The Latest Spanish Property News from Kyero.com

A new law will only allow the construction of “golf housing” if the land has already been designated for building in the area’s PGOU urban plan.

The development of residential tourism on the Andalusian coastline has gone hand in hand with the appearance of new golf courses surrounded by a cluster of residential complexes. However this type of “first line” golf course property - as they are often advertised - could become an endangered species following the new Junta de Andalucía decree due to come into force next year.

Sources from the regional department of Public Works have told SUR that the Junta aims to “disassociate” the granting of planning permission for golf courses from the construction of housing around them. In other words the new law will prohibit construction next to golf courses unless building on the land in question is already envisaged in the local PGOU (development plan). Therefore the existence of a golf course will no longer be an advantage when it comes to the creation of a new housing development. The change totally opposes what has become common practice. Of the 303 golf courses planned for this year in Spain, 150 are in Andalucía and property developers or builders are behind 80 per cent of them.

Until now a golf course has been the key to being able to build apartment blocks and endless rows of townhouses on a large area of country land where otherwise construction would have been prohibited. Some call these projects financial investments that are vital for the development of a municipality and the region itself, while others describe them as mere breeding grounds for speculation and corruption which, what’s more, contradict the policy of sustainable development promoted by the regional President, Manuel Chaves.

What the Public Works Department would like to achieve is the location of a golf course in a more suitable country setting and residential developments a short or medium distance away, but on land already designated for building properties.

On October 25th the Andalusian Parliament approved the POTA, a general land plan for Andalucía, which is another document that will affect the future law regarding golf courses. With this plan the Andalusian Parliament calls for the regional government to establish a regulation during the first half of 2007 to regulate the installation of golf courses in Andalucía, “disassociating” them from urban development and establishing restrictive guidelines regarding their size and environmental impact.

Meanwhile it’s not surprising that the Junta’s planned new decree has not gone down well with the associations of developers working in the field of residential tourism. They point out that the construction of a golf course costs between nine and 12 million euros - not to mention the cost of its upkeep - making the project no longer viable if it is not accompanied by residential development.

Story from surinenglish.com

Speculators are anxious to sell quickly, given that prices are not likely to continue rising. They warn that excess supply is beginning to slow sales, which are now taking three times longer to finalise.

Some talk of a slow meltdown. Others refer to it as a sharp drop in prices. And most simply cross their fingers and hope it will go away soon. They are all talking about falling property prices, or to be more accurate, a slow-down in the rate of rising property prices. But however one looks at it, the prices of houses and apartments in Malaga and the Costa del Sol have ceased to rise at the rate we have become accustomed to over recent years, and many home owners, private investors and property companies are worried. The great Costa del Sol property bubble may not burst, but it is leaking air. The era of fast profits in property would seem to be over, at least for the moment.

Although the property market is still in a fairly healthy state, in spite of continually rising interest rates approved by the European Central Bank in recent months, the experts warn that in certain parts of the Mediterranean coastline and Andalucía – including the Costa del Sol – owners can no longer expect to get the high prices they have previously expected. In other words, it is beginning to become a buyers market.

Many people in Malaga invested in property some years ago as a means of earning a relatively fast profit with a short-term investment. They saw the speculators scrambling over each other to get their hands on properties everywhere, and quite naturally, they wanted in. The spectre of even higher prices for houses and apartments encouraged many to extend themselves too far, financially speaking, and many of them now find themselves with properties they cannot afford on their hands and little chance of unloading them on the open market.

An additional problem, felt more keenly in the area to the west of Malaga city, is the high rate of construction over many years. This has inevitably led to an excess of supply, in turn acting as a brake on both demand and sales. Experts in the sector speak of ‘anguish sales’, in reference to the need for speculators, many of whom bought off-plan, to sell quickly at what they believe to be below true market price. If property speculation was once a ticket to sudden wealth on the Costa del Sol, it is certainly no longer so.

Real estate agents point out that it takes three times longer to sell a property now than it did just a few years ago, the average time now being more than two and half years for a coastline house or apartment to sell. José Antonio Pérez, property professor and director of research in the Business Practices Institute, tells us that prices of residential properties reach their ceiling at 300,000 euros, and from there on sales have more or less stopped. He talks of fear in the property investment market. “Many investors are beginning to get very nervous right now, afraid they will not be able to sell. So they end up selling at below market value and looking towards other parts of the country, such as the south-eastern coastline of Spain,” he says.

The president of the College of Real estate Agents, Cayetano Rengel, prefers to speak of nervousness rather than fear. “The problem is getting quite serious,” he warns us. “Just a few years ago, the buyer would purchase a few properties at a time with the intention of selling them on a short time later and doubling his initial investment. The panorama has now changed considerably. The property market is in a process of self-regulation and equilibrium.”

The response by the speculators is to sell fast, however much they believe they might be losing in the process. Mortgages rates are rising, and nobody wants to be caught in the middle. “We have been receiving many requests for sales in recent years. One can see just how nervous people are, many of them desperate to sell. Even the promoters are asking for our help,” says Rengel.

Juan Carlos Cuevas, owner of the Tecnocasa property agency in Malaga city, agrees with this assessment of the current market. He confirms the high level of saturation in the market at this time, adding that it takes a lot of effort to sell right now. “Even the small residential developments are having difficulties,” he adds. Long gone are the times when the buyer would walk into the office and choose a property off the architect’s drawing. “If we took up to 90 days to push the sale through in the past, it is now taking a great deal longer, up to nine months in may cases. Also, many owners are obliged to drop the asking price drastically, because they have no choice.”

In spite of this situation, the Association of Builders and Promoters of Malaga refuse to talk of a crisis. “We do not believe that there is any real cause for alarm,” says the secretary of the association, Juan Moreno. “What we have is no more than a slow-down. Malaga is too attractive for a real crisis to come about.” In the face of this ‘slow-down’, nevertheless, the University of Barcelona recommends that speculators change their focus. They should look more towards the office sector in the future, we are told by these experts.

Before: Five years ago, the stock market crisis encouraged many people in Malaga to invest in houses and apartments, many of them on the Costa del Sol. The result was a sharp price-rise, and speculators doubled their money over a period of a few years.

Now: Excess supply and high prices have slowed sales. The pattern of continuously rising property prices has levelled off, cutting profits in the short term for the speculators.

Price-rise: Last year, prices rose for the first time below two digits since 2001.

Sales: At the moment, apartments on the Costa del Sol take an average of two and a half years to sell.

Story from surinenglish.com

SUMMER may have brought a heatwave to Britain, but if you’re keen to get some more regular sunshine, you may be able to secure your own home abroad at a surprisingly good interest rate.

The key is buying a property with a mortgage in euros rather than sterling. The euro base rate is 2.75%, compared to the UK’s 4.5%, meaning your mortgage repayments can be significantly lower than with a sterling mortgage. Standard variable rate mortgages in Spain start at 3.5%.

The process is not without with its potential pitfalls. Borrowing in the same currency of the country where you are buying protects you from changes in the exchange rate. But if you are paying back your loan from Britain using sterling, currency fluctuations mean your repayments could change from month to month.

British homeowners are also spoilt with an array of 100%, buy-to-let, interest-only and offset mortgages which are uncommon in other countries. It is far more difficult for a buyer to remortgage in euros. While we’re used to remortgaging every two years, you may want to select a euro mortgage that will be better value over a longer period of time.

There are several ways of obtaining a foreign currency home loan. You can directly approach a bank local to your new purchase, use a British bank offering foreign currency mortgages (usually through their European subsidiary) or use a broker to find one for you.

Unless you already have local connections in the country of your choice, the first option could be difficult. But many British banks offer euro mortgages, and several firms, including Savills Private Finance and Conti Financial Services, specialise in these types of loans.

Savills’s international chief, Mike Boles, said euro mortgages are often suitable for average income earners wanting to buy an investment property to rent out for some of the year. He said many would have a plan to eventually retire to their second home in the sun.

“More and more people who are buying second homes will rent it out for some of the year,” he said. “It’s a good idea to put that rental income into a local currency account, which can then be used to pay the mortgage without losing money in the exchange rate. It also means your mortgage repayments remain steady throughout the year.”

If you do not have rental income going into a local account you can also use a foreign currency exchange service such as MoneyCorp or HIFX to lock into a sterling/euro exchange rate.

Mike Rickards from HIFX said customers paying their euro mortgage from Britain can lock into an exchange rate for one or two years, which means the amount being paid in sterling each month is fixed. Once the rate is agreed, a direct debit is set up from your account to HIFX, which forwards the money to your bank in Europe. Their fee is built into the exchange rate.

It’s worth receiving advice on how exchange rates are expected to move before locking yourself into a rate, or you could find that you end up spending more than you need to.

But Mr Boles warned that it was not always the best option to buy in local currency and to do some decent research before choosing a foreign currency mortgage.

Story from thisismoney.co.uk

A surveyor in Spain believes that banks, buyers, lawyers, developers and advisers are all to blame for Marbella’s illegal homes but, acting for the vendor rather than the buyer, agents are only morally obliged to compensate.

In response to the OPP’s question of the week (about whether UK buyers should be punished for abuses by Spain’s corrupt developers, agents and town planning officials), Campbell D Ferguson - a F.R.I.C.S. Chartered Surveyor from Survey Spain & Survey Gibraltar - explains that everyone involved in the development, sale and purchase of Spain’s illegal homes are either guilty of misrepresentation or, at the very least, of undertaking poor due diligence.

“The properties were built under permissions granted by the Town Halls, but these were illegal as they were outwith the General Plans approved by the higher authorities,” Campbell observes. “Reasonable due diligence by the landowners/developers, their financiers and their lawyers and/or others would have discovered this and so they acted in that knowledge. It could be said that the town halls are innocent; as they could not hide that the higher authority did not support the permissions. There were at least 400 legal actions by the Junta de Andalucía against Marbella alone.”

Property companies took a chance on an eventual amnesty, as Campbell explains: “The developers took a commercial risk in the hope that all would eventually be corrected, which appears to have rebounded upon them if the buildings are demolished. If they can show that they were not properly advised, then their advisors are to blame, but that is a private matter between them.”

“If they paid for these permissions, that is unfortunate as the permissions were not legal and were therefore worthless. The developer and builder should be fined severely to cover the cost of reinstating the land; to remove the profits they made; and to penalise them for ignoring the law. They will have known that they were acting illegally.”

Campbell believes that the law must be observed to the letter. “If the original planning reason for the land not being classified as suitable for development was approved and legitimate, then the land should be reinstated to that use,” he says. “Otherwise the community as a whole loses the benefit of having planned and ‘rationed’ uses. The town’s planned services and utilities were not designed to cater for the surplus use created by the illegal development and therefore will not be sufficient for legal development occupiers.”

Qualifying this, and echoing Special prosecutor Antonio Vercher’s statement last month, Campbell points out that it would have been easy to find out whether these properties were illegal or not. “As the buildings are illegal, proper inspection of the properties and the permissions prior to buying would have shown that. Therefore the buyers are deemed to have known.”

A buyer’s main advisers must share this blame, although the specific duty of care means that some are more liable than others. “If they can show that they were not properly advised, then their advisors are to blame,” said Campbell. “The principal advisor will be the lawyer, if it can be shown that they had a duty to the buyer to advise them that the property was illegal.”

“The selling agent, who should have known the property was illegal, may also be liable for misrepresenting the property. However, the buyer is NOT their client and it could be argued that they do not have a duty of care to them. The agent’s client is the person who pays their commission, namely the seller.”

Campbell also says that blame must be shared by the banks. “The banks that lent on the property should have known that the security was illegal, or again their advisors should have known and advised. Therefore there may be some doubt as to the borrower’s liability to repay the loan. It affects all buyers, no matter their nationality.”

This view is supported by Brenda Waddington of Rusticasa in Spain who said: “Sr Vercher, the Fical responsible for co-ordinating all the public prosecutors of Spain in matters of urbanism and the environment, is incredulous that people do not check the legality of properties at the land registry before they buy. He is obviously not aware of all or some of the following.”

“In permissive town halls, they know what is going on, but turn a blind eye, or at worst fine the builder. Some architects sign false certificates of age, which appear to legalise the property but in fact do not. The local Notaries know what is going on, but some accept the architect’s certificate as a valid document (in some areas where illegal building is treated seriously, a document from the town hall is required by the Notary). The Land Registry accepts the documentation from the Notary and registers the illegal property. Local solicitors know what is going on and accept the documentation - some have been known to accept bribes. Some local bank managers, even now it appears, are accepting the “false” documentation and lending on the properties.”

Going forward, the media coverage of this situation - which is likely to be extensive if these homes are indeed demolished - will educate future buyers and compel the property industry to think twice before acting unethically. “Yes, the Brits and other buyers will now be aware that if something is illegal when they buy, it stays illegal,” Campbell concludes. “At some time the illegality will have to be corrected and it will cost somebody in time, hassle and money to put it right, which may involve them losing everything. This is the right message, as the law must be obeyed. Without that there is no society. For potential UK buyers, it should reassure them that everybody will be much more careful to act within the law in the future and protect the buyer’s interests.”

In a separate letter to the OPP, Gwilym Rhys-Jones, from the Costa del Sol Action Group, asserts that a harsh lesson must be learned in Spain. “The reality is that there are to be demolitions in Marbella and other parts of Spain. Spaniards and foreigners alike will lose money. It’s like car insurance - you never get back what you think you’re entitled to. The Spanish track record on planning and other species of blight is appalling.”

“Incompetence and corruption are the twin hurdles to overcome. If everybody is making mucho dinero then sod the punters. The properties will eventually get legalized anyway. That is the attitude. Unfortunately this time there is no question of waiting three years and the authorities will provide a back-dated building licence. It has all been done to such a breathtaking level that ‘something must be done’. It was an open secret that developers in Marbella were buying planning permissions and if I was told by one lawyer (not Spanish) years ago that he would not accept a planning permission from Marbella Town Hall for a development, only those from the Junta de Andalucia then; everybody was in on that secret.”

Concluding with some advice for buyers, Rhys-Jones says: “The short answer is not to trust anyone and to demand everything in writing from the agents and your lawyer. Of course they won’t do it because they know they’re lying so that tells you.”

Story from opp.org.uk (free registration required)

BRITONS thinking of buying a place in the Sun should think twice: La Caixa, the Spanish savings bank, says that Spain’s decade-long housing boom has peaked and is on its way down.

Money is still flooding into Spain’s febrile construction sector, but “everything appears to indicate that the long expansive cycle has now hit a ceiling,” La Caixa said in a report yesterday. “House price rises are slowing and, according to the Housing Ministry, the price of land has stagnated.”

A sudden downturn in the Spanish construction sector could have knock-on effects in the UK. Hundreds of thousands of Britons have invested in property on the Costas and a collapse in its value could force asset sales in Britain. The long boom has also given Spanish companies the financial power to acquire British companies and some believe that a crash could force them to retrench in their home market.

Many Spanish companies have grown from family owned concerns into sprawling multinationals on the back of the construction boom, but are aware that the party is coming to an end. They have been looking to diversify away from the highly cyclical construction business - and out of Spain.

Bulging with cash and with access to cheap financing, Spanish companies have been launching audacious takeovers of companies all over Europe, including many in Britain. Ferrovial, the construction and services company, bought BAA, the airports operator, for £10.3 billion this year. ACS, another building company, has bought a 10 per cent stake in Iberdrola, the Spanish utility that is expected to make a £12 billion bid for ScottishPower.

The Spanish Government is hoping that the economy - in its twelfth consecutive year of expansion - similarly can diversify. Yesterday the Government said that the economy had expanded by 3.8 per cent in the third quarter - the fastest annual rate in five years. Many economists caution that the strong growth rate is too dependent on construction and consumption to continue.

As in Britain, Spanish house prices have more than doubled in a decade. Unlike Britain, Spain has responded by going on a building spree. More than three million houses have been built in the past four years, half of them on the coast.

Economists have long said that an abrupt correction in house prices could tip the economy into recession. So far there has been no sign of that. Spain’s economy has been growing at about twice the rate of the rest of the 12-nation eurozone, making it a rare bright spot in the otherwise sluggish area. Perhaps because of that, La Caixa said that confidence in the construction sector remained “very high”.

However, signs of a slowdown are apparent in Madrid and even on Spain’s ever- popular coasts. Simon Walley, deputy secretary-general of the European Mortgage Federation said: “Supply has caught up with demand in some areas, notably on the Spanish coasts.”

Story from timesonline.co.uk

Buying property in Spain can still be daunting but the process can be made easier if advisers learn about the country and the systems in place.

Spain remains the most popular destination for British people buying property overseas and British expatriates are now an important part of the Spanish property market, particularly within the popular Costa del Sol and Costa Blanca regions.

According to the Office of National Statistics’ Official Social Trends Report, over a quarter of Britons, 27%, are buying their second homes in Spain and the Spanish Ministry of Tourism has forecast that one million foreigners will set up home on the Spanish coast within the next six years, trebling by 2025.

The demand from British people for property in Spain has been fuelled by the demand for low-rate Euro mortgages and the boom in low-cost, budget airlines. Research global travel information platform OAG Worldwide has shown that the number of low-cost flights to and from Spain is up 25% on last year, while low-cost operators within Spain have increased by 160%. Euromonitor’s Travel and tourism in Spain report also revealed that one to three day breaks are the fastest growing type of holiday in Spain, accounting for 37% of all trips in 2004.

The growth in low-cost, budget airlines has not only opened up the sun, sea, and sand in Spain to the independent traveller, but has also driven the development of new, regional airports. With daily flights leaving to Spain, particularly to the Costa Blanca, Costa Calida and Costa del Sol, from numerous airports across the UK, the British can now benefit from shorter, more frequent, affordable trips.

As a result, lenders will continue to see a greater number of requests for mortgages in Spain, which will ultimately put more business into the hands of intermediaries and create stronger networks of intermediaries looking to do business abroad. To provide clients with the excellent service standards they expect in the UK, intermediaries need both an understanding of the Spanish market and importantly access to a bank with experience of dealing with British non-resident customers.

Buying a property abroad is not as complicated as some clients may imagine. Just like buying in the UK, brokers’ clients need to follow the proper process. Therefore mortgage packagers or intermediaries must have a detailed understanding of the Spanish market or local area, so that they can provide clients with the correct level of advice to follow the house buying process correctly, or have a good resource of knowledge to call on.

A report in 2005 by the Spanish savings bank Caixa Catalunya entitled Demography and housing in Spain and its Autonomous Regions examined the expected level of supply and demand for residential property in Spain over a 10-year period between 2001 and 2011. The report - prepared for Caixa Catalunya by Professor Josep Oliver - finds that while demand for new residential property in Spain over this period will reach an estimated 400,000 units per year, the number of new housing starts in 2004 was almost 700,000 units.

The report breaks down the expected annual demand for 400,000 new Spanish properties as follows: 230,000 main residencies caused by demographic developments, 100,000 holiday homes bought by Spaniards and 70,000 second homes bought by foreigners investing in Spain. Over the 10-year period, the report forecasts that 2.3 million new households will be created in Spain, driving the demand for an average of 230,000 new main residencies each year. Half a million of these new households will be made up of economic migrants and the remainder the result of changing social trends among Spaniards such as smaller families and an increasing divorce rate.

But as long as Spain remains popular and its house prices stable, there will be increased opportunities for people to own property in Spain. While there will always be a range of options for financing that dream home in the sun, the relatively low levels of interest rates in Spain has continued to drive interest in buying property in Spain and has resulted in an increasing number of people opting for Euro mortgages.

Interest rates in Spain have generally been below those quoted in the UK for quite some time. However, an important consideration surrounding Euro mortgages is that the lender will require monthly repayments in that currency. Therefore, fluctuations in the exchange rate will certainly affect the value of client’s monthly repayments, if they are being met from income earned outside of the Euro zone.

In addition, most banks in Spain will offer a maximum loan to value of around 70%. The large 30% deposit reflects the fact that the property is not the customer’s main residency. In situations where someone holds Spanish residency papers, the maximum loan will usually be restricted to 80%, although in some cases can be as high as 95%. Certain banks also allow their customers to ‘wire’ amounts for the property purchase free of the normal telegraphic transfer fees.

The main difficulty most prospective buyers and their advisers experience in the house buying process is, inevitably, language and the use of different jargon, such as evaluators rather than surveyors. However, as long as care is taken over the choice of bank in Spain and some initial enquiries are carried out to check its ability to deal with British customers in English, all these differences can be overcome.

Most Britons buying property in Spain demand similar products and services to those available in the UK. For this reason, the British banks that combine a network of branches in Spain with a customer service team in the UK are best placed to provide the product range and standards of service expected by British customers.

Dealing with a UK based operations team also enables intermediaries to avoid international telephone charges and allows all paperwork to be handled in the UK. The team can also provide advice about applications submitted, mortgage packers, lending criteria and can work with the intermediary to ensure that it has the relevant knowledge, skills and expertise to operate efficiently within the Spanish market and that applications are processed smoothly and operate on a right first time approach. This means that applications are only passed for processing when all the supporting papers are available, therefore avoiding time consuming corrections or amendments having to be made. In addition, English-speaking mortgage helpline numbers help to deal with any time sensitive queries that intermediaries may have.

The importance of using a qualified solicitor with local knowledge and experience of acting for British customers cannot be over emphasised when clients are buying property in Spain. Few people would consider buying a property in the UK without using an independent solicitor and surveyor, so why should it be any different for brokers’ clients buying property in Spain?

Although employing an independent solicitor and surveyor increases the purchase costs, as legal and survey fees have to be paid, these amounts are relatively small when compared to the expense of trying to sort out unexpected difficulties in the future. In addition, if the bank in Spain has an approved panel of solicitors and surveyors an intermediary would be able to pass on competitive prices to their mutual client.

As in the UK, a Spanish solicitor will ensure that all aspects of the purchase, including planning permission, obtaining a residency certificate and other legal requirements are satisfactory. In addition, valuation reports and reports from the Land registry or Property Registry with details of charges, laws, rules and regulations that could impair any future use of the property can also be provided in English by the solicitors. Advice about tax, if required, can also be provided.

Brokers should finally offer the following checklist to their clients considering buying a property abroad so they can make the necessary personal arrangements before leaving the UK.

Knowledge of the market and taking extra care of their client making the big step to buying property abroad will ensure that the process is smooth, successful and fulfilling.

One million foreigners will set up home on the Spanish coast within the next six years – three million by 2025.

70,000 foreigners are demanding second homes in Spain annually, 17.5% of total demand.

Spanish banks will usually offer a maximum LTV of 70% and require a 30% deposit.

Story from mortgagesolutions-online.com

In recent weeks, the Foreign Office has voiced concerns that thousands of Britons retiring to a life in the sun risk seeing out their days in relative poverty and poor health due to inadequate preparation for their future lives abroad.

Around 13 million British nationals live abroad, a number that increases annually by an estimated 350,000, according to government statistics. Fears over the well-being of some of these expats have been raised ahead of a new study of British migration trends by the Institute of Public Policy Research, due out next month.

“We’ve been getting a lot of feedback from our posts in Spain, Greece and Portugal that the welfare of some older retirees is becoming a major issue,” explains Steve Jewitt-Fleet, head of the Consular Communications Team at the Foreign & Commonwealth Office (FCO), which advises Britons on the services available to them when living and working abroad.

“The 1980s were a popular time for migration and to Spain in particular,” says Mr Jewitt-Fleet. “Many Britons moved abroad in their sixties and reasonably hale and hearty. That population is now in its eighties and experiencing exactly the same sorts of problems they would have experienced in the UK. Many viewed the move as an extended holiday and one that would absolve them of such problems.”

Mr Jewitt-Fleet says the FCO is hoping to raise awareness not just among the group he refers to as the “pioneer retirees” of the 1980s, but also among the increasing number of younger Britons choosing to live abroad. “One of the biggest problems our staff abroad are facing is the lack of awareness over the provision of public healthcare,” he says. “Ask yourself whether you can you afford to fly home should you need (extended) treatment not available overseas. With hindsight it sounds quite obvious, but even if you move to a British enclave you still need to deal with local authorities - so you do need to learn the language.”

FCO consuls provide information on a range of welfare services available in the European Economic Area (EEA). Those entitled to a UK state pension, for example, or those on long-term incapacity or bereavement benefit, may be entitled to free or reduced-cost medical care in some European states.

Across much of the Continent, care of the elderly and infirm still falls to the extended family and as such, some expatriates often find themselves isolated. “British retirees need to realise that not many European countries have welfare provisions like the UK,” says Bruce McIntyre, British consul to Malaga, one destination where the problem is particularly pronounced. “There are often no old people’s homes, no district nursing or community care. We provide help where we can, but there are a few steps you can take to ensure that it doesn’t come to this.”

British television is awash with programmes championing both the lifestyle benefits abroad and the ease of investing in property overseas. But it’s a case of buyer beware, says Mr Jewitt-Fleet. “If you buy a brand new villa you need to make some provision for maintenance and do the same searches on a property as you would in the UK.” One legal oversight by increasing numbers of buyers is not making a will. Should you die abroad without having made one, the legal implications for your family back home can be significant, and France is just one example of a country where the laws governing death duties are incredibly complex.

Another key failing is lack of financial planning. “You need to allow for inflation and exchange-rate fluctuations, explains Mr Jewitt-Fleet. “The Department of Work and Pensions can give you a state pension forecast (your pension entitlement based on National Insurance contributions) and most countries in the European Economic Area will allow you to open a non-resident bank account.

“The last thing we want is to put people off retiring abroad but you need to know what you’re letting yourself in for.”

Story from belfasttelegraph.co.uk

Spain should impose a moratorium on reclassification of land for building purposes, a leading Spanish architectural academic has suggested.

More than enough land had already been turned over from green belt to urbanisation, said Ricardo Aroca, Dean of the Madrid College of Architects. And what is more, recent scandals in Marbella and other towns linked to improper planning consents allowing even more building on what should have been reserved as agricultural land and green spaces were a national disgrace, he said.

They had been allowed to happen because it remains easy to make large profits through reclassification of land. It had proved ‘difficult’ to find people with the scruples needed to stand up to land speculators. “The problem is the system puts temptations in front of people”, said Aroca.

Many more scandals could remain undiscovered and a halt should be called to reclassification of land to give the country ‘some years of reflection’, he suggested.

Latest planning wrangles that have left property investors facing uncertainty include an investigation by Almeria’s environmental protection agency into alleged irregularities in six towns. The Fiscalía de Medio Ambiente de Almería has ordered Albox, Cantoria, Oria, Zurgena, Partaloa and Garrucha councils to explain why planning permissions had been granted for developments, many sold to UK investors, constructed on land zoned as green.

Meanwhile construction of 500 homes in Tolox has been halted by the court following complaints by from the environmental agency about land reclassification. And demolition has begun of chalets built among dunes at the Les Deveses beach in Dénia following agreement with owners.

A study by the University of Barcelona has predicted Spanish property prices will fall back by 20 per cent between 2007 and 2009. An excess of supply over demand and increased interest rates will be partly to blame.

Story from fly-2let.co.uk

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In response to last week’s OPP online story about retirees in Spain ‘living in squalor’, some observers have highlighted the rising number of IFAs on the costas who may be exacerbating the situation.

One agent from Estepona, John Blainey, agreed that there are some retirees in Spain who seem to be in considerable financial difficulty. “The ones that have suffered most often appear to be the ones who have been advised and milked by IFAs,” he said. “This is, indeed, a serious problem in southern Spain. The financial advice market here is unregulated and the local con men are very convincing. As a result of my personal experience my position is that I do not act on advice from anyone that I do not thoroughly research and analyze myself, and then let my brain mull over for a good while well away from the sales agent (independent adviser) - a self-imposed “cooling off period” of a week or two or three to dig out the flaws.”

While anecdotal evidence from a variety of sources suggests that there are too many IFAs in some Spanish resorts, many retirees have made life harder for themselves; as Colin Langton, Chairman of Langtons (IFA) Ltd, explains: “I would endorse the lack of financial planning we are finding amongst expats. There has been so much bad advice in the past from unregulated and unaccountable IFA’s in Spain, [and] there is natural resistance from the public when it comes to genuine regulated IFA’s giving sound advice. A pity as it is desperately needed here.”

“It’s one thing to push Equity Release schemes in every newspaper you see, as a solution to IHT, etc, but to my knowledge we are the only IFA in Spain offering comprehensive advice including Long Term Care Planning. LTC is the largest single expense (far more than IHT) for most retirees and Spain offers no state help and the UK is already crowded out, without adding overseas expats returning when care help is needed.” Langtons (IFA) Ltd works with property companies and estate agents in the UK and Spain and has approached Saga to assist their Spain based clients.

With liquidity highlighted as a key area of concern, Langton pointed out that retirees should consider the most comprehensive products and services. Commenting on Solbank’s Home Reversion Plan, which was mentioned in the OPP news feature last week as an option for Sol Andalusi retirement buyers, Langton pointed out that the bank only pays an Annuity for life when the individual sells their house to them and keep a life interest. “Our Crown plan is superior as it offers the option of tax free cash or an annuity, or both,” he said. “Paid either in UK or Spain. Annuities are notoriously bad value and also deprive one’s beneficiaries of any capital on [their] death.”

Katy Katani, sales coordinator for Spain’s largest privately-owned property developer, Grupo Lar Sol, points out that Brits should do their homework before relocating - but the property industry can help help them. “Grupo Lar Sol offers a range of quality homes designed to accommodate new lifestyles,” she says. “Owners at Grupo Lar Sol gain exclusive access to the company’s added-value services, such as membership to Club Lar Sol. This private club offers retired buyers instant access to an extensive range of lifestyle amenities and advice to assist them in settling into their new homes and ensuring that owning a home is an easy and enjoyable experience.”

“Amongst other things Club Lar Sol can offer advice to retired people on the nearest local hospitals, how and where they can register with the local authorities, and other specialist services they may require. All Club Lar Sol members will have access to this information 24 hours a day in any language.” Grupo Lar Sol work with a number of IFAs and have even launched a training programme to educate them about overseas property. Katy will be participating in a panel at OPPLive (www.opplive.org.uk) on the state of the industry and alliances between property and finance professionals.

Mark Wilkins from The Rights Group SL, a property law specialist in Spain, thinks there are a “disproportionate” number of IFAs for the total number of people actually resident in Spain. “Very few are correctly ‘passported’ into Spain by the UK Financial Services Authority and, as such, they are effectively unregulated,” he says.

Commenting on the equity release products available, Wilkins believes that the ‘income variety’ should be avoided. Outlining one option he said: “Monies are released from a property which has risen in value over the years and has no loan or mortgages charged against it. The monies are invested in a fund, often beyond the control of the client. The ‘income’ is the margin between the costs of borrowing - usually bank interest - and the yield of the fund into which the sums have been invested. Whilst in times of low interest rates this may be comparatively attractive; as rates rise and fund performance drops the ‘income’ margin will be squeezed. There is a clear risk of a house being repossessed if rates rise substantially and funds under perform.”

Some schemes are aimed at Inheritance tax (IHT) relief. “These have some merit as they create a debt against an estate which it seems the Hacienda - tax office - will accept in reduction of an IHT burden. This may be short lived as a number of Spain’s autonomous regions have already abolished IHT in favour of succession taxes paid by the recipients of bequests.”

One equity release option in Spain that Wilkins does endorse is where the lender offers a relatively small loan to the value of the property (15% to 25%) depending on the age of the borrower. “The interest is ‘rolled up’ until the demise of the owner of the property,” explains Wilkins. “The property is not at risk thereby delivering peace of mind to the older borrower.”

Story from opp.org.uk (free registration required)

After two weeks of pleading with the good people of Google to fix their Blogger service, we’ve given up on them. Shame really.

We’ve been publishing the latest Spanish property news using Blogger for almost three years now so we were REALLY keen for them to get their recent problems sorted.

However, after two weeks of not being able to publish the news, we’ve had to write our own publishing system and ditch Google’s Blogger. Ours is a fairly basic affair at the moment but one that we can easly enhance bit by bit as we go.

For those of you who missed our daily pick of the best Spanish property news stories these past two weeks - my sincere apologies - we’ll try and make up for it somehow!

Give a lawyer unlimited power over your affairs and you could be heading for serious trouble.

Amid the thrill of buying property in Spain, many people make too little effort to understand the “boring but important” issues involved in the conveyancing process. But as the following experiences show, you ignore unexciting questions - like whether to grant a power of attorney or complete without a first occupancy licence - at your peril.

Maureen Windale moved to southern Spain with dreams of living out her twilight years in a sunny rural idyll. Windale, 68, a pensioner from Sunderland, spent €150,000 (£100,000) - most of her life savings - on a newly built bungalow with one acre of olive groves in Andalucia’s Granada province.

At first, she was delighted with her new home just outside the village of Freila, 60 miles northeast of the city of Granada, and close to the provincial border with Almeria. “I was so happy with my big bungalow and its views of mountains and lakes,” says Windale, a widow who moved alone to Spain. But seven months later she is spending the rest of her savings on legal action against the vendor, the estate agent and the lawyer. What went wrong? It turns out that Windale was duped into buying an illegal property. Her title deeds make no mention of the bungalow, and the land is significantly less than she was promised. To cap it all, she does not even own the land outright; she shares it with her neighbour and the vendor.

Windale’s big mistake was to give sweeping powers of attorney (POA) to a lawyer recommended to her by the agent. The lawyer abused these powers to buy her an illegal property that was smaller than expected. The lawyer signed all the purchase documents on her behalf, and Windale had no idea what she was getting into. In hindsight, she realises that the lawyer was in cahoots with the agent and vendor in a scheme to defraud her.

“I let my heart rule my head, and now I’m so angry with myself,” says Windale. “The vendor was English and the estate agents were English, so I felt I could trust them. When this is done to you by your own people it hurts a lot more.”

Just like Windale, many Brits on inspection trips to Spain sign a power of attorney in a hurry before flying home. For many, it is an unintelligible document in Spanish giving a lawyer they have never met before extraordinary powers to make decisions on their behalf - with big financial implications.

Buying agent Andrew Lupton, head of Stacks Relocation Spain, believes that many Brits are too flippant about granting POAs when buying property. “It’s risky giving a POA to a relative stranger,” he explains. “They are powerful documents that can be easily abused, which is why we recommend people never sign POAs unless it’s among trusted family members. And if you must sign one, make sure the powers are limited very specifically to the job in hand.”

Imagine buying a new home in Spain but not being able to connect to the mains. This is what happens if you complete on a new property without a licence of first occupancy (LFO), or licencia de primera ocupación in Spanish. Utility companies need to see this licence - issued by the town hall - before they can supply domestic accounts with water and electricity. But some big new developments are not receiving LFOs, often because of planning irregularities.

Jayne Arthur, 48, and husband John, 52, from London, rue the day in early 2004 when they completed without one, paying £140,000 for a two-bed flat in Mijas, near the Costa del Sol. “We have been relying on the builder’s supply for two years, and the problems have put us under a lot of strain,” says Arthur.

Developers often promise to provide water and electricity from the builder’s supply until an LFO is granted. The problem here is that the supply can be unreliable, and there is always the risk that it might be cut off. “There was a power surge on the development a few weeks ago in which many neighbours lost their air conditioning, fridges and burglar alarms,” says Arthur. “We had to pay £200 to have our air conditioning fixed, and now we’ve decided to shut down the fuse box until the utilities are connected.”

Unfortunately for the Arthurs, their lawyer used a power of attorney to complete on their behalf without ensuring that an LFO was in place. “Other buyers didn’t complete until a few weeks ago, when an LFO was granted. But because we completed two years ago we’ve had to pay more than £2,700 in community fees, rates and wealth taxes for a holiday home we couldn’t use,” seethes Arthur.

Under Spanish law you can’t be forced to complete without an LFO, but that rarely stops unscrupulous developers from putting buyers under pressure to do so. The best advice to all buyers is don’t complete without one. Having said that, in some cases it may be the most sensible thing to do.

“The lack of an LFO sets the alarm bells ringing,” explains Michael Davies, a lawyer based in Almeria. “It means you have to do more checks than normal and find out exactly why there is no LFO. Once you know what the problem is you can decide how risky it is to complete without one.”

Story from timesonline.co.uk

Cave homes date back to the 8th century when the Arab communities replicated their cave dwelling traditions in the provinces of southern Spain. Right up until the 1950s tens of thousands of native farming communities lived in these caves but with the advent of tourism in the early 1960s a mass exodus of the workforce to the lucrative coasts meant that many caves were simply abandoned. Over the last decade however interest in these “casas-cuevas” has been strong from overseas buyers keen to purchase their first property in Spain.

The province of Granada has the largest cave dwelling population in Europe and property developers have transformed hundreds of untouched or partly re-formed cave houses into modern holiday and second homes. So, what makes a 21st century cave home a good investment? Christina Sanchez of 1 Casa comments, “Cave homes present the ideal opportunity for buyers to get onto the Spanish property ladder. Prices start from only 23,000 euros or £15,000 and with modernization and good styling can sell for up to 350,000 euros (£215,000) in some areas.”

Cave houses by virtue of their “construction” maintain a steady temperature of around 20 degrees centigrade all the year round. This natural air conditioning system is an attractive feature as temperatures can often reach 40 degrees in the summer months. All modern conveniences including electricity, plumbing and heating and even Jacuzzis and broadband are available in cave homes and regular ventilation ensures a damp-free property. As each cave home has been hand-carved this creates a unique character for the property. Rooms tend to reflect the contours of the rock and the soft stone means that another room can be carved out as you need it so expansion is not a problem.

These dwellings can be considered to be ecologically sustainable or “green” as they have been dug out of the soft sandstone resulting in minimal impact on the local environment. Taking advantage of the natural situation of a cave home will result in less energy consumption and hence lower running costs. Council tax rates are approximately 75 euros (£51) per year and the Spanish government is also playing its part in encouraging cave home occupation by offering grants to contribute to the costs of installing renewable energy systems such as solar panels.

There is limited need for or use of man-made products such as concrete, insulation fibres or plastics and the year-round even temperatures and rock formed walls lend themselves to natural materials, such as wood, cane, cotton and linen to create an elegant, eco home. Many local craftsmen are busy producing furniture to suit the cave dwellings and the prices enable anyone to have a designer home for the price of a designer room in the UK. So, where are the hot spots for these cool caves homes? Within Granada there are three separate concentrations of cave houses, the historic Albaycin and Sacromonte neighborhoods of Granada City, Gaudix and Baza. The Albaycin and Sacromonte are adjacent hillside neighborhoods, both of which form part of a UNESCO World Heritage Site along with the Alhambra Palace. The cave dwelling population of the areas is rapidly increasing and some cave houses are extremely large, having ten or more rooms.

It is not just existing caves that are being bought up for modernization however; new cave homes can be sculpted out of the special mountainside rock face that lends itself to this type of structure extremely well. Architects in the cave areas are being specially trained to design and “build” state-of-the-art cave dwellings to meet an increasing demand.

Story from easier.com