Time to grab a Spanish bargain – but be careful
Desperate to lure foreign buyers back to its property market, Spain's government has cleaned up the buying process. Chiara Cavaglieri and Julian Knight report
Sunday 21 August 2011
With an economy in turmoil and a reputation tarnished by tales of dodgy developers and legal nightmares for expats trying to buy their dream home, the Spanish property market has been something of a disaster zone for the past couple of years.
Yet some say now is the perfect time to snap up a bargain, with the country's banks trying to offload repossessions and new rules being introduced by the government to improve Spain's image and tempt back British buyers.
"We are in the middle of a big PR push by the Spanish government to get the Brits back," said Richard Way, editor of A Place in the Sun magazine. "We already have heavy discounts – depending on the area and the financial position of the developer – now the government is trying to sort out some of the legal and ownership problems which have given the country's property industry such a bad press."
In an attempt to persuade Brits that they will not fall foul of some of the country's numerous property scandals, measures are now in place to make the system more transparent. First and foremost, expat buyers can go to their local town hall to request a translated land registry certificate.
"The new initiative to enable local town halls to issue land registry certificates is a welcome move in the right direction, as long as any local delegated authority, such as this, is not overturned at a later date by central government," said Louise Reynolds, of agent Property Venture.
These certificates, known as nota simples, cost €29 (£25) plus VAT, and include the seller's details, a property description and any charges and embargoes against it. These can be obtained online from the Colegio de Registradores, land registry, buyingahouse.registradores.org).
Other improvements introduced by the Spanish government mean that properties deemed to be fuera de ordenación – not built to current building regulations – can be registered on the land registry as long as they are at least four years old, in order to protect owners who, in many cases, bought in good faith. For anyone buying off-plan, information about any legal proceedings brought against the property, which could result in fines or demolition, must be incorporated into the land registry. Town halls are obliged to provide registrars with this information and will be held financially accountable for any losses incurred by those buying in good faith.
In a bid to support off-plan buyers, it is no longer possible for a new home to be registered on the land registry unless it has the license of first occupation, a construction license and a technical certificate stating that the building corresponds to the plans for which the license was granted.
"Making the local authorities accountable is also a shrewd move to help address potential corruption that has been an issue for some town halls on the costas in the past," said Ms Reynolds.
All good news, but these measures will do little to comfort existing homeowners struggling in Spain, many of whom sunk their cash into new developments, which were later declared illegal by local authorities. These homeowners now face the threat of demolition because their property was built on restricted land, or because developers seeking a fast buck built and sold properties without planning consent. Other horror stories are told of couples spending their life savings on the deeds to land with hundreds of thousands of pounds worth of debt signed over to it, or off-plan buyers who ended up with a home that fell well short of what was promised, or even nothing at all because their developer went under.
These tales, coupled with Spain's economic plight, are enough to put many buyers off. Yet the truth is that property prices have gone down considerably in the country. Properties in coastal areas, where most holiday homes are found, fell by 9.5 per cent in the year to July 2011, according to valuations from Spanish appraisal company Tinsa. Across the board, prices fell by an average 6.4 per cent.
In general, getting a mortgage in Europe has become increasingly hard, with many banks closing the door to foreign buyers. However, in Spain, the banks have so many properties to shift that there are some good deals to be found for buyers getting their mortgage and new home from one lender. Several agents are now working closely with Spanish banks to offload some of these homes to Brits and other foreign buyers.
The estate agent Connells (connells.co.uk), for example, is working with Spanish bank Caja Mediterráneo, PropertyRepossessionsSpain.com has links to bank Cajamurcia, and Spanish agency Básico Homes (basicohomes.co.uk) now has a UK arm headed up by Robert Evans. According to Mr Evans, in the costas, where most construction took place, buyers can find many well-built developments being sold by banks at attractive prices combined with a mortgage.
"Spanish banks have a lot of property to sell and are really the only option for someone trying to buy a home in Spain with a mortgage. The truth is that it is difficult to obtain a mortgage unless the bank is selling the property," he said.
"Mortgages are available but with the banks holding so many properties they are basically looking to provide home loans on what they have to sell, so those foreign buyers looking to rely on mortgage finance who are not buying a repossession from a bank can struggle," he added.
However, some experts argue that many of the best deals are available for properties that overseas buyers should steer clear of – homes at the lower end of the market likely to be located on over-built, or unfinished developments. "Because a property has a low price tag doesn't mean it's a bargain. Be prepared that with Spanish property you are looking at a long-term investment, maybe 10 years or more before you see capital appreciation," Mr Way said.
For anyone brave enough, the onus is still on the buyer to do their research, carry out due diligence before signing anything and ensuring the property is free of debt and other liabilities. From the start, it's important to hire an independent Spanish lawyer not affiliated or recommended by an estate agent or developer.
"When buying in Spain, it is important to speak to a local attorney who will help handle the agreement, conveyance and possible migration. There are local taxes and fees that the attorney can explain. It can also be helpful to speak to a tax adviser who can find tax incentives to residing in Spain," said Christian de Meillac from agent Knight Frank International.
Robert Evans, Basico Homes
The Spanish government has taken this matter very seriously and is working hard to bring some measure of order to those who have lost out buying from developers that have been less than diligent. But it remains a sad reality that many British buyers purchased from British-based or run agencies whose prime motive for sending buyers to a particular developer were very high sales commissions.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Geoffrey Macnab reviews American Hustle, also starring Christian Bale and Bradley Cooper
elephant appealThe first 23 lots in our charity auction have now gone. But there are 22 more still up for grabs
Michelle Nijhuis' daughter insists (s)he is, and she learnt a valuable lesson on gender in books
news Opponents claim it would stop performers such as Beyonce and Madonna appearing on TV
It takes a platoon of chefs, litres of brandy and rum, and almost 100kg of dried fruit
newsThat most ancient of crimes is on the rise, threatening farmers' livelihoods, community trust – and human health
- 1 America's 'virgin births'? One in 200 mothers 'became pregnant without having sex'
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 3 Christmas comes early: Justin Bieber is 'retiring from music'
- 4 Iain Duncan Smith leaves Commons food banks debate early
- 5 Children evacuated from swimming pool after prosthetic leg mistaken for paedophile
Exclusive: Young people ‘want UK to stay in Europe’: Four in 10 adults aged 18 to 24 are ‘firmly in favour’ of membership, poll shows
Tom Daley ‘is gay because his father died’ says UK evangelist
You can STILL be jailed for being a republican, government confirms, and it remains illegal to even 'imagine' overthrowing the Queen
Iain Duncan Smith leaves Commons food banks debate early
Kiss and yell: Italian protester charged with sexual assault after kissing riot police officer
Fighting back: the woman giving a voice (and 49,999 others) to the victims of sexism - by giving an airing to their horror stories
- < Previous
- Next >
iJobs Money & Business
£500 - £650 per day: Harrington Starr: Harrington Starr is working with a Glob...
£27000 per annum: Harrington Starr: Junior Consultant (Excel, Financial Spread...
£500 - £600 per day: Harrington Starr: .NET Quantitative Developer - Contract ...
£55000 per annum: Harrington Starr: Technical Operations Analyst (UNIX, Linux,...
Day In a Page
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.