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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

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

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.

Continue reading

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

Hard facts: The lack of systems and rules in Spain’s property game is ridiculous

It's all positive news this quarter.In most northern European countries, including Scotland, but sadly not England, all sellers of properties have to provide factually correct information packs – ‘Home Reports’ – to potential buyers.

In some countries, these are prepared by state registered inspectors, whilst in others the estate agent is legally responsible for any errors or omissions.

If the packs prove to be significantly erroneous or even fraudulent, the seller can withdraw from the sale, even after they have moved into the property.

Unfortunately, it’s a completely liberated system in Spain, where nobody takes responsibility for anything and even the buyer can renege, pleading ‘in good faith’ if they didn’t check anything themselves. Property descriptions by agents on the internet and in their details, can be at best ‘mistaken’, but sometimes, either through their or the seller’s ‘optimism’, appear to be deliberately misleading. Continue reading

How financially strong is your town hall?

location_locationWhy sussing out your local authority is fundamental before buying

The decision to buy a house is not just down to the attractiveness of the rooms, garden, location or general surroundings.

Consider the financial strength of the town hall, because if we compare Benahavís with Estepona, we get very different pictures.

Benahavís is reportedly one of the richest municipalities in Spain, though it doesn’t have a coastline.

How can that be? It’s because it contains so much natural advantages in south-facing slopes, tree-covered mountainsides, extensive views along the coastline and the mountain ranges towards Ronda. Continue reading

Quarterly Market Report – Summer 2016 – 12th October 2016

q-reportIn September we celebrated our 3rd year of Survey Spain, helping with ‘All Property Matters’.

This is our 11th Quarterly Report. We shall be pleased to provide more information if requested. As part of the research we have identified a number of wider and national property matters.

The Overall Market – Currency Fluctuations are having a big effect.

  • Brexit and the continuing uncertainty and bemusement caused by it, both in the UK based market and throughout Europe, has undoubtedly been the greatest factor affecting the ‘international’ property market in which we largely operate.
  • The immediate factor has been the two significant drops in exchange rate, with the latest ‘storm’ perhaps having more psychological effect than previously. Buyers and sellers are realising that sterling is likely to drop further and is reaching a new base level and unlikely to bounce back to what it was before the vote. The full effect of the most recent drop is still to be seen in values, but we expect that it will reduce the number of UK buyers.
  • The effect on sellers intending to return and sale price to UK will be mixed. Some may decide to wait for further drops in exchange rates to their benefit, but others will be more nervous at the reduction of buyer numbers. Either way, it’s likely to lead to a preparedness to drop their selling price. This will be especially evident in areas where UK owners traditionally dominate, such as in areas of Almeria and Fuengirola to Torremolinos on Costa del Sol.
  • Foreign exchange companies are still reporting that they have experienced a considerable drop in enquiries from UK, but many enquiries from Costa del Sol to transfer funds into sterling.
  • However, thankfully for many reasons, the British market is not by any means the only one and thus buyers from other currencies will have found more bargains. This appears to be the case for Nordic buyers who have shown a considerable increase in activity, although the overall EU and Euro uncertainties must still cause the more cautious to reconsider
  • Within Spain, the political situation is if anything more chaotic than before. It appears unlikely that there will be a Government with a secure majority any time soon and the likelihood of a third election is becoming more and more probable. The polls appear to show that there is more likelihood of a return of a right wing Government, though it will still be by a very small margin or possibly requiring an agreement to work with another party. In the meantime, the statistics for the Spanish economy appear to show growth so maybe the absence of government is not a completely bad thing!
  • Given that the property markets of the Costas are so heavily influenced by international buyers, the areas where these buyers predominate are largely unaffected by Spanish national politics except with regard to buying costs and general property and wealth taxes. These appear to be increasing and we have had conversations with individuals interested in a home in the sun, but looking at the costs and deciding that it just doesn’t make financial sense.
  • There is continuing and increasing concern at the attitude of Spain to Gibraltar. This is likely to be affecting the local market in Sotogrande and around.

Continue reading

Has anything been learnt in the property game over the last 13 years?

marbella-sol

The same issues seem to keep resurfacing.

September 18 saw the 13th anniversary of the Survey Spain website www.surveyspain.com, which we take as the founding date of the business. 

Much has happened since 2003.

Looking through the old articles I’ve written over the years for newspapers and magazines, plus their transfer to website articles and then blogs, Facebook, Twitter and all, I’m struck by how little appears to have been learnt.

Article headings tell it all – ‘Why didn’t they get the property Surveyed?’, is a constant theme as so often we come across stories of ‘disasters’ that could have been avoided.

To rush forward to spend tens or hundreds of thousands and even millions, based on the word of somebody who is only being paid, and reluctantly at that, if the deal goes through, must be the height of naivety. Often it’s expressed as buying ‘in good faith’, but there are more blunt ways of expressing it too. An article I commented upon started with, ‘We spend about the same time choosing shoes or buying a suit as deciding which house to buy’. Continue reading

Taxing times in Spain

 

0,,15743033_303,00How Spain’s tax system is undermining the property market and its would-be buyers.

The situation in Spain is fragile, what with Brexit, the continuing dictatorship of Rajoy and the out-of-control national and regional debts. Tourism, residential expats and short stay are a major contributor to the Spanish economy that appears to carry on regardless.

However, it’s ‘on a shaky peg’.

All it would take would be one small tremor on land or a bomb in a tourist place, and Spain would be in the same position as all the other Mediterranean countries.

The exceptional numbers of tourists this year is not because of an overwhelming desire for Spain, it’s due to the impression of there being nowhere else ‘safe’ to go in the sunshine.

And as for the longer-term residents, they are being hit for tax in so many ways. Continue reading