The Latest Spanish Property News from Kyero.com

Last week I asked Who are the bad guys in Spain? This week, two news articles provide the answer.

The tedious account of a meeting in Planning Abuse in Almeria reveals a partial list of things wrong with the property market in Spain:

• No regulated steps for conveyancing
• No registration, supervision or compulsory insurance for estate agents
• No obligatory public information regarding planning approval
• No record of planning applications at the Land Registry Office
• No coordination between the Catastro and Land Registry Office
• No independent environmental protection

Hmm, that's quite a list of fundamental problems isn't it? They're not limited to Almeria either - this is how the property market operates throughout Spain.

Neither is the list complete - the councillor of Mojacar who made these points conveniently omitted the fact that town councils routinely ignore regional building regulations in order to profit from the taxes they charge on new construction.

Think of Valencia land grabs, Marbella demolitions and, the new-kid on the block, coastal demolitions.

When you combine a 20-year building boom with a broken system for building and registering property - guess what happens?

If you ran your bank account, home or business with such abandon, would you be surprised to find yourself in a mess?

Bad guy No.1: The Spanish government for allowing this to get so bad and looking the other way while they profited from the building boom.

Speaking of the government, in Real Estate Market Must Correct Itself we read the Minister for Tax and Economy, Pedro Solbes saying that he is against doing anything to halt the adjustment of 'the excesses' of the construction industry.

Responding for the construction industry, the President of the Promoters' and Constructors in Spain, APCE, Guillermo Chicote, said that the government is 'fighting pneumonia with cough drops' and that the problem was so acute, it cannot be solved by a little speech.

Bad guy No.2: The constructors for plunging Spain into the current situation of oversupply - and now taking no responsibility for the situation at all.

Solbes thinks that 'normality' will return to the market by 2010 - which sounds about right to me. I just hope that, during the intervening period, they get their act together and fix the broken system of buying a home in Spain.

It's not all doom and gloom though. Back in October last year, I wondered whether there wasn't a socially responsible solution to the problem of new-build oversupply. In particular, I wondered if it made sense to absorb some of these properties into the stock of subsidised housing.

Last week, the Spanish newspaper Expansion, as reported by Idealista ran this article:

"The government is studying whether freehold dwellings in stock can be sold under the state-subsidised scheme. The government could help developers by transforming part of the stock of half a million unsold freehold homes into state-subsidised housing. The reconversion plan could be decisive for absorbing the glut in supply."

Yep, I think that would work to the benefit of all.

I think Solbes is starting off in the right direction by refusing to pour money into subsidising a fundamentally broken system but the next step needs to be to fix the system itself.

If you had a leaky bucket, it would make sense to first stop pouring water into it, and second, to fix the holes or replace it with a new one. I hope that Mr Solbes agrees.