The Latest Spanish Property News from Kyero.com
December 29th, 2006
Grupo Ferrovial SA, Spain’s second- largest builder, agreed to sell its real-estate division to Promociones Habitat SA for 1.6 billion euros after its August takeover of airport operator BAA Plc inflated debt.
The sale of Ferrovial Inmobiliaria SA will result in a gain of 770 million euros, Madrid-based Ferrovial said. It later plans to buy 20 percent of Habitat for 125 million euros.
Ferrovial racked up about 32 billion euros in debt following its $19 billion purchase of London Heathrow airport operator BAA in August. It’s selling the property unit as Spanish house-price growth that’s been running at an average 15 percent a year since 1999 begins to cool with higher borrowing costs.
“With this transaction, Ferrovial significantly renews its investment capacity and changes its net debt position,” the Spanish construction company said in a statement late yesterday.
Shares of Ferrovial climbed as much as 1.70 euros, or 2.3 percent, to 74.90 euros, and traded at 74.10 euros as of 9:40 a.m. in Madrid. The stock has climbed 27 percent this year, giving the company a market value of 10.4 billion euros.
Spanish builders have invested in other industries to help prepare for a possible slowdown in domestic housing and construction spending. Ferrovial has expanded in airport-baggage handling and U.S. toll roads, as well as buying BAA. Competitors Actividades de Construccion & Servicios SA and Acciona SA are betting on energy.
Under the terms of the deal, Ferrovial Inmobiliaria will first pay a dividend of 160 million euros to its parent and Habitat will then pay 1.44 billion euros to acquire the business. The financing of the acquisition is led by Barcelona-based savings bank La Caixa.
The transaction doesn’t include Ferrovial’s property holdings in Poland, where the Spanish company said it will continue to expand. Ferrovial said in November it had received more than three approaches for its property division.
Habitat, founded in Barcelona in 1953, sells about 3,000 homes a year and combined with its latest purchase has annual sales of about 993 million euros. Outside Spain, Habitat is expanding in Portugal, China and Latin America, including Chile and Mexico.
Spanish house-price growth slowed to 9.7 percent in the 12 months through September, the first time in 5 1/2 years that the pace of gains has dropped below 10 percent, the country’s housing ministry said on Oct. 19.
The European Central Bank has increased borrowing costs six times since December 2005, lifting the benchmark interest rate to 3.5 percent from a six-decade low of 2 percent.
December 28th, 2006
Britons living abroad tend to open an offshore bank account to help with their banking arrangements. You will also need to open a local bank account in Spain, but if you retain financial transactions in the UK, or wish to benefit from higher interest rates, then an offshore bank account can be an asset.
An offshore bank is one situated outside the country where the account holder lives. The term ‘offshore’ refers to jurisdictions like the Channel Islands since they are ‘offshore’ from Britain, but it can also refer to a landlocked country like Luxembourg or Switzerland.
Offshore banks have various attractions such as higher interest rates, tax planning, additional services not supplied by domestic banks, banking confidentiality (though this is slowly being eroded as a result of international legislation), protection against local political or economic instability and accounts in both Sterling and the Euro.
It is relatively easy to open an offshore bank account and you do not have to visit the jurisdiction to do so. Telephone banking and internet access will make your account simple to manage wherever you live. You will have to provide your local tax identification number to prove that you are in the tax system of the country where you are living, as well as proof of your identity and address like your passport and utility bills, and information about where your money has come from.
All this is to prevent identify fraud, tax evasion and money laundering. It also helps the bank to build up a profile of your banking activities in order to monitor the account and to see if there are any unusual transactions which may alert them to the fact that your identity has been stolen.
Until 1st July 2005 interest from bank accounts in Jersey, Guernsey and the Isle of Man was paid gross and it was up to the individual to declare these earnings to his country of tax residence. Tax residents of Spain, the UK and most European countries are legally obliged to include these earnings on their tax returns.
Under the terms of the EU Savings Tax Directive, banks in the British offshore islands are now deducting a withholding tax from the interest earnings of EU residents. The tax is currently 15%, but it will increase to 20% next year and to 35% in 2011. You can instead authorise your bank to automatically exchange information with your local tax authority each year, in which case your interest will be paid gross. To set this up you will need to provide your tax registration number.
It is a common misconception that paying the withholding tax exempts you from declaring the interest earnings on your local tax return. This is not the case – it is fundamental that all your worldwide interest earnings are fully declared for tax in your country of residence, even if from an offshore bank applying the withholding tax. You should be paying the full amount of tax due on these earnings as per the regulations and rates of your country of residence. Failure to declare the interest earnings is tax evasion and therefore a crime.
As we move closer to the days when automatic exchange of information will apply across the board, replacing the withholding tax, it is important to ensure that your banking and tax planning conforms with the laws in your country of residence.
To increase security on international bank transactions, standardise the identification of bank accounts, speed up the process of international bank transfers, avoid manual intervention and extra costs, the EU introduced IBANs on 1st January 2007, although many European banks have been using them for some time.
The IBAN uniquely identifies a bank account wherever it is located. It is made up of around thirty alphanumeric numbers consisting of the country code, control digits, bank code, branch code and account number. When making transfers you will also need to also include the Bank Identification Code (BIC), alternatively known as the SWIFT code, which was a bank’s identification number used before the introduction of IBANs.
IBAN numbers are for use mainly with Euro transfers (where their use helps avoid delays and additional charges being applied) but banks in offshore jurisdictions, even though not in the EU, are now also using IBANs. At present, IBANs do not have to be provided for cross-border Sterling transactions although some of the major UK banks have issued IBANs to Sterling accounts.
December 28th, 2006
Banco Halifax Hispania has reduced the rate on its variable Euro mortgages with immediate effect.
Repayment mortgage rates of 4.633% for loans up to 60 per cent and 4.733% per cent for loans up to 70 per cent of the value of the property are now available.
The reduction in interest rates comes as good news for those people looking to buy a property in Spain. Recent research from Mintel states that 800,000 Britons now own a second home abroad. Spain was the most popular location amongst more than four in ten respondents who had either already bought or who were looking to buy abroad.
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.
Ian Smith, Head of European Operations at Halifax said: “When it comes to owning that holiday home in the sun, Spain is certainly the favoured location with British people, so this latest reduction in interest rates is really good news.”
There are currently 19 Banco Halifax Hispania branches throughout Spain. All dealings between Banco Halifax Hispania and its customers can be carried out in English. In addition, there is also an English speaking helpline within the UK for customers who wish to sort out their financial options prior to arriving in Spain. The helpline answers queries about what’s involved in buying in Spain and will guide customers through the application process.
Banco Halifax Hispania also has an approved panel of Spanish solicitors (Abogado) and surveyors who are not only fluent in English, but who also have local knowledge and experience of acting for British customers.
December 28th, 2006
Bank of Scotland International has highlighted the benefits of offshore banking for people living overseas.
More and more people choose to relocate each year, with almost 200,000 Britons moving out of the UK in 2005. Traditional locations such as Spain are being joined by the likes of Panama (currently enjoying a huge building boom) as thousands of people around the world seek to retire abroad.
However, many face confusion when dealing with their financial affairs in a foreign country and offshore banking is a good option for many. Despite carrying somewhat negative connotations for many people, this form of banking can bring many benefits.
Firstly, it comes with tax benefits. Interest is paid gross, meaning that the customer can pay tax in their country of residence without being taxed at source. However, you must make sure you are abiding by the tax laws of each country in which you live.
Offshore bank accounts are also designed so that customers can deposit money into other accounts, such as those in their country of residence and those in their native country that can be used to pay any bills they still have there.
Other benefits include commission-free foreign currency exchange, tax-efficient mortgages, teams of financial advisors on hand to help expatriates in money matters, and round-the-clock access.
“If you are planning to leave the UK to live temporarily or permanently overseas, you need the right products and services in place,” said Bank of Scotland International’s managing director, Tony Wilcox.
December 27th, 2006
Your success or failure in finding a suitable rental property depends on many factors, not least the type of rental you’re looking for (a one-bedroom apartment is easier to find than a four-bedroom detached house), how much you want to pay and the area in which you wish to live.
Finding a property to rent in Madrid or Barcelona is similar to the situation in London or Paris, where the most desirable properties are often found through personal contacts. There are a number of ways of finding a property to rent, including the following:
Ask your friends, relatives and acquaintances to help spread the word, particularly if you’re looking in the area where you already live. A lot of rental properties, particularly in major cities, are found by word of mouth. You can also look out for ‘to rent’ (se alquila) signs in windows. If you’re looking for an apartment in a block in Madrid or Barcelona, it’s prudent to ask the porter (portero) if there are any vacancies in a building or if anything will be vacant soon;
Check the advertisements in local Spanish newspapers and magazines under alquiler. If you cannot speak Spanish, you may prefer to respond to advertisements in expat publications (including Expatica), where advertisers are likely to speak English or other foreign languages. In major cities there are property newspapers and magazines. There’s little jargon or abbreviations in Spanish rental ads and most can be deciphered without too much trouble;
Visit accommodation and letting agents. Most cities and large towns have estate agents (Agentes de Propiedad Inmobiliaria) who also act as letting agents for owners. It’s often better to deal with an agent than directly with owners, particularly concerning contracts and legal matters. Some agents advertise abroad in property publications and many companies handling holiday rentals also offer longer term rentals, particularly during the winter. Note that agents usually charge commission equal to a half or one month’s rent for long-term rentals. If you wish to avoid agency fees ask before viewing, as advertisers who appear to be private individuals are often agencies;
Check the advertisements in shop windows and on notice boards in shopping centres, supermarkets, universities and colleges, and company offices; Obtain copies of newsletters published by churches, clubs and expatriate organisations, and also check their notice boards;
To find accommodation through advertisements in local newspapers you must usually be quick off the mark. Buy the newspaper as soon as it’s published and start phoning straight away. You must be available to inspect properties immediately or at any time. Even if you start phoning at the crack of dawn, you’re still likely to find a queue when you arrive to view a choice property in Madrid or Barcelona.
The best days for advertisements are usually Fridays and Saturdays. Advertisers may be private owners, real-estate managers or letting agencies (particularly in major cities). You can insert a ‘rental wanted’ advertisement in many newspapers and on notice boards, but don’t count on success using this method.
Rental costs in Spain vary considerably depending on the size (number of bedrooms), quality and age of a property, and the facilities provided. However, the most significant factor affecting rents is the region of Spain, the city and the particular neighbourhood.
In major cities, particularly Madrid and Barcelona, rental accommodation is in high demand and short supply, and rents are high. A two bedroom, unfurnished apartment (e.g. 75m2) which rents for around EUR 1,200 a month in Madrid or Barcelona, costs around 50 percent less in most smaller cities, and rural and resort areas.
However, rents have risen considerably on the Costa del Sol and in other resort areas in recent years, where there’s a relatively small long-term rental market.
Rents are lowest in small towns and rural areas, although good rented accommodation is often difficult to find. As a general rule, the further a property is from a large city or town (or town centre), public transport or other facilities, the cheaper it is.
Many Spanish families live in communal high-rise property developments called urbanizaciones (which surround Spanish cities), where rents are much lower than in city centres. Rents are also dictated by supply and demand and are naturally higher in cities than in rural and resort areas (except for short lets during the high season).
Rents are calculated according to the number of bedrooms (dormitorios) and the floor area (in square metres). In cities, an apartment with a terrace or balcony is usually more expensive. Generally, the higher an apartment is in a block, the more expensive it is (you pay for the view, the extra light, the absence of street noise, increased security and the rarefied air). However, if a block doesn’t have a lift, apartments on lower floors may be the most expensive.
In cities, most properties are let unfurnished. Expect to pay up to 50 per cent more for a furnished property in a city.
Long-term contracts usually require tenants to pay gas, electricity and telephone bills, and may also include community (comunidad) fees, property taxes (IBI) and water rates, although these are usually paid by the owner. However, if these charges aren’t specifically mentioned in your contract, they’re the landlord’s responsibility.
If a property has a telephone installed you must usually pay a large deposit, e.g. EUR 200. Always have a contract checked by a lawyer if you don’t understand it. Long-term tenants must take out third party insurance for a property they’re renting.
December 22nd, 2006
The Association of International Property Professionals (AIPP) estimates that nearly £20 billion will have been spent in the international property market by UK buyers in 2006 - but they have wasted up to £700 million in unnecessary costs.
Commenting on the launch of the report at OPPLive 06, AIPP’s Chief Executive, Paul Owen, said: “The size of this market now is incredible. With so many new markets and new buyers, it can feel at times that the possibilities are endless. In many ways they are, but so are the potential problems. As a non-profit membership organisation, we are working to make the industry much more professional; the size of the market these days and the needs of the client demand that we do so.”
The report found that nearly a third (31.6%) of overseas properties bought by British buyers are in Spain, with France in second place (18.9%). “This report confirms that, despite the massive increase in emerging markets, nearly half of overseas property purchases by UK buyers are in a country they know, one in which they’ve spent many holidays and, possibly, learnt the language a little at school,” continued Owen. “This will surprise many people, including some in the industry. The story of this year’s market is not just the old favourites though.” Bulgaria is now the third most popular country for UK property buyers, according to the report, with 7.7% of the market (the US came a close fourth at 7.5%).
The full AIPP report: ‘The year in international property, 2006’ will be completed in early 2007 and is likely to show that approximately 200,000 purchases will be made by British buyers in the calendar year of 2006. The report also shows that Brits have squandered much of the spend in 2006 on unnecessary bank charges for international transfers.
With much of the report’s data provided by currency specialists, it is estimated that 25% of the international money transfers for property purchases are undertaken by foreign exchange specialists with 75% done by the banks. Based on the percentage split, that means 150,000 money transfer transactions for property purchases have been placed with the high street banks.
AIPP’s figures show that the average amount spent on an overseas property by UK buyers is £98,000 and 150,000 buyers will each have wasted between £4,000 and £5,000 on their overseas property purchase this year as a result of poor exchange rates. That equals between £600 million and £750 million in wasted money in one year alone.
December 21st, 2006
Many foreigners pay more than is necessary when buying property and property related services in Spain. Being on unfamiliar ground they find it difficult to judge if they are being charged reasonable prices. This in turn motivates companies to exploit the opportunity. So do yourself a favour and swot up on the main ways you risk paying more than is necessary.
Prices for Spanish property are at historical highs after the last few years of increases (for more information see the latest Spanish property market report). However that doesn’t justify all ‘high’ prices, and the asking price of any property should be evaluated in terms of its market context and in comparison to other similar properties in the area (referred to as ‘comparables’).
Many properties for sale to foreigners in Spain are actually overpriced in terms of their market context and comparables. This is especially true of the resale market where individual sellers largely decide the asking price, but can also be true of new developments. Estate agents often allow sellers to ‘name their price’ rather than give them a professional evaluation of the true market price. There are various reasons why a property might be overpriced. Vendors sometimes set an unrealistically high asking price in the hope that a) someone might actually pay it and b) that it will give them a stronger negotiating position at the start and ensure that final transaction price is higher than it would have been had they started with a lower asking price. Another reason is because some sellers have unrealistic expectations as to what their property is actually worth. A further reason is because agents and/or developers sometimes increase the price if they think that foreign buyers are and will remain ‘ignorant’ of market values. This is more likely in those cases when the agent ‘controls’ the entire visit of the buyer thus preventing them from finding out what comparable properties are worth.
To say that a property is overpriced is not the same as saying that it won’t sell at that price. The great tragedy is that people do actually buy overpriced properties on a regular basis. This is bad for the overall market as word often gets around, driving up the expectations of sellers and reinforcing the suspicion that foreign buyers will pay any price.
So how do you avoid overpaying for a property in Spain?
1) Gain market insight - Do your research and look around. Try to get a feel for market prices in the area you are interested in. The internet is a useful tool for basic research but it is no substitute for going to visit different properties and talking to impartial people with a good understanding of the Spanish property market. Take notes of the key features (size, location, condition, views, price etc) of different properties and compare them in a table. No two properties are exactly alike, especially in the resale market, and there is no such thing as a mathematically-proven correct price. Nevertheless by doing your research and approaching it in a rational way you should be able to identify if a property is more or less correctly priced given its market context.
2) Use a good real estate agent in Spain - Spanish real estate agents spend their professional lives looking at properties and witnessing how much they sell for. If they are competent they should have a better idea than anyone else as to the fair market price for a property. If they have high professional and ethical standards they should help both buyer and seller agree on a fair market price (notwithstanding the fact that they are paid by the seller). It is crucial to use a good estate agent with high professional and ethical standards if you are to avoid overpaying or even more serious problems.
3) Take into consideration all factors - Even the price of the most basic goods such as commodities change frequently in response to many different factors. The same is true of property in Spain or anywhere for that matter. The price that the seller will agree to exchange at (rather than the initial asking price) could be influenced by many things that might not be obvious at first glance. The time of year, the length of time that the property has been on the market, local market conditions, political developments, the attractiveness of the property in comparison to comparables, the age and other personal circumstances of the seller (not always easy to find out), to name but a few. The more information you can find out about a property, its vendor, and the local market the greater your insight and hence negotiating power.
4) Don’t be afraid of robust negotiations - In the Spanish real estate business German buyers are famous for demanding high quality construction and finishings and the Dutch are famous for being very tough negotiators when it comes to price. British buyers, on the other hand, are famous for not saying what they really think about a property and for kicking up remarkably little fuss about price. Needless to say in general the British pay more for Spanish property than the Dutch and don’t get the quality that the Germans do. Unless you push for something you are unlikely to get it, so cast aside your traditional British reserve and negotiate hard. Having said that, knowing how to negotiate skilfully is equally important and will produce the best results.
December 20th, 2006
The Brits love affair with Spanish property shows no signs of diminishing although the areas still showing growth potential are changing.
“It is interesting to note that according to the government’s figures in 2005, some of the highest growth regions in Spain were Aragon, Andalucia and Galicia,” said Nick Freeston, director of the international department at Chesterton International. “Average capital growth was 12.8% and in 2006 Mallorca is proving to be our hottest market with growth levels anticipated to be in double figures.”
Chestertons believes that the overall Mediterranean market remains solid due to climate, type of product and price range, as well as low cost carrier affordability. Whilst the Mediterranean islands of Crete, Cyprus and Menorca remain popular they are not seeing the same levels of overseas purchasers as other areas in Spain.
The number of investors that flooded the Spanish market between 2001 and 2004 has reduced and with significant stock levels now nearing completion the number of re-sale properties available has risen.
Some 65% of Chesterton International’s clients who bought in Spain have been second home purchasers wanting to use the property as a holiday home and as a long-term investment, while 25% of purchasers are investors looking for good rental yields, and 10% are retirement purchasers, in search of the sun.
Mallorca remains the most popular hotspot accounting for 80% of Chesterton International’s sales for Spain in 2006. This is because of a wide range of properties available to buy with good entry level pricing and a healthy price mix starting from £120,000.
“Mallorca also has smaller developments compared to the mainland giving a more exclusive feel. There are strict building guidelines as to what you can build, meaning a reduction of large scale developments. There is easy access from the island’s major airport and the island is a good golfing destination as well as having beautiful coastal areas, great beaches, food and culture,” said Freeston.
December 14th, 2006
Nowadays, many people in the UK own a holiday or a second home outside UK - be it Spain, France, Italy etc. It is estimated that second homes are one of the major source of income for the people of UK. But you may never know when some mishaps might happen and you get involved in some sort of legal and financial constraints. A second home insurance is designed especially to provide protection to your second or holiday homes.
A second home is more prone to risks and dangers because you do not spend most of your time there. There can be burglary or thefts, your guest or domestic help might get hurt or injured. With all these, you might land up in heavy financial burden and even legal liability. A second home insurance makes sure that all these problems embracing a second home will be taken care of properly.
A second home insurance will provide cover for the following:
Building structure: Your second home insurance will provide cover for the building structure which will include swimming pools, summer houses etc.
Contents insurance: The contents of second homes are usually expensive and exquisite. Your second home insurance will provide cover if some damage is done to the contents or if the contents get stolen or burgled.
Liability cover: This will provide cover if anyone gets injured in your second homes.
Obtaining second home insurance can be at times difficult and expensive. It is because of the fact that it may remain unoccupied for many months and often during winters, there is a risk of burst pipes, flooding plus there can be the possibility of legal action by some injured guests. You will have to go through an extensive study of the entire market and look out for a second home insurance that will give you an excellent coverage. You have to observe the pros and cons of different insurance companies and their policies and later when you are fully satisfied that a particular policy is fitting into your financial situation, you can buy that second home insurance.
With internet facilities, you can search and locate a second home insurance policy within no time. Even many companies offer discounts when you buy second home insurance through online. So without anymore delay, get a second home insurance now.
December 12th, 2006
Holiday Lettings keeps its homeowners informed on proposals to reduce Capital Gains taxes payable by non-residents in Spain.
If you are about to purchase a holiday home in Spain or sell up and buy another elsewhere can you wait until the New Year celebrations are over? It is likely that your vendor, if a non-resident, would be happy to wait a little too. And all because the Spanish government is about to change its stance on taxes payable by non-residents.
The Capital Gains Tax payable on the difference between the selling price and original purchase price is currently a frightening 35% if you are a non-resident vendor. Proposals set to come into effect from 1st January 2007 will bring resident and non-resident taxes to an equal value of 18%.
Should you, at some point, decide to sell your Spanish home, as non-resident 5% of the purchase price is currently retained by the purchaser and paid to the Spanish Tax Authorities upon completion. This covers any debts that could be difficult to recover from a non-resident vendor once they have left the country. This amount will be reduced to 3% under the new proposals and the amount is reimbursed to the vendor against the difference of the capital gains tax when it is paid.
If you can step away from all the jargon, the proposed changes would enable non-resident investors to reap a larger profit from their Spanish property at time of sale. Should you want to gain even more from purchasing in Spain the answer is to gain residency rights.
As a resident over 65 and having lived in your property for more than 3 years you are no longer subject to capital gains tax. But most enticing, residents can claim some of the capital gains tax back if they buy another principal residence in Spain within two years of the first.
Ross Elder, MD of www.holidaylettings.co.uk commented: “This is great news for non-resident homeowners in Spain. It’s important not just to think about those exiting the market though, but about those who are thinking about upsizing or extending their investment in the country. It will bring equality amongst all Spanish homeowners.”
December 11th, 2006
New flexible mortgage has Barclays Spain highest ever loan to value and mortgage term which gives British buyers more options in the Spanish property market.
Barclays, the largest British bank in Spain, has launched a flexible mortgage for non-residents looking to buy property in Spain which allows property buyers to take out a mortgage of up to 80 per cent of the value of their property.
Barclays ‘80% Mortgage’ has the highest ever loan to value ratio offered by the bank in Spain (previously 70 per cent) and also its longest ever mortgage term at 30 years (previously 20 years). These terms, when combined with the interest rate options available with the mortgage, make it one of the most competitive and flexible mortgage products available in the Spanish non-resident market.
This is a limited product and applications must be submitted by 31st January 2007. It is offered on a rolling 12 month fixed interest rate. Buyers are given flexibility to take out an initial interest-only period ranging from one to five years. The interest rate is highly competitive and ranges from 4.72% to 5.22% depending on the length of the interest-only period.
Suzanne Clay, business development manager at Barclays said: “Barclays continually looks to develop its range of mortgages available to British people wanting to buy property abroad. By offering a higher loan to value, and adding flexibility at highly competitive rates, we believe this product will enable many budding overseas property investors to realise their dream of owning a home Spain.”
December 7th, 2006
The slopes and the costa are both within striking distance of this ancient town, writes Nicola Venning. If you like to mix café society with your aprés ski and enjoy red runs as much as red wine in a good restaurant, then a home in Granada, southern Spain, could be for you.
With two budget airlines – Ryanair and Monarch – flying regularly to Granada, this astonishing medieval city, which is home to the historic Alhambra palace, has never been more accessible or alluring.
“Granada has cachet,” says Michael Harding, 55, a property investor who has bought a home in the Santa Clara golf resort three miles outside the city. “It is quality as opposed to cheap sun, Guinness and chips.”
Harding paid £140,000 for a three-bedroom house with a handsome 150 square metres of floor space two and a half years ago. He estimates that it is now worth more than £190,000.
The development around it has an indoor swimming pool and golf course complete with clubhouse and is only forty minutes from the Pradollano ski resort in the Sierra Nevada in one direction and same distance from the beach on the Costa Tropical in the other. “I have many friends in Malaga who come to Granada every year to ski,” says Harding.
If you would like to be closer to the slopes, you might like to consider a home in one of the pretty little villages en route to the ski station, such as Monachil, Pinos Genil or pretty Guejar Sierra, which is about half way between city and resort. Eighteen months ago, Sean Lundy, 35, a civil servant from London, bought a two-bed off-plan apartment from Granada Estates in Guejar which is due to be finished by the end of this year, for £66,000.
“We are not yet paying the mortgage and it has already appreciated,” says Lundy. “I think it is now worth £76,000. The village has shops and a school – and is only 20 minutes from Granada and all its nightlife as well as 20 minutes from the skiing.”
Lundy plans to use the apartment during the school holidays with his wife and son and rent it out the rest of the time. Homes close to the ski resort are few and far between and tend to be old fincas or cortijos (farm houses with land), often not in very good condition with poor access.
Paul Martin, managing director of Granada Properties, said: “When houses do become available close to the resort they tend to be very expensive usually selling for between £200,000 to £420,000 for a fairly basic two or three-bed house. It is almost impossible now to obtain planning permission to build new houses up there”. More apartments are available to buy in the ski village itself. The average price for a two-bed apartment is about £100,000. The cheapest would be £30,000.
If you are something of a culture vulture and don’t mind a 30-minute drive up to the resort each day, you might prefer Granada itself. For sheer atmosphere and charm you cannot beat the alluring old districts or “barrios” of the city.
In the ancient arab quarter of Albaycin and gypsy district of Sacromonte, white-washed houses hug winding medieval lanes that wend around the Alhambra. Unsurprisingly these are some of the most sought-after and expensive homes you can buy in the area. In upper Albaycin – on the top of a hill with fabulous views prices are the highest. A “Carmen” – which is a traditional Andalucian house with wooden floors, beams, a garden and a pool – would cost about £405,000, while a one-bed apartment starts from about £140,000 and could be rented out as a short-stay holiday let for £42 to £60 a night.
Barbara Wood of consultants The Property Finders, said: “You might find the skiing market for rentals in the city a bit hit and miss, unless you are close to the south side and an access point.”
Happily, access will be improving though, because there are plans to link Granada by gondola to the ski station 13 miles away with proposed stops at the villages of Monachil and Purche.
December 4th, 2006
The thought of owning a second home in the sun or a ski lodge or mountain retreat where we can escape whenever the mood takes us is of course a commonly held dream.
And with the simplification of re-mortgaging facilities, the affordability of home loans and the growth in underlying equity many of us have enjoyed on our principal residences, there couldn’t be a better time to turn that dream into a reality than today.
Here’s how to buy a holiday home abroad and avoid all the common traps and pitfalls that people can fall foul of.
First things first you need to decide whether it make sense for you to release the equity that has built up in your principal residence to buy a property overseas, to raise a mortgage on the overseas property or to pay for it in cash.
Unfortunately there is no straight answer to this dilemma! The answer will lie somewhere among your own personal circumstances, your ability to afford an extension on your home loan or an overseas mortgage, the country in which you’re buying abroad and whether or not it offers good investment potential. However, there are two simple facts that the majority of financial advisers and mortgage lenders agree upon and these may help you make your decision: –
- Taking the money that has built up in equity on one property and using it to buy another property is probably the most sensible thing to do when releasing equity
- Over the medium to long term real estate as an equity class is one of the most consistent returning investment mechanisms.
The next issue relates to which country you should buy your holiday home in. You may have a very positive idea of which country you would most like to spend your holiday time in – if you have a country in mind it’s probably a country you know well and have had enjoyable times in before.
If on the other hand you’re unsure and are looking abroad for a holiday home as an investment property in an emerging market or a market with strong room for growth, you should draw yourself a shortlist based upon what you’re looking for in a holiday home – i.e., if you want a European beach house with 300 days sunshine a year you’re more likely to look at the Mediterranean region rather than the Ukraine or the UK!
Whichever country you’re considering, do research into the laws relating to foreign freehold ownership of real estate in that country and on the projected prospects for the property sector over the medium term – all this sort of information is available on the internet.
Once you have a country in mind you need to set yourself a realistic budget – realistic in that it is an amount you can afford and also that it is an amount that will buy you a quality property abroad. Going back to the Mediterranean region in Europe for a moment, those with a large budget could acquire a decent property on the Spanish coast, those with a small budget could only acquire substandard or renovation property on the Spanish coast but could purchase something far more substantial in the interior of Spain. Think about the amount you can afford and then look at the country you’re interested in – where will you get the most for your money?
Always employ independent legal representation to assist you in any transactions you enter into abroad. You may not fully understand the language or legal system of the country you’re buying your holiday home in so you need a lawyer who does! Furthermore you need a lawyer who is working solely for you and not representing your interests together with those of the vendor or property constructor as well!
Get any contracts or papers you sign officially translated into English before signing, have any promises made or deals verbally brokered written into the contract, make a will that includes your new property purchase and don’t rush into a decision because pressure is being put upon you or because your time abroad to organise everything is short. The world will not run out of holiday homes for sale in our lifetime. If you keep your wits about you and remember the golden rule – i.e., if something seems too good to be true it probably is – you’ll be just fine!
December 1st, 2006
From Ecuadorean nannies to Romanian builders, millions of immigrants to Spain are buying their first homes and buoying the country’s cooling house market.
Spain’s immigrants have quadrupled to over four million since 2000, helping the country’s population grow as much in the last five years as in the previous 30. Most immigrants are of house-buying age and they could make the difference between a hard and soft landing for one of Europe’s highest flying house markets, where prices have risen 160 per cent since 1998.
Banks and lending agencies are tripping over themselves to sign up the new residents as demand from Spaniards eases following a decade-long housing boom. The willingness of some mortgage brokers to let low-income immigrants take on ever larger loans alarms some economists, who remember Spain’s last housing market crash in the early nineties.
Lenders see little cause for concern, so long as Spain’s economy continues to grow at about twice the pace of the euro zone as a whole and unemployment remains at a three-decade low.
“Immigrants are our new neighbours, they’re taking out mortgages at a far faster rate than Spaniards,” says Ignacio San Martin, real estate analyst with Spanish bank BBVA.
A third of mortgages for existing homes went to immigrants in the first quarter based on a study of houses sold by real estate firm Tecnocasa and financed by lending agency Kiron. Spanish banks report between 15 and 20 per cent of mortgages going to immigrants, even though they represent only 9 per cent of the population.
Across Spain, resident foreigners bought 12 per cent of homes sold in the second quarter, according to the Housing Ministry. Latin Americans are leading clients, followed by those from Eastern Europe, North African and Asia. Retirees and other residents from Northern Europe and North America form a smaller, wealthier group.
It is a shot in the arm for Spain’s house market, where prices have risen at around 17 per cent a year since 2002 but will fall to high single figures in 2006 and the rate of inflation in 2007, according to property consultants.
