The Property Banks Spanish Property News
Spanish property still has plenty to offer, Finance News Online, UK 11.06.2007Even though there has been some negative news regarding the Spanish property market of late, homes in the Iberian country are still the most popular for Brits buying abroad.
According to the new HiFX Monthly Global Property Hotspots Report, Spain still remains the top destination for Brits buying overseas property with 27 per cent of all enquiries relating to Brits buying in Spain.
There have been recent reports of a potential Spanish property market crash and figures marking an overall slow down in some areas of the country particularly the Costas, however, HiFX says British investors could use this to their advantage.
Mark Bodega at HiFX explained: "Forced to be more realistic about the prospects in the Spanish real estate market, holiday home buyers and investors alike, will have to look for value rather than creating it artificially.
"Cut through the current hype and think carefully about the property you are buying in order to make the most of the current market conditions. Only certain areas are suffering a slump due to over supply, whilst others still have much to offer."
He added that all markets go through corrections and potential buyers should not be put off.
"As long as you are looking at your holiday home as a long term investment (five to ten years) you can still buy with confidence," Mr Bodega said.
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Spain still number one destination for Brits buying abroad Easier, UK - 8 Jun 2007
Despite recent reports of a potential Spanish property market crash and figures marking an overall slow down in some areas of the country particularly the Costas, the latest HiFX Monthly Global Property Hotspots Report shows that Spain still remains the top destination for Brits buying overseas property with 27% of all enquiries relating to Brits buying in Spain. In light of these market conditions, currency experts HiFX, are urging Brits considering purchasing Spanish property, or those who already own a property in the country, to be aware of how the Spanish market is changing and how this can best be used to their advantage.
According to HiFX, while some areas of the Spanish Costas are certainly cooling and seeing market corrections due to over supply, at the same time, less traditional inland regions are becoming more popular with savvy buyers. Mark Bodega, at HiFX comments; “Forced to be more realistic about the prospects in the Spanish real estate market, holiday home buyers and investors alike, will have to look for value rather than creating it artificially. Cut through the current hype and think carefully about the property you are buying in order to make the most of the current market conditions. Only certain areas are suffering a slump due to over supply, whilst others still have much to offer.”
Holiday homer?
“For holiday homers, the oversupply in some Spanish markets can lead to real bargains as property sticks and investors look to extract themselves. If you are buying a holiday home in Spain, don’t be put off by the recent reporting of a potential crash. All markets go through corrections and as long as you are looking at your holiday home as a long term investment (5-10 years) you can still buy with confidence, if you buy wisely.”
An abundance of low cost airline routes, a two hour flight time and the great weather means that Spain will always be a favourite with British buyers. Even for those looking for capital growth in the short term there are plenty of opportunities to be had in the lesser known Costas, in the cities and inland. Coastal regions like Tarragona, and inland areas like Jaen and Cordoba still provide excellent value as do some cities. In Barcelona for example, property prices are rising at their fastest pace ever.
Or property investor?
Bodega continues, “Over the last 10 years, the Western world has enjoyed the biggest property boom in its history, creating a whole generation of potential property investors. In fact, over the last decade house prices have boomed in almost every developed market with the exception of Germany and Japan. House prices in Spain, the UK, Ireland, Australia, Netherlands and Sweden have, for example, all risen by more than 50% and the value of property across the US has climbed by 30%. What this does mean however, is that with developed economy markets at their current high, investors are increasingly turning their attention away from the traditional markets like Spain and to the emerging markets, such as those on the Eastern Bloc.”
It’s easy to see why investors, in particular, are turning their backs on the traditional Spanish hotspots and examining international markets which are at an earlier stage in their growth cycle. In August 2005, the national median price for property sold to overseas buyers in Spain was approximately €250,000. In Bulgaria the average price was closer to €30,000!
Bodega continues, “Whether you are buying a holiday home or a property specifically for capital growth – no one likes to make a bad investment. We’ve seen a big increase in property prices and values in some areas of Spain over the last 20 years. There should be no surprises in a market correction whenever it occurs; supply has out-stripped demand at the moment and market forces will probably dictate values over the next year or two.
“Buyers should remember that their choice of where to buy really depends on why you are buying and on the degree of risk that you are willing to accept. Wherever you do decide to buy, be it Guildford or Granada, it’s imperative that you do your research and ignore the hype.”
Selling up?
While owners of property in the saturated Spanish markets could be well advised to hold tight for a year or two, if possible and let the market come through this cycle. For those who must sell now, HiFX is advising owners to avoid just automatically turning to their bank to transfer their assets home.
”Shop around and consider using a currency broker. Not only will you save money on the exchange rate ensuring you receive the maximum amount possible from the sale of your property, you’ll also avoid the many costly banks fees often charged when you bring your money back to the UK.” says Bodega
A recent mystery shop showed that high street banks were charging up to 4% more to exchange money. For someone changing €200,000 into Sterling for example this would mean you’d receive around €8,000 less if you used your bank to bring the funds home rather than a currency specialist like HiFX.
Bodega concludes, “If you are forced to sell up and repatriate your wealth - don't let the banks cash in! Shop around and compare the rates given by your bank with an established currency broker to make sure you receive more of your money.”
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Britons of all ages looking to Spanish property, Overseas Property and Investment News, UK - 6 Jun 2007
Spanish property is no longer the preserve of the elderly looking to enjoy their retirement in a sunny climate, a new study has revealed.
Research from Banco Halifax Hispania found that it was 35 to 44-year-olds who were the most likely to profess their intentions to move to Spain, with the younger generations also showing strong interest....
Spanish property is no longer the preserve of the elderly looking to enjoy their retirement in a sunny climate, a new study has revealed.
Research from Banco Halifax Hispania found that it was 35 to 44-year-olds who were the most likely to profess their intentions to move to Spain, with the younger generations also showing strong interest.
Just 22 per cent of over 65s said they would be interested in such a move, compared with almost two thirds of those aged under 55.
"It has long been assumed that only retirees are buying property in Spain, but this is far from the case, as it is also a popular location amongst younger age groups."
The region with residents most eager to escape abroad was the south east, with one in ten respondents who expressed an interest coming from the country.
Last month a property advisor suggested that recent stories regarding a slowdown in the Spanish property market were "misleading".
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Spanish property prices unchanged, Easier, UK - 5 Jun 2007
The Spanish national average property price remains the same 1 month on from the Spanish stock market slump at €250,000 (£169,463), according to the Kyero.com Spanish House Price Index.
Average property prices in Alicante province continue to rise, now up to €254,000, a 10% rise since Jan 07.
In contrast average property princes on the canary isle of Fuerteventura have fallen to €235,000, an 11% decline since Jan 07.
The average property price in Girona province has reached €434,000, a 9.5% increase from May 07.
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Police investigation hits Spanish property, ifaonline.co.uk, UK - 5 Jun 2007
One of Spain’s largest providers of non-resident mortgages has stopped accepting applications after police raided a mortgage broker accused of providing it with false documents.
Caja Mediterraneo (CAM Bank) has instructed its branches to ignore non-resident applications until the authorities finish investigating the actions of the Costa Blanca-based broker.
The move presents new considerations for investors in property in Spain, particularly if the crackdown leads to stricter regulation.
The unnamed broker, the proprieter of which has been arrested, is accused of providing false documentation to CAM Bank in a bid to sell mortgage products which may not exist.
As it stands, there is no official regulation of the provision of mortgages in Spain. The Bank of Spain regulates every new product, but there is no law defining who can market them.
Heather Chambers, director of International Mortgage Solutions (IMS), a non-resident mortgage provider in Spain, says: “We are very happy that Spain is finally getting to grips with this practice.
“We have come across instances where clients have been talked into presenting false mortgage applications to obtain the finance that they require.
“In these circumstances the broker has made no attempt to protect or care for their client, all they are concerned with is the commission they will receive from the bank. The client is rarely made aware of the longer term implications of getting involved in such transactions, maybe even repossession.”
Chambers adds: “Even worse, some clients may have been sold a mortgage product that does not exist thinking it is self-certified or non-status, with the broker providing false papers to the bank without the client’s knowledge. [The police raid] should be applauded.”
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Spanish property dreams turn to dust for Britons, Khaleej Times, United Arab Emirates - 2 Jun 2007
IT WAS not meant to be like this. The thought of sun-drenched days spent relaxing by your pool at your exclusive villa with a spectacular backdrop from your terrace has been a much sought-after dream for many Britons determined to escape the rat race and the gloom of UK city life.
With the kinder climate, good education standards and a lower cost of living in Spain, it is not hard to see why Britons in thousands have said "adios" to the UK in search of pastures anew with the traditional bolt hole of Spain the big pull.
The huge residential construction projects in Spain have created a frenzy amongst speculative Brits who have bought not one but in some cases many properties with the view of either renting them out or selling them on at a premium to finance their new life in the sun. Stories of making a quick buck were not uncommon and neither were stories of local Spanish resentment as the local population were being priced out, unable to afford to buy in a rising market fuelled by an increasing number of foreign owners, many of them British.
Fast-forward to today, and that dream of a life in the sun has turned into a nightmare for many beleaguered Britons who find themselves in the middle of a spectacular Spanish property crash. Compounding their woes, the Spanish regional towns from Valencia to the Costa del Sol are invoking land grab laws where construction of roads and the urbanisation of rural areas have resulted in many Brits facing losing their homes without being offered a penny in compensation.
One homeowner saw a third of his property "disappear" when bulldozers turned up to build a road adjacent to his patio doors. To add insult to injury, he was then sent a bill of £30,000 to pay for the work. The law in Spain, it seems, is powerless to do anything in cases such as these, because many properties have been constructed illegally by unscrupulous developers, who then sold them using documentation written in Spanish to buyers unable to fully comprehend what they had bought.
Britons who did buy and then sold properties in the last three or four years had made a healthy profit on their investment in the sun, but those who wrongly timed the market, now face the heartache of financial ruin. It is a theme not uncommon among the expat British community along the many British bars and restaurants scattered along the Spanish Costas. A rising number of homes are being put up for auction, but new buyers only want to snap up a bargain, as current homeowners realise their homes have depreciated by as much as 100,000 euros or more.
Property developers accused of over-developing argue that the property price crash has been predicted for several years, and that the market is now just catching up. Building sites and cranes however still litter the skylines over much of Spain, as demand for newly built properties remains. The price correction may have been long overdue, but that is no consolation for those sitting on worthless properties or nursing huge losses
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Spanish property boom or bust? You decide!, Easier, UK - 31 May 2007
Consolidating the collective knowledge and experience of three top Spanish property experts, Overseas Property Hub Nubricks.com launches The Great Spanish Property Debate, its most informative overseas property podcast to date designed to put the record straight on what the future holds for potential buyers and sellers of property in Spain.
As part of Nubricks second overseas property podcast series, this hour long Spanish podcast contains essential information that buyers and owners of Spanish property both need to hear. “Our podcastees are professionals who have an impartial, bird’s eye view of the Spanish property market” explained host Adam Samuel Nubricks resident podcaster. “the Sunday Times resident ‘Spanish Property Doctor’ Mark Stucklin’s wealth of Spanish property knowledge, Kyero.com Martin Dell’s attention to Spanish property search and statistical detail and the weight of Aguirre Newmans Wynn Williamson’s market analyst forecasts, combine to offer three unique perspectives on the business of Spanish property and whether Spanish property will boom or bust in 2007.
There is no disputing that the recent media coverage on the Spanish market along with longer standing issues such as Costa del Sol corruption and the land-grab issues has seriously dented property buyers’ confidence and indeed the sellers. However we need to be realistic about the property market, how it has got to where it is and potentially what will happen in the future?
The number of people searching for their dream home in the sun in Spain has been decreasing over the last few years. At a basic level this can be seen by looking at internet statistics on what people are searching for, although this is not a fool proof indicator. Google Trends allows you to search volume trends for phrases like "property in Spain" and from looking at these trends it is noticeable that the Spanish property search volume has halved just about every year since 2004 and this looks set to continue. Martin Dell, from the Spanish property portal kyero.com comments “This downturn in volume could be purely down to the ‘dreamers’, after all it costs nothing to do a Google search, and from word from the agents itself, it would seem that the number of people looking to buy not for speculative reasons or for investment, but just for utility reasons - to have a home to use, in the sun – has stayed constant over the last year to two”. Another reason for the down turn in interest could be that Spain itself is now having to compete with other property markets each offering a sunshine coast and a cheap beer or two; in many cases high profit margins on ‘flipping’ and short term investments are being publicised in these alternative ‘emerging markets’.
Sales rates have been declining in Spain since 2003 meaning that fewer new units sell per year and it is taking longer to sell a property. According to Wynn Williamson of Aguirre Newman based in Madrid, “In 2003, it would take about 23 months to sell an apartment, however recent 2007 studies indicate that sales can take up to 35 months and it could be even longer for resale properties.”
“As for price per square meter of a property, we are still seeing increases across Spain, but the increases just aren't as much as they were previously.”
The media coverage on corruption is nothing new. The reigniting of this issue seems to have happened in the ‘Spanish Bubble’ hype, however for many, the recent press on corruption has been very much welcomed as it has given the market a chance to air out and address the issues. The new Ley del Suelo, will add a level of transparency to all these processes. The new legislation will establish an obligation for opening all planning and development projects up to public consultation; it will also bring land valuations and expropriation rights into the public arena.
When looking at the Spanish property market it would be hard not to mention off-plan property and the alleged over supply of new property up and down the coast. “The Spanish College of Architects talks of 920,000 planning approvals in 2006, with a smaller figure, 800,000, quoted for 2007 so there are fewer housing starts”, comments Wynn. And although not all planning approvals result in a housing start, of course many do. But this is an issue specific to certain markets, in Barcelona, for example, there is not a new build ‘problem’, all the building was finished at the end of the 19th Century, these issues have been generalised across Spain but really we are talking about isolated areas like the Costa del Sol.
There are very different markets in Spain and probably even more micro markets; where Barcelona differs from Malaga, so does the coast from inland property. According to Kyero.com’s new popularity indicator it can be seen that over the last 9 weeks Almeria, Tarragona, Albacete and Valencia have all gained in popularity with property hunters; and those losing in the stakes are Granada, Malaga and Alicante.
Whereas Malaga is feeling the effects of negative publicity and the recent plummeting stock price of the Valencian property developer Astroc Mediterraneo which has filled our media headlines. Other markets for example, the capital Madrid, are seeing an increase in property interest and a rise in prices which has been spurred on by influential factors such as the expansion of the AVE train system. There is a plan, by 2020, that all of Spain will be connected by these high-speed trains and some of the areas which are set to receive these AVEs in the near future have certainly seen increases in prices such as Avila, Segovia, Guadalajara, Toledo. Valencia too is enjoying a period of world attention for the famous Americas Cup generating renewed interest in the region.
Each market in each area responds to local factors - the usual factors of supply, demand, and prices. Mark Stucklin who writes The Spanish Property Doctor column in The Sunday Times adds “What we are starting to realise is that it isn’t a case of how much property is ultimately built in an area; it’s how much is built at the same time which has the greatest effect on the market.”
So prices are not dropping across the board in Spain, they appear to be going down in some places and not in others, and for certain types of properties, and not for others. In some highly developed areas, such as the Costa del Sol, prices are likely to have a shake out and drop to reflect demand but it will take longer for the new build prices to impact on the resale market. Problems will only occur for investors looking for short term profits by flipping their off-plan purchases; they may find themselves in situations where they are competing with the developer on the cost for the same product.
This situation has been exacerbated by numerous internal factors in Spain and in Wynn’s opinion “It is not just a case that they are building too much, they are also building the wrong type of property, using the wrong type of urban planning model”. There is an over supply of the type of property that suits a peak time holiday maker. A lot of the municipal authorities up and down the Spanish coast need to rethink what they are trying to achieve with their urban planning, and focus more on the type of property which would attract people to live in the area for a majority of the year. That is much better for building business and local community, and raising wealth for those municipalities.
There are signs that people are starting to plan differently, thinking about what they want to achieve with urbanisation in the future. Now that a development doesn't sell itself quite so quickly there has been an increased focus on marketing, and increased research, especially for analysts to examine various developments, and to see what is in demand and what sells well.
In addition to smarter urban planning you are also seeing more and more golf developments, you are seeing developments with activities for families, you are seeing spas, integrations with hotels and developments trying to offer something extra or something interesting.
Overall, it's neither a booming market - the boom's clearly over - but there is no disaster either. Quality property in all areas sells very quickly when it's priced reasonably, at a price to sell.
There has been a couple of big voices that have all chimed in and have said the same thing, that's it's going to be a soft landing. Among them J.P. Morgan, Banco Santander, the Bank of Spain. The recent effect on the Spanish market is an adjustment and it's a needed adjustment because the Spanish economy has been growing very strong, well above the European average. What we are seeing is a "construction-led recession," which is likely to last for a few years whilst the sector calms. There has been a lot of easy money made in Spanish construction and property for the last ten years. Unfortunately it has encouraged the wrong kind of people to get into the business, people who are just looking for a fast buck so a clean-out is not so much of a bad thing.
In the long run, meaning five to ten years, we are very likely to see prices in the hard hit areas in Spain start to rise again. Spain is still held dearly in the hearts of the summer holiday maker, not just in the UK but across northern Europe also.
The people who may lose out in the short term are the people that were making short term investment decisions, but that doesn't represent all of the people buying in Spain. It is now a buyers market and those looking for a ‘utility purchase’, a home that will be used for many years for holidays giving enjoyment value and quality of life, will be sure to find a bargain.
Mark offers a valid observation “Bargains are not at all about being cheap. Cheap is sometimes just cheap; it is not a bargain. A bargain is about getting great value at a price. That might even cost you two million euros, but it is still a bargain.” And this is a good time because the heat has gone out of the market. You can take your time identifying the property, and there is no rush. That also helps people buy safely, doing all the appropriate legal searches. It is up to the buyer to do their due diligence and make the effort to identify quality within the market and there’s no better way than actually visiting Spain to look around and see what happening.
If your goal is to make capital appreciation, if you are looking at this as a pure investment, you might want to consider some other markets, markets outside of Spain but also markets within Spain other than residential property.
So we’ll conclude with an alternative solution to property investment in Spain… garages. They can be very profitable in major cities like Madrid and Barcelona, even some smaller places like Salamanca and Tarragona. With a little bit of research you’ll find that there is a lack of parking and ‘car-homing’ space comes at a premium!
So, boom or bust in 2007?? The Spanish property market may no longer be booming but neither is it about to go bust, now is the time for buyers to watch the cash and invest sensibly into the ever popular Spanish market.
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Spanish property market 'is entering a new cycle of maturity', Ready2invest, UK - 30 May 2007
The Spanish property market has entered a "new cycle" marked by stable high prices that will steadily increase, according to an international property analysis firm.
Property Secrets said that although there has been some negative speculation over the prospects for the Spanish property market, this has largely been the consequence of a growing market with developing characteristics.
Now that the market "is already a mature one", the country is continuing to attract increasing numbers of Britons for a variety of different reasons, the company stated.
Asked whether this is predominantly in the form of emigrants or holiday home investors, Daniel R Talavera, editorial manager at Property Secrets, commented: "Both. The number of British emigrants to Spain who buy a home property is increasing. They are buying a place to live."
He also noted that some investors are looking towards eastern European countries like Romania, which could provide better returns in the short-term thanks to their rapidly emerging status.
A recent survey from the Bank of Scotland revealed that Spain is the second most desirable European property destination for Britons after France.
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Spanish property market reignites, Property News, UK - 29 May 2007
The glowing embers of the troubled Spanish property industry look set to flicker back into life with stable high prices that that will grow steadily in the future, an independent Overseas Property analyst has claimed.
According to Property Secrets, negative speculation in the Spanish property market has ended, with increasing numbers of Britons still heading out for a new life abroad.
The news is sure to be welcomed by over four million Britons with existing property investments in the country who feared April's correction in the market would cause a slump in property prices.
Yet, Daniel R Talavera, editorial manager for Property Secrets in Spain remains upbeat about the rejuvenation of the market: "Spanish property business is starting a new cycle with stable high prices that will grow steadily."
However he admitted that some British investors had become "wary" of buying in Spain as they target new markets promising better returns in the short and medium term.
Getting an immediate good return on a Property Investment is less of a concern for the growing numbers of Britons choosing to retire in the Spanish sun for whom gaining returns in the longer term was more important, he added.
Spanish property still going 'very well', Property News, 04.05.2007
Despite its recent bad press, a leading UK estate agent has today insisted the Spanish property market is still in good health.
According to Foxtons International, property investment in the country is still going "very well" with ever increasing numbers of Britons relocating to their favourite Overseas Property investment hotspot.
The property group revealed that a growing number of business people are heading to the country to take advantage of its proximity to the UK and South America.
Foxton's international development manger, Matt Glazier, said the recent turn in the Spanish property market might "shake things up a bit", but it was something the industry had been "expecting" for a long time.
He explained that investment in infrastructure in the country was still a huge draw for Overseas Property investors: "The country is still developing new airports all along the coasts that's going to increase the accessibility.
"It's always been an established tourist base for many years now, whereas some of the Eastern European countries are trying to catch up."
Mr Glazier also explained that the financial service for investors was much more "streamlined" than in previous years, however he still recommended people equipped themselves with a good lawyer to deal with complex issues including titles, land and deeds.
Figures reveal a staggering 800,000 new properties were constructed in the country last year.
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Cracks Are Appearing in Europe's Property Market:By Matthew Lynn, May 2, 2007 (Bloomberg)
With a strong euro, a steadily recovering economy, and no looming threat from inflation, you might think that Europe's property market was largely immune from the decline in U.S. home values.
Think again. Cracks are starting to appear in the real- estate markets of Ireland, Spain and France -- the three euro- area countries where property prices have soared in recent years.
That isn't about to blow over. The housing markets in these countries may be on the verge of a sustained period of stagnation -- and maybe even a full-blown collapse.
Why? House prices surged because interest rates were set too low for those nations for several years in a row. Now they are likely to be too high.
Europeans who thought investing in property was a sure bet are being forced to reconsider.
``Last week's sell-off marked the first real sign of panic among Spanish property investors,'' the London-based consulting firm Capital Economics Ltd. said in a note to investors. ``A key reason for this is that Spain's latest wobble has come against the backdrop of the recent rapid deterioration in the U.S. housing market as well as tentative signs that Irish house prices have started to head south. This has prompted fears that a similar situation could unravel in Spain.''
The Spanish stock market has been spooked by the threat of a looming property slowdown. Last month, Spain's 10 largest publicly traded real-estate stocks lost about 7 billion euros ($9.5 billion) in value in eight days as investors judged the eight-year boom may be over.
Declining Profits
Parquesol Inmobiliaria & Proyectos SA slumped after it reported declining profits as new properties failed to sell. Overall, prices may advance only 3 percent to 5 percent this year, according to Banco Bilbao Vizcaya Argentaria SA, compared with 15 percent gains at the height of the boom.
Meanwhile, the Irish are having to get used to falling prices. Irish home values dropped 3 percent in the first quarter, according to the Web site http://www.MyHome.ie . They stagnated in February for the first time in more than four years, mortgage lender Irish Life & Permanent Plc said in April. That's after Irish house prices quadrupled in the past decade, and as recently as 2005 were rising by more than 9 percent annually, according to Knight Frank LLP.
In France, housing starts dropped 15 percent in the three months through February, the biggest decline in six years. Apartment prices in Paris are rising at an annual rate of 10 percent -- but that is the slowest pace in seven years. That's hardly a sign of a healthy property market.
Low Interest Rates
There's no great mystery about why France, Spain and Ireland boomed. When all three countries adopted the euro, interest rates were set by the European Central Bank in Frankfurt. It looked at the entire euro-area economy -- not just property prices in one or two countries. The result? Interest rates were lower than they would have been if they were set by a national central bank.
And now? That has been thrown into reverse. Just as borrowing costs were artificially low for those nations, now they may be artificially high.
There are good reasons to think the boom in those countries is coming to an end.
Since December 2005, the ECB has raised rates seven times to the current 3.75 percent. They have almost doubled since the 2005 low of 2 percent. That's a hefty increase in mortgage payments.
Tightening Cycle
Interest rates are likely to go higher, perhaps to 4 percent. There is no sign that the current tightening cycle is coming to an end, putting even more pressure on house prices.
A strengthening euro will make life tougher for exporters, curbing wage growth in those countries. Again, that is going to make it harder for people to take out big mortgages.
Interest rates are being set to keep a lid on Europe-wide inflation. Even if the ECB lowered borrowing costs to keep the property market afloat in Spain and Ireland, it would risk re- igniting inflation in one of the other euro-area countries.
To put up rates when house prices, and new housing starts, are moving into freefall may seem like madness. After all, a significant property collapse could tip economies into recession, and leave mortgage lenders and banks struggling. Yet that is the way the system now works.
One consequence of the euro is boom-and-bust property markets in some member economies. We have seen the boom. Now we are about to see the bust -- and there is probably little that anyone can do about it.
(Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.)
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Declare It", says Kingdom-Homes Spanish Properties, Click Press, 02 May 2007
If you have a Spanish bank account, a Spanish property, rental income from a Spanish property, or a capital gain from the sale of a Spanish property, and you’ve not yet declared it to the UK tax authority, now is the time to do so, says Kingdom-Homes, a Spanish property services company based in Murcia / the Costa Calida.
The UK tax authority, HM Revenue and Customs (HMRC), has instigated a massive crackdown on unpaid tax. The Offshore Disclosure Facility (ODF), which some are calling a ‘tax amnesty’ (although it’s not), is aimed at UK residents who are not declaring their offshore assets, income or gains.
People have until 22nd June to come forward and notify the tax authority of their intention to disclose, and then until 26th November (some five months later), to make a full disclosure of all tax irregularities, and to pay the outstanding tax, plus interest at 7.5%, and the 10% penalty charge.
An elite crack team from the Special Civil Investigations Unit within HMRC is poised to rapidly target suspected tax evaders, and will send out letters immediately after the deadline of 22nd June to those who have not notified their intention to make a disclosure and where information suggests that tax may have been underpaid. Outstanding taxes, plus interest at 7.5%, and a penalty of up to 100% will then become payable.
HMRC is offering, in effect, to cap penalties at 10% of the maximum 100% allowed. Kingdom-Homes believes that it would be unwise for anyone who has undeclared assets, income or gains, to ignore this opportunity to come clean and benefit from the 90% reduction in the penalty.
Spanish tax on rental income for non residents is a flat 24% of gross income. The net income is also liable to UK income tax, at a rate of up to 40% for higher rate taxpayers, but any Spanish tax paid can be deducted from the UK tax due.
The sale of a second home in Spain will attract a capital gains tax levy of 18% in Spain, and up to 40% in the UK above the tax free amount of £9,200.
Kingdom-Homes sell Spanish property in Murcia / the Costa Calida, a genuinely unspoilt region of Spain, with many protected areas of outstanding natural beauty and a growing number of golf courses designed by the sports biggest names. Kingdom-Homes is firmly committed to the highest ethical standards, providing a totally honest and transparent service, always putting their clients Spanish property requirements and interests before their own.
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Falling Spanish property shares raise fears about
residential market Printable Version, Published: 10:13 Tuesday 01
May 2007
By: David Campbell, New Model Adviser News Reporter
A 10-year bull run in the Spanish property market appears to have
been skewered as fears of oversupply sent shares in some of Spain’s
leading construction groups falling.
This was precipitated by a fall in the share price of Astroc
Mediterraneo, one of four Spanish real estate companies that came to
market last year.
Its shares in February touched a record €75 (£51), 10 times its IPO
price of €6.40, yet it experienced a 65% decline last week, causing
a major sell-off in the sector.
The first signs of trouble emerged last week when Astroc revealed
that some of last year’s reported profits came from the sale of
company assets to its chairman.
This was compounded by concerns about levels of debt underpinning
new developments and about the danger of oversupply, with 800,000
projected completions in 2007, well above expected demand for
600,000 new homes.
Property investment adviser Stuart Law of Assetz said that a
‘pulling in of horns’ was long overdue but claimed that the property
market itself was solid.
‘The Spanish economy has been significantly reliant on property
investment inflows in recent years but that capital is not going
anywhere now it is there,’ he said.
Structural issues have coincided with a series of consumer scandals
as details about planning abuses have emerged, alongside a
government threat to seize illegally built homes.
‘Spain will continue to experience property problems in areas that
have been exposed to corrupt licensing laws and where there are
“land grab” issues,’ said Simon Attrell, Spanish property adviser at
Conti Financial Services.
‘The Spanish property market is well established and we’ve always
maintained the market should be viewed as a long-term investment and
not short-term.’
UK fund managers believe the fall will not affect the wider European
commercial property market.
The head of property equities for Henderson Global Investors Patrick
Sumner said: ‘This has been a disaster waiting to happen; the sector
has lost all reality and fundamentals.
'We haven’t owned Spanish stock for years because we were able to
sell them for a stupid amount of money. But investors should not
worry about the wider property market. This will probably impact
mostly on financials and construction.’
Premier Asset Management’s Rupert Morrell had to sell half his
holding in one of his favourite stocks in his £13.4 million Premier
European Growth fund (Premier European Growth) as a result of the
crash.
He slashed his 2.6% stake in Spanish property group Fadesa, which he
had hoped to raise to 3.6% over the coming months.
Is property boom turning to gloom?, 5:00AM Saturday April 28, 2007, By Jane Padgham, New Zealand Herald On Sunday
For those
fantasising about sipping sangria while watching the value of their
Spanish holiday-home soar, the dream is over. After five years of
double-digit growth, house prices rose by a relatively modest 9 per
cent in 2006 and are expected to slow dramatically this year.
A constant stream of bad news has shaken foreign buyer confidence in
Spanish property, while relatively high prices and competition from
cheaper destinations such as Morocco and Bulgaria have drained
demand. Corruption scandals linked to property deals have been rife
- in Marbella, several municipal councillors are in jail awaiting
trial for allegedly taking kickbacks.
Mark Stucklin, who runs the Spanish Property Insight consultancy,
believes house prices in many parts of Spain will stagnate this
year, and stagnate or fall next year. "I think attractive properties
in good areas and on the best developments will hold their value in
the short-term, and deliver solid returns in the long-term. But when
it comes to mediocre property in over-developed areas, all I can say
is there is far too much of it around, and I am not optimistic about
it," he said.
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Spanish property downturn 'will provide long-term investment
opportunities' ,27/04/2007, Ready to Invest
The widely-expected collapse of the Spanish property market could
yield lucrative long-term investment opportunities for new buyers,
according to one expert.
Although people who have invested in Spanish property over the last
few years may soon find themselves without any capital gains to show
for it, with an active buyers' market the result, said Jamie Lidell,
property expert with Homes Overseas Magazine.
He told the Telegraph that it will soon be "the perfect time to pick
up a bargain" as the market settles following its correction.
Explaining the reasoning behind the buyers' market, he said: "As the
bottom falls out of the market we will see distressed sellers
off-loading property for a lot less than they paid for it."
Pierre Williams from Inside Track property consultancy also told the
newspaper that "quality properties in quality locations" are still
likely to deliver strong returns for investors in the mid to long
run.
Fears over a slump in the Spanish property market grew yesterday as
some Spain-based property firms sustained losses on the stock
exchange.
Spanish property prices dive 27-Apr-2007 ,
By Nicolette Botbol, Mortgage Strategy
Assetz believes that falling share prices of Spanish property
companies is good news for the housing market.
Stuart Law, managing director of Assetz, says: "Spanish property
company shares were clearly overpriced and investors are bailing out
after finally recognising that prices cannot keep growing.
"This could be good news for the property market as a whole, as it
will reduce the vast gearing of listed property companies, reduce
the high levels of housebuilding which has led to some oversupply in
the market, and also decrease levels of illegal housebuilding in
Spain, which is very distressing for buyers when they discover their
purchase is not secure."
Assetz disputes the likelihood of any significant house price drop
in Spain, which is currently benefiting from annual growth of around
7%, with a long term growth rate of 5% - 7% looking highly
sustainable, especially in the tourist hotspots.
Law adds: "Falling Spanish house prices in real terms is actually
old news, not least when talking about new build properties in the
tourist locations, as developers have been offering discounts for
two years now in an effort to maintain their sales volumes.
“However, these price reductions have not shown up properly in the
house price indices.
"The reason for this is that black money (cash passed over the table
at the time of purchase to reduce capital gains tax) has been
reducing over the last two years or so under legal pressures, which
has led to reported prices of sales transactions increasing. This
has counteracted the actual new build price reductions.
"The net result is that the rate of property price increases have
lowered to more moderate levels over the last two years, but a lot
of the froth in terms of pricing has been taken off the market in
that time.
“Two years ago, when Spanish new build house prices did suffer a
correction (at the time when developers started to discount and
investors started to get caught out when trying to flip properties)
it was very little reported.
"Our view now is that house prices in Spain are firm but
sustainable, not least as a result of the strong demand from British
holiday home owners who continue their love affair with Spain.
“The Spanish holiday home market is also underpinned by strong
rental yields in holiday hotspots of 7% - 8% and good yields will
always ensure a healthy capital value of a property."
Spanish property stocks hammered, Thursday,
April 26, 2007,By Ben Harding and Sarah Morris, MADRID - Reuters
Spanish property stocks took a nosedive on Tuesday, shedding more
than 18 percent in some cases, on fears that a decade-long property
boom was fading.
The sector dragged Spain's blue-chip index down 2.73 percent to
close at 14.587.7 points, off a low of 14.516 points, as concerns
for the financial strength of a small property firm, Astroc,
contaminated the wider market.
Some 70 percent of the average daily volume on the Ibex had been
traded in the first 3.5 hours, with real estate firm Inmocaral
falling as much as 18 percent before recovering to a fall of 11
percent. Fadesa fell 11 percent, while Colonial was down 12.6
percent.
The slide prompted a government source to say the market was
correcting from recent historic highs and the drop should not be
described as a collapse.
"Neither is there a bursting of any 'property bubble'," the source
added in a written statement.
After a building bonanza dating from the mid-90s, valuations on some
property firms look increasingly shaky and the "crisis is...
spreading to the banks," a trader said.
Spain's two biggest banks, Santander and BBVA, were also hit,
falling three and 2.8 percent respectively. Other smaller domestic
banks with a greater percentage of mortgage lending on their books
than their peers were down 3-to-5 percent.
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Astroc Meltdown
Tuesday's plunge was triggered by the meltdown of shares in property
firm Astroc, whose shares fell 9 percent to 15.95 euros, bringing
the past week's losses to over 60 percent.
Astroc shares had shot to more than 10 times their original May 2006
price by February 2007, propelling Chairman Enrique Banuelos, its
majority shareholder, into Forbes' top 100 rich list in March, with
an estimated $7.7 billion fortune.
Last week news spread of an auditor's report that stated Banuelos
had bought property from his own company equivalent to 65 percent of
annual turnover – despite Banuelos denying any such rumors. That
sparked a massive share sell off.
Fears spread from property specialists to larger building firms like
Sacyr Vallehermoso, down 8.15 percent and Acciona, 5.07 percent
lower, and then to building groups FCC and OHL, dropping 6.7 and 3.9
percent respectively.
The tremor of fear shot through Spanish markets the week after
official figures showed house prices growing at their lowest rate in
almost eight years in the first quarter at 7.2 percent, as well as a
price fall in some areas.
Fears grow of Spanish property crash, 25th April 2007, Times Online, Andrew Ellson and Lucia Adams
Panic selling of property-related companies on the Spanish stock
market this week has raised fears that the country’s housing market
is set to crash, potentially hitting tens of thousands of Brits with
second homes on the Costas.
The value of Spain’s leading developers has slumped by as much as 65
per cent with analysts worried about levels of debt and a massive
over-supply of properties. The concerns drove Madrid’s IBEX index
2.7 per cent lower yesterday.
The Spanish construction industry is expected to churn out 800,000
properties this year, 200,000 more than last year.
Diana Choyleva, director and chief economist at Lombard Street
Research, believes the Spanish housing market is about implode
“It is not good news for UK investors in Spain. The problem is in
supply. We have had over investment on a gigantic scale and it has
already started a slowdown in house price growth.
“We will definitely see house price growth stop and falls in nominal
prices are likely in Spain over the next 12 to 18 months.”
An estimated 250,000 British citizens own properties in Spain with
many having benefited from prices that have risen by an average of
10 per cent a year over the last five years. In some areas prices
have risen by 270 per cent over the last decade.
Spain has long been the destination of choice for Britons. However,
land scandals and the attraction of less expensive emerging markets
have meant that demand from British buyers has declined in recent
years.
Last year corruption on the Costa del Sol left British property
owners fearing for their Spanish boltholes after homes were built
illegally on protected land.
The Ley Reguladora de la Actividad Urbanistica (LRAU) - or land grab
law - has also left some Britons out of pocket: the law can demand
in certain cases that owners cede part of their land to the town
hall while receiving as little as 10 per cent of the value of their
property in compensation. In some cases owners have found themselves
liable for the part of the cost of redeveloping what was their land.
Maria Tujillo, Spain’s housing minister, attempted to allay fears
over property prices, saying the market was heading for a soft
landing rather than a crash.
Legal advice recommended for Spanish
property purchases ,04/04/2007 17:32 Realestate TV
An overseas property expert has warned buyers to make sure that they
get legal advice when purchasing property in Spain as the potential
consequences of failing to are "not worth it".
Les Calvert, director of overseas homes website Property Abroad,
said that people needed to make sure they knew what they were
signing and had an English translation if they could not speak
Spanish.
Notaries usually had an obligation to make sure whoever was signing
a document understood it, he added.
He also advised buyers to check there were no debts, planning
permission issues or future planning laws associated with a
property, and when investing off-plan to make sure a bank guarantee
was in place or that whoever the deposit was paid to was on an
off-plan project.
"Don't just take the estate agent's word, or their solicitor's word,
make sure you've got your own independent legal advisor to clarify
whatever it is they're telling you or promising you," he advised.
Other legal issues that investors in Spain have recently been
advised on include the Numero de Identificacion de Extranjero, which
Halifax says investors must have before buying property due to a
change in the law.
05.04.2007 New Rules for Property Purchase announced
As of the end of March residency cards (residencias) will no longer be required to be produced by EU nationals as proof of identity in Spanish property transactions. This follows the coming into effect of a Royal Decree bringing Spain into line with EU requirements. In future expats need only produce a passport when proof of identity is required; a document they are advised to carry at all times. Expats intending to remain in Spain for more than three months will still need to register with the Registro Central de Extranjeros to obtain certificate confirming their Spanish address and ID number.
09.03.2007 Spain to remain popular with UK Property Investors
Spain is expected to remain the most popular location for British investors seeking to purchase property abroad, it has been claimed.Mark Stucklin, spokesperson, stated that, in the long-term, the Spanish market will continue to attract UK investors.
However, following recent reports of planning permission issues relating to properties bought in Spain, Mr Stucklin suggested that many potential investors may currently be wary of the market.
"There's presently some problems with buyer confidence," he remarked.
"But I don't think people are going to abandon Spain just because of that."
Currency specialist HiFX recently reported that 55 per cent of all property enquiries from British investors are for areas of France and Spain, although a growing number of people are turning away from traditional overseas markets in favour of emerging ones.
The firm stated that Germany, Poland and Romania are becoming increasingly popular among investors.
08.03.2007 Spain 'will be top for real estate investors'
Spain is soon to
become the number one destination for European property investors,
according to one analyst.
Mark Stucklin, a spokesperson for Spanish Property Insight, said
that despite recent reports of planning permission problems with
properties in the country, people were not going to abandon the
destination.
Spain has been a popular holiday home destination with older Britons
for many years, who have been drawn by the warm Mediterranean
climate and good infrastructure. The country is also increasingly
appealing to younger Britons, with growing numbers investing in the
destination.
Although the legal system in Spain is different to the UK as it
revolves around a notary, it is not a complicated system, Mr
Stucklin advised.
He said: "If you do things thoroughly you dont really take any
risks. The best thing for people to do is to buy with the help of an
independent lawyer. Which is something that many people fail to do."
While a large number of people were not aware of the inheritance tax
issues surrounding Spanish property, among those that did know, Mr
Stucklin said that he was not aware of any cases in which people
decided not to buy as a consequence of it.
"One needs to be aware of it to try to minimise, or legally avoid
it, where possible," he said.
07.03.2007 Spanish Property market performing well
The Spanish property
market is performing well and looks set to provide even more
investment options in the near future, according to Inside Track.
A study by the property company found that Spain was the "second
best performing" property market, just behind Florida.
Many British overseas property investors are attracted to Spain
because it offers 48.74 per cent in terms of return on investment –
ten per cent above the UK market.
Pierre Williams, an Inside Track spokesman, said the good
performance is likely to continue.
"Spain is still performing well. There's going to be much more
regionalisation of the market. We really have to look at where the
growth markets in future for Spain are," he said.
Mr Williams predicts that interest in property more inland will be
more popular than it has been in the past.
He added: "Traditional areas are still performing well but what
we've seen is an expansion of the market and there's still an awful
lot of investor interest in Spain. It's a very mature market. That's
likely to continue. But as with all markets, as they mature, people
are looking at where the new opportunities might be."
07.03.2007 Is Spain Europe's California, Expatica
Foreign investment
in Spanish property hasn't lived up to the optimistic forecasts of
just a few years ago, when 'experts' predicted that Britons and
other Europeans would increase spending every year.
In reality, foreign investment in Spanish real estate has fallen
since 2003, and by the end of May was some 33 percent below the
level for the same period in 2003.
Nevertheless, I still think there are good grounds for optimism
about the future of the Spanish property market, at least in those
areas popular with foreign buyers.
European baby boomers officially start to retire this year, and will
continue to do so over the next 20 years.
With the right financial advice millions of them will be able to
afford a place in Spain, and I'm confident that many of them will
end up buying into Spain's higher quality of life and lower cost of
living, where pensions go that bit further.
Though I see plenty of evidence that today's buyers are more
cautious then they used to be, I see little evidence of demand for
Spain's lifestyle evaporating.
I still expect significant problems in short term, and I think a few
agents and developers might go out of business before the smoke
clears.
But it's still early days for Spain as the California of Europe, and
looking 10 years ahead, I can only see it becoming more popular.
07.03.2007 Spain lures investors 'with 48.74% return'
Spain's property
market is second only to that of Florida in terms of performance,
one expert has claimed.
Pierre Williams, a spokesperson for Inside Track, said that the
Mediterranean country averages a 48.74 per cent investment return,
which is ten per cent more than the UK property market.
And the destination, a traditional favourite with British retirees,
has had new life injected into it through a growing number of
younger Britons choosing to invest in the area.
Mr Williams said that despite softening in property markets in much
of western Europe, Spain was still performing well.
Growth markets in the future would not necessarily be in traditional
coastal regions but were likely to spread more inland to areas which
have seen less investment in the past, he added.
Aspects such as the weather, well-established expat community and
infrastructure would continue to draw British investors, he said.
He stated: "Spain's naturally an attractive market, and has been
because it's been a holiday destination for the British for so
long."
02.03.2007 Has slashed Spanish capital gains tax brought hidden costs, Assetz
Investors looking
for property in Spain may wish to do some research on the capital
gains tax system in that country before making a purchase. Recently,
Spain enacted laws that lowered the capital gains tax a non-resident
owner of Spanish property would pay on selling the asset. The tax
was lowered from 35 to 18 per cent, seemingly a huge boost for the
shrewd overseas property investor.
However, closer analysis reveals that the tax cut may not deliver
such straightforward benefits as first appearances would suggest.
Under the double taxation agreement in place between the UK and
Spain, the capital gains tax payable domestically by the
non-resident investor may actually be higher. Double taxation
agreements vary from country to country, but essentially work as
outlined below.
Anyone making a profit from their activities in another country,
such as acquiring a property portfolio for buy-to-let or resale
purposes, may find that they are due to pay tax in both their
country of residence and the country in which the profit was
acquired. As this is quite unfair, countries will often enter into a
double taxation agreement that allow the person to pay their local
tax but pay no tax in the country in which the business was
conducted. To take advantage of such a treaty, the person must be a
declared non-resident in the foreign country.
However, the terms of the double taxation agreement with Spain mean
that capital gains tax is still payable in both countries. So, while
a UK resident selling a Spanish property will pay less capital gains
tax in Spain, they may be in line for a higher capital gains tax
payment in the UK. This is because the net tax paid in Spain is
deductible from the amount that tax is to be paid on in Britain. As
less money is being paid in Spain, less money is tax-deductible at
the UK end. This isn't likely to present a huge problem for most
property owners or buy-to-let investors in the Spanish property
market, but it is something that they may wish to look into.
Research conducted by Mintel last year found that over 800,000
Britons owned property abroad, with just under half of those
investing in Spain. The country is especially popular with retirees
and under current rules, anyone over the age of 65 who has lived in
their Spanish property for three years or more is exempt from
Spanish capital gains tax.
01.03.2007 Spanish Property Tax reduction, Half truths and Hype, John Hill, E-Gain New Media Ltd
There is a lot of
talk just now in Spanish property circles about the recent reduction
in Spanish Capital Gains Tax. Many Spanish property developers and,
more importantly, the property agents who service the UK market, are
quick to point this out and often use it to entice UK buyers to the
Spanish market.
Here we point out that for the majority of UK resident buyers, the
total Capital Gains Tax payable on the sale of Spanish property is
unlikely to be very different than it was previously.
28.02.2007 Spain and France still top for Property Buyers
Property in Spain and France continues to dominate the attention of investors looking to purchase property abroad, according to a new survey.
According to research published by the Association of International Property Professionals (AIPP), Spain tops the list with a 31.6 per cent market share, with France second, commanding 18.9 per cent of the market.The AIPP's report was established last year in a bid to improve professionalism and accuracy in the market as it is believed many similar reports are simply estimates produced by companies trying to sell property.
Paul Owen, chief executive of AIPP, said: "In 2006, Britons spent nearly £20 billion on overseas property yet most of the figures produced about the market are made up by companies trying to sell property."In a market of this size, it is incredible that no reliable statistics have been produced," he added.
The average amount spent by British investors when buying abroad last year was £98,167.Elsewhere other reports suggest the rise in British investors buying in Spain is because it is often easier to buy a property there than in the UK. Research by Lar Sol claims Brits have been attracted to Spanish property due to recent income tax cuts by the Spanish government.
Britons moving abroad might want to take advantage of self-storage to deal with possessions they cannot take with them.14.02.2007 Spanish Property Market Up 11% Despite Softening Predictions
Research recently
carried out by the Royal Institute of Chartered Surveyors showed
that the European property market as a whole remained very
competitive in 2006, with most countries achieving double figures.
Despite being slightly down on the previous year, many of the
traditional markets such as Spain continued to show extremely
favourable results and achieved a promising 11% price rise overall.
Even with the European Central Bank interest rate rises in 2006, the
predicted fall in the housing market did not happen, and many of the
lenders have refused to follow and raise their rates, keeping the
housing market in Spain buoyant. The much predicted softening of the
housing market therefore did not happen, and buyers are still keen
to invest in the residential housing markets.
Some experts say that buyers looking to invest in Spain want more
space, suggesting that the trend is shifting to the purchasing of
villas and larger properties which is therefore making them more
popular than the traditional apartment type purchases.
Principal International, a leading overseas property investment
company in the UK, say that Spain is still popular with British
investors and the second home buyers. They have a number of
apartments and villas available, priced at below 250,000 Euros, in
the Murcia and Almeria region. These offer excellent value for
money, as the average price quoted in a recent article written by a
Spanish property portal is said to be 263,000 Euros for a three
bedroom property.
With capital growth and rental yields in Spain still being amongst
some of the highest in Europe, Simon Ryeland, Director of Principal
International, says that many parts of Spain are still showing a
good return for investors.
08.11.2006 Spanish Property Tax Reduced
Spanish property
sales tax for non residents is to be reduced. Legislation to reduce
Capital Gains Tax for non-residents from 35% to 18% plus increase it
for residents from 15% to 18% was approved by the Spanish Senate in
October 2006. The new regulations also reduce from 5% to 3% the
withholding provision that non-residents pay when selling property
in Spain. The new regulations come into force at the beginning of
January 2007. Non-resident property sellers should try to delay
completion of their property sale until January 2007 to benefit from
these lower taxes.
The change was introduced after growing pressure from the European
Union to treat non residents equally.