on mortgages, banks are instructed by the courts to repay interest to customers whose mortgage agreement has resulted in them paying interest above the market rate.

There is good news too concerning the plusvalia tax, a capital gains tax applied by a local municipal council in addition to the one by the Autonomous Community e.g. Andalucía. Continue reading

Why taking advice when purchasing a home is always a good idea

Survey SpainAfter many years of carrying out expert witness valuations for international courts, I’ve applied to be appointed to the President of RICS’s panel of Expert Witnesses.

The training involves a new section, entitled ‘Professional Ethics for RICS Members’. It was a thought provoking course.

“Professional ethics, that should be a doddle as I’ve been dealing with such decisions all my working life,” I thought to myself.

However, after the online training, in my first question-and-answer test, I didn’t achieve the required 75% pass rate!

So, I went through the questions again and studied the ideal answers, which were all to do with conflicts of interest and respect for RICS and the client above myself and my firm.

I read through the course again and sat a different test, being delighted with the pass now that I knew the type of answers expected.

I don’t necessarily agree that these answers are practical for real life, but it’s certainly made me think.

When somebody comes to Spain wanting to buy a property for the first time, or in an area where they haven’t built a social support system, how do they select the professionals they need to work with?   Continue reading

Do you know importance of studying a home’s Energy Efficiency Certificate?

energy_efficient_homes_1212It’s worth studying the Energy Certificate as this could help you bag the best price for the home of your dreams.

For every property sale to be registered, an Energy Efficiency Certificate (CEE) must be included within all the documents.

The Regulations state that the efficiency rating must be displayed in all selling and letting promotional material and a copy of the full certificate made available to every property enquirer.

Despite that, the convention appears to be not to obtain that certificate until contracts have been signed and everyone is on their way to the notary.

I suppose it will take a few agents and owners being substantially fined for people to comply with the regulations.

Study of the energy certificate should be a part of a buyer’s consideration of a property.

In the south of Spain, the energy consumption in a house will reach two peaks: in winter when heating is required and in summer when air conditioning comes into play.

How efficient the house is in retaining heat in winter and avoiding it in summer, is what the energy certificate is all about. Continue reading

Selling your house: The importance of the home report pack

Holiday rental licences in Spain Survey SpainThe sensible used property seller can compete in the market by having a Home Report prepared that gathers all the information on their property together and offers it as one pack to buyers.

“May you live in interesting times” – Reputedly an ironic ancient Chinese curse, and certainly 2017 is likely to have many opportunities to be ‘interesting’.

Locally, we see many new properties under construction, both individual villas and apartment urbanisations.

The vast majority of these are aimed at the upper price level and we hope that all have done their marketing analysis correctly.

Certainly, many appear to be pre-sold or for individual owners, all of which is good news.

Long may it continue, though for every new property built there are still a number of older properties available.

Investigation of the market shows a definite double level, with older properties being available at often half or less per square metre compared to the new ones.

That’s the effect of everything being offered as one package to a buyer, with guarantees, though sometimes the small print of the latter needs to be read very carefully.

The sensible used property seller can compete with that by having a Home Report prepared that gathers all the information on their property together and offers it as one pack to buyers. Continue reading

Quarterly Property Market Report – Autumn 2016 – January 2017

q-reportAs part of the research we have identified a number of wider and national property comments.

The Overall Market – Increasing divergence of markets.

  • “Where it is good, it is very, very good, but where it is bad it is horrid” (Adapted from Henry Longfellow)
  • In the prime locations in the main towns of the Costas, there is increasing demand for ‘the best’, with ripples out a short distance from those locations. Increasing numbers of construction cranes are seen to be working on individual and small groups of luxury villas and urbanisations of luxury apartments.
  • Elsewhere and especially in locations and buildings without any special selling features, lower prices are the only way any properties sell.
  • Banks, and especially the large investment companies that have acquired portfolios of properties and/or management companies from them, are carrying out renovation and completion of part completed shell buildings and taking up the planning licences where they have already been granted.
  • All this activity is good for the construction industry and for initial investors, but there is concern that it is perhaps being overdone, with the number of actual purchaser/occupiers being uncertain. Is another property bubble being inflated?
  • Undoubtedly, there are fewer British buyers, but since the beginning of the year, at Survey Spain we have seen a considerable increase in enquiries and instructions from UK and other northern European purchasers. This indicates to us that demand is still strong, with any reduction in interest from UK buyers and perhaps increasing interest in selling by UK owners in Spain, encouraging other nationalities, both Euro and independent currency based, to take up any ‘exceptional’ opportunities.
  • One other point of note, by both ourselves and reliable estate agents, is that buyers appear to be prepared to pay well over the market level for new property, when with a little research they could obtain equal or better second-hand properties at much lesser price. It appears that strong marketing, confidence in the builder and ease of acquisition are the prime reasons for this. Individual property sellers cannot compete with the marketing budgets and mortgage offers that developers/banks can provide.
  • As stated before, the apparent ‘exceptional’ drop in exchange rates gets the blame for much of the decrease in UK demand, but from recent research we have carried out at 1GBP = 1.17€ euro we are 13% above the lowest level in the last 10 years and only 3% below the average. After today’s speech by the UK Prime Minister, the pound has rallied from about 1.137 to 1.155€ euro. We are in for a rollercoaster two years, with formal declaration of leaving Europe expected before the end of March, plus President Trump, French, Dutch and German elections all to happen within 2017.
  • Within Spain the market is still difficult and extremely fractured. Similar to the Costas, the main cities are experiencing significant demand and rising prices, though much of that could be investment based, which can be fickle and could reverse quickly in the event of problems with the euro exchange rates and/or the EU. Mortgages for the average Spaniard are still at a relatively low percentage of valuation, with these valuations themselves being held significantly below actual market value due to the prevalence of MLV valuations. Accordingly, a substantial deposit has to be found by the individual purchaser and, with there still being so much individual debt, this situation is unlikely to change. Market predictions vary, with developers and estate agents anticipating an increase in value, whilst other pundits are indicating that there could be a drop during the year.
  • The high costs of acquisition and sale and the apparent increasing costs of holding property are bound to be influencing some potential purchasers/investors. The requirement for licensing of tourist property and the potential for restrictions of the numbers of those that may be granted in the future, will also affect values.
  • Many of the comments in previous reports are still current.

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Do exchange rates really affect demand?

euros_1693423b

Since that indescribably foolish day in June, agents, property pundits and others, including myself, have been blaming any apparent drop in demand by British buyers, at least partially, on the variation in the exchange rate of Pound to Euro.  Yes, there has been a drop in the pound’s value, which makes property buying in the euro zone more expensive for sterling buyers.

But hold on a sec, haven’t we been at these levels before and the demand has continued? And has demand really fallen. Dealing with the latter, undoubtedly, Survey Spain has seen a drop in the number of pre-acquisition building surveys since the beginning of the year. I feel that this can be a guide to the number of buyers who are considering purchasing a property. It slowed over the couple of months before June, dropped to almost nothing during the week after the vote, but then picked up and has continued at a lower level over the last few months. Not everyone gets their property inspected, on which they can be spending millions, but then ‘easy come, easy go’! The prudent person knows that armed with a comprehensive report on the condition of the property they can get a substantial and justifiable discount in the price. It’s a no brainer in two ways. ‘No brainer’ not to do it and a buyer shouldn’t really have to use his/her brain to see the benefits of a survey. We have so many clients who have saved many times our fee in price reduction. You’ve only to look at our testimonials page on our website to see the truth of that.  Continue reading

Floods and how to plan for them

How to protect your house from the rain in SpainI know, ‘stable doors’ and ‘horses’ come to mind…

“It droppeth as the gentle rain from heaven. Upon the place beneath. It is twice blest: It blesseth him that gives and him that takes.’

So wrote Shakespeare in The Merchant of Venice. Well, there was been a little too much blessing last month. Even the crofters in the storm-tossed Western Isles of Scotland would acknowledged that we had more than ‘a wee drop of rain’ on the Costa del Sol over the first two weekends of December.

The first weekend was a welcome soaking for the parched earth and everyone, especially EcoPepe our organic farmer near Álora, was happy to see it. Continue reading