The Latest Spanish Property News from Kyero.com

The UK tax authority, HM Revenue and Customs (HMRC), has instigated a massive crackdown on unpaid tax. The Offshore Disclosure Facility (ODF), which some are calling a ‘tax amnesty’ (although it’s not), is aimed at UK residents who are not declaring their offshore bank accounts. All offshore assets would have to be declared at the time, including Spanish property and any rental income or capital gains made from it.

The initiative is primarily targeted at people who hold, or have held, an offshore account, either directly or indirectly, which has not been declared for UK tax. In effect, HMRC is offering to cap penalties to 10% of the maximum 100% allowed. People have until 22nd June to come forward and notify the tax authority of their intention to disclose. Then by 26th November, just five months later, full disclosure of tax irregularities must be made, along with payment of the back tax, plus interest at 7.5%, and the 10% penalty charge. HMRC will send out an acknowledgement of the disclosure and payment. Notice of whether or not the disclosure has been accepted as complete will be sent by the 30th April 2008.

An elite crack team from the Special Civil Investigations Unit within HMRC is poised to rapidly target suspected tax evaders, and will send out letters immediately after the deadline of 22nd June to those who have not notified their intention to make a disclosure and where information suggests that tax may have been underpaid. Mitigation of any penalty is then highly unlikely.

Many UK residents who own holiday homes in Spain open a Spanish or other offshore bank account and the interest earned on these accounts is not declared to HMRC, either purposely or by people not realising that tax is due in the UK. UK residents who receive rental income from their Spanish properties, must declare the income in the UK as well as Spain, and also declare any bank interest whatsoever.

The launch of the ODF provides an opportunity for other tax defaulters to come clean as well as offshore account holders. Under the terms of the amnesty, UK residents cannot use the ODF itself if they have not held an offshore account that has been connected with a loss of UK tax. But disclosures and payment of other undeclared (e.g. purely onshore) liabilities can be made at any HMRC office under the same terms as the ODF facility. This is interpreted as meaning within the same deadlines set by the amnesty and with the 10% penalty capping applying. To deny this would contravene the Human Rights Act, apparently.

The disclosure must be a full disclosure of all undeclared offshore and onshore liabilities, not just those connected with offshore accounts, including details of offshore assets that were held at 5th April 2006. This will include rental income from Spanish property and any capital gain on a sale. Full details are at: https://disclosures.hmrc.gov.uk/oaics/

Spanish tax on rental income for non residents is a flat 24% of gross income. The net income is also liable to UK income tax at a rate of up to 40% for higher rate taxpayers, but any Spanish tax paid can be deducted from the UK tax due. The sale of a second home in Spain will attract a capital gains tax levy of 18% in Spain payable to the Spanish tax authority, and up to 40% in the UK above the tax free amount of £9,200.

It would be unwise for anyone who has undeclared income to ignore this opportunity to come clean and benefit from a 90% penalty reduction.

Bill Blevins is Managing Director of Blevins Franks who provide high quality financial advice for expatriates

A new breed of Costa con man is preying on gullible sellers, stealing money and even houses, reports Mark Stucklin.

These are testing times for Britons with property to sell in Spain. There is a glut of homes on the market; properties are taking longer to sell, and prices in many popular areas are stagnant or falling. To cap it all, sellers are increasingly falling victim to scams.

Desperate sellers make soft targets, which is why the tricksters are doing so well. Then there’s the rise of the internet: websites that bring together buyers and sellers may inadvertently make it easier for those up to no good to contact large numbers of sellers quickly and cheaply. Whatever you may think of estate agents in Spain, they do at least offer their clients some protection.

There are two main types of swindle at the moment, and both take advantage of the fact that under-the-table cash payments are still a regular feature of Spanish property transactions.

The most common scam, known as a “rip deal”, originated in France and has spread into Spain. It works like this: people posing as buyers contact you, pretending to be keen to buy quickly, without viewing, no questions asked. They give you some spiel about having to pay the reserve deposit in cash, normally dollars or Swiss francs, which, they argue, you can easily change at the bank.

And, since you will have to change the deposit anyway, they ask if you wouldn’t mind advancing them a further amount – €100,000, say – in return for a hefty commission. The next step is a meeting in a swanky hotel somewhere like Barcelona or Milan to do the deal. You return home with a bag full of worthless counterfeit notes.

Ian Ainsworth, 37, from Bolton, but now living in Sanlucar de Barrameda, on the Costa de la Luz, has been contacted three times about a family property in Sotogrande, near Gibraltar, that he is selling.

“Once it was a Nigerian calling me on a French mobile, but recently it was someone from North Africa on an Italian mobile,” he says. “They often want to buy without viewing, which is an obvious sign of trouble, and they always ask if you are willing to accept a large amount in cash. Last time, I played along with it for a while, until they told me I had to go to Monaco at my own expense.”

A rip deal doesn’t always involve foreign currency. Sometimes, the seller is asked to change €500 notes into smaller denominations. Again, the money turns out to be counterfeit. The €500 notes are jokingly known in Spain as “Bin Ladens”, because when the single currency was introduced, everyone knew they existed, but nobody had actually seen one.

Now, thanks to widespread corruption and tax evasion in the country’s real-estate sector, there have been more sightings of “Bin Ladens” in Spain than of the man himself in Afghanistan. They are ideal for Marbella-style backhanders and under-the-table payments.

Although it can prove expensive to fall victim to such a scam, the seller still has a property at the end of it. Not so with another trick that centres on the common practice of declaring to the authorities only part of the sale price and paying the rest in cash. Normally, this extra payment, known as “B” money, is paid in the notary’s office where the sale documents are signed – after he has left the room.

How many people would notice that they were being paid with counterfeit €500 notes? And even if they did, what good would it do? By then, the deeds would already have been signed, and calling the police would not be an option – the victim would have broken the law.

Vince Barnes, 42, a professional musician from Newcastle, has two properties for sale on the Costa Blanca. He was contacted by someone from the Ivory Coast who, after an initial call, came down from France for a viewing and offered to buy both.

“The total price was €480,000, which he didn’t question,” Barnes says. “He wanted to pay €160,000 in cash, and declare only 66% of the value on the deeds. He said the cash would be in €500 notes, but added that he had to improve the colour of the notes and remove some serial numbers, all the while claiming they were perfectly legal. I think he took me for an idiot.” One hapless German expat selling his luxury villa on the Costa Blanca was less astute, and paid dearly for his mistake. As part of the deal, he agreed to take €400,000 in cash and to change the same again into smaller notes. It was only after he had signed the sale contract and changed the money that he realised some of the notes he had been given were fake – and that he was €400,000 down.

Pulling out was not an option – he had also signed a contract agreeing to pay €800,000 compensation to the swindlers if he went back on the deal. He couldn’t very well go to the police: he would have been in trouble for money-laundering and tax evasion.

Nobody knows how many people have fallen for these scams, since, like the German, most have an incentive to keep quiet. Last year, the police in Barcelona announced they had uncovered 16 rip deals, carried out by gangs from eastern Europe, with a total value of €3m. This was probably only the tip of the iceberg: many British owners advertising their Spanish properties for sale online are being contacted by swindlers posing as buyers.

So, if you are trying to sell a property in Spain – or elsewhere in Europe – how can you attract real buyers without falling for one of these scams? The answer is simple: make clear from the outset that you will not accept any part of the payment, however small, in cash.

And remember: if a deal sounds too good to be true, that is probably because it is.

Story from timesonline.co.uk

Concerned that negative media reports of last week’s stock market slide have focused on only one aspect of the Spanish property market, Chris Mann of Hacienda del Alamo said: “Some people are doing their best to talk the Spanish property industry into a crash but their arguments are built on very poor foundations. There has indeed been a sudden dip in the average value of property companies on the Madrid stock exchange; but when their stocks had risen by an average of 65% in the past year that’s hardly surprising.

“We are seeing a correction rather than a crash. Much of that correction is based on the faltering performance of one single company which has speculated on land prices.”

This point is echoed by Stuart Law of Assetz, who believes that investors have become victims of their own over-confidence in the performance of property assets. “Spanish property company shares were clearly overpriced and investors are bailing out after finally recognising that prices cannot keep growing,” he says. “This could be good news for the property market as a whole, as it will reduce the vast gearing of listed property companies, reduce the high levels of housebuilding which has led to some oversupply in the market, and also decrease levels of illegal housebuilding in Spain.”

Mixed fortunes

Like any property market, in any country, performance is defined by a range of factors and varies by region. Chris Mann highlights a distinction between the domestic market, where Spanish nationals have taken out large mortgages and even remortgages to finance “a two-household or more lifestyle”, and the non-resident market of UK and Irish buyers who still see Spain as their favoured destination. While some developers are now suffering the consequences of over-supply as the full impact of a buyers market kicks in, he says, others at the luxury end are still seeing healthy sales.

“There is still a steady growth in the value of properties on golf resorts, especially in new hotspot areas such as Murcia, where prices have doubled in five years,” says Mann. “The conclusion is that there is not just one Spanish property market but rather a series of them which are all performing very differently.”

Andrew Benitz, former banker with Deutsche Bank and now a director of Titan Properties, agrees that developers in over-priced areas will have to be more realistic with their prices. The agent, which specialises in Spain’s Western Costa de la Luz, adds that some regions still offer plenty of growth. “I subscribe to the Spanish Housing Minister’s viewpoint that the real estate market as a whole is heading for a soft landing rather than a crash, as there are many pockets of the country that remain undervalued, the Western Costa de la Luz included,” he says.

“This Costa is already 30 - 40% cheaper than neighbouring Costa del Sol and Portuguese Algarve. Those that have bought for investment will already be sitting on a profit, whilst new entrants to the Western Costa de la Luz property market have the reassurance that they are buying under- rather than over-valued property.”

Other observers focus on the positive implications of this correction. Tim Hodges, local director for the County Homesearch Company in Spain, says: “This represents the start of a long anticipated correction in the market, and has been evident in accepted offers over the last few months. It offers clear evidence that the quality of housing stock must now be reviewed and that the issues concerning off plan investors clouding the real marketplace must be addressed.

“Spain still represents a good long term investment and rental returns for holiday lets are superb. Interest rates are lower than in the UK and the mortgage market is becoming more liberalised whilst tightening up against illegal and low quality builds.”

Return of the lifestyle buyer

Much of the inflated confidence in Spanish property is due to speculation, with investors driving up prices through off plan purchases in recent years. There may now be a trend back toward the lifestyle buyer. “When we first started selling homes in Spain in 1998, our customers wanted a second home, a holiday home, a place to retire to, an investment or all four,” said Jack Hamilton, managing director of Parador Properties. “Spain is still the country most people want to go to, but the investment is more in quality of life, healthcare, accessibility, climate, and cost of living.

“Spain remains one of our largest markets and the recent emotive headlines may well deter people from moving there, which is a pity, as it really is a secure home away from home.”

Still a British favourite

In spite of negative publicity about land grab, Operation Malaya, and over-developed areas, UK and Irish buyers are still coming to Spain in their droves. RightmoveOverseas reports a 92% increase in enquiries for Spain during the first quarter of 2007, compared to the same period in 2006. The increase in searches has largely been driven by emerging areas such as Costa Tropical, Costa Azahar and large urban areas like Madrid and Barcelona, said a spokeseperson, as well as the recent surge in the popularity of Spanish golf resorts.

Story from OPP (registration required)

According to a survey carried out by the Organisation for Consumers and Users (OCU) Pamplona, Bilbao and Gijón are considered to be the best places to live in Spain.

More than 10,000 people in the OCU survey, carried out in collaboration with associations that are members of Euroconsumers. In the survey, citizens in 76 towns and cities were questioned about their level of satisfaction for the place they live in.

Those questioned consider that the most important criteria that determines the quality of life in the place where you live is personal security (18%) followed by the local employment market (15%), housing (13%), health care (12%) and transport (10%). In contrast little importance was attached to shops, services, historical heritage and the urban landscape.

In terms of the above criteria Pamplona turns out to be the best place to live in Spain, followed by Bilbao, Gijón, Logroño, Albacete, Barcelona, Santander, Murcia, Zaragoza, Palma de Mallorca, Valladolid, Valencia and Badajoz.

Surprisingly, Gran Canaria, Madrid, Vigo and Seville came last in the survey given the criteria used.

In order to carry out the survey the OCU selected the 17 Spanish cities with the highest populations in each autonomous community:: Albacete, Badajoz, Barcelona, Bilbao, Gijón, Logroño, Madrid, Murcia, Palma de Mallorca, Las Palmas de Gran Canaria, Pamplona, Santander, Sevilla, Valencia, Valladolid, Vigo and Zaragoza.

Story from euroresidentes.com

Spain’s blue flag awarded beaches and marinas are keeping the country’s property market buoyant.

Spain’s beaches and marinas have received over 500 blue flag awards this year.

The Blue Flag is an eco-label awarded to over 3200 beaches and marinas in 37 countries across the world.

In order to achieve a Blue Flag, beaches and marinas must comply with a number of stringent criteria. Marinas must consider recyclable waste facilities, provide a map indicating all amenities and have lifesaving facilities. Beach candidates were subject to ongoing evaluation from control visits in 2006 and were evaluated to ensure the presence of a map indicating all facilities, presence of recyclable waste facilities at the beach and compliance with the water quality criterion.

A total of 499 Spanish beaches were judged by the Blue Flag International Jury to have met the criteria, along with 77 marinas. The majority of the awards went to Valencia, Catalonia and Galicia, with the less well known Galicia receiving 119 flags for its pristine beaches – more than any other region. Valencia has 95 blue flag beaches, and Catalonia, which comprises the Costa Brava ad Costa Dorada, has 89 exceptional beaches and 22 marinas. The 576 Blue Flag awards is keeping the Spanish property market buoyant despite recent stock market concerns, confirming the country’s popularity with holiday homeowners and buy-to-let investors alike.

Story from homesworldwide.co.uk

According to one of Spain’s most prestigious valuation companies, the price of new build property in Valencia city increased by 15.6% in 2006 and the average price per square metre now stands at €2,211 which is still almost half the price of new builds in Madrid and Barcelona. Valencia is Spain’s third largest city with a population of around 800,000 that increases to 1.5 million within a 30 km radius.

Sociedad de Tasacion S.A. has more than 20 years experience in the valuation sector. Last year it valued both property and businesses worth more than €89.6 billion.

In its study of the new build market in “Spain’s 50 Provincial Capitals” it concluded that prices increased by an average of 9.8% during 2006 with the average price per sqm now standing at €2,763.

Its prediction for 2007 is that prices will continue to rise albeit not as strongly as in 2006. Increases will be more moderate especially in areas with a good supply of available building land.

The data which was used in the survey came from 315,000 properties in 7,600 different developments. Properties of more than 150 sqm and less than 60 sqm were not included nor were attic apartments due to the distorting effect which the inclusion of such properties would have given the sizable terrace space that they tend to have. Detached houses were also excluded.

In addition, the company also provides data relating to the annualized return over the last 21 years, the average annualized return being 10.7%.It estimates that there were more than 800,000 home starts in 2006.

The data regarding Spain’s 6 largest cities are as follows:

Madrid new build prices are now at €3,870 per sqm, an increase of 6.6% in 2006 and an annualized return of 10.6% since January 1986.

Barcelona new builds are now at €4,192 per sqm, an increase of 13.3% in 2006 and an annualized return of 13% since January 1986.

Valencia new builds are now at €2,211 per sqm, an increase of 15.6% in 2006 and an annualized return of 10.9% since January 1986.

Seville new builds are now at €2,445 per sqm, an increase of 15.4% in 2006 and an annualized return of 10.5% since January 1986.

Zaragoza new builds are now at €2,851 per sqm, an increase of 17.4% in 2006 and an annualized return of 11.5% since January 1986.

Malaga new builds are now at €2112 per sqm, an increase of 9.9% in 2006 and an annualized return of 8.6% since January 1986.

In conclusion, new build property in Valencia city still represents excellent value for money when one takes into account the fact that it is a good 20% cheaper than the average price per sqm in Spain’s 50 Provincial Capitals (€2,211 vis a vis €2763). It is almost half the price of new builds in both Madrid and Barcelona, being 43% and 47% cheaper respectively.

When one also considers that Valencia will play host to Sailing’s Olympics “The America’s Cup” this year from April to July with an expected global tv audience of more than 300 million viewers as well as the more than 1 billion Euros being spent on infrastructural devlopment, investing in property in Valencia becomes all the more compelling. It is just a question of sourcing value for money property in good areas using the services of a good property search company such as Valencia Property Hound Ltd.

Story from Valencia Property Hound Ltd.

As the number of Britons taking up residence in Spain and France soared to a total of 961,000 by the end of 2006, the WAY Group reported a ‘significant’ rise in enquiries from expats concerned by highly complex taxation laws in both France and Spain, especially for Brits who are non-domiciled – i.e., living permanently in one of these countries.

“Up until quite recently we had little or no enquiries on the IHT abroad issue but IFAs are increasingly being asked to restructure clients’ affairs ahead of emigration to the sun. As a result WAY is being asked for comments on the IHT aspects of leaving the UK which is, of course, quite a grey area,” said WAY Group chairman Paul Wilcox.

A key fact which Britons retiring to live in France need to be aware of is that there is no exemption beyond the €76,000 personal allowance on transfers between husbands and wives on death – and, according to the Institute for Public Policy Research (IPPR), there are some 200,000 expat Britons that permanently reside in the country.

“Clearly, in the case of better-off expats, this relatively frugal allowance means that many Brits will be vulnerable – and if assets go directly to the children, each child only has a personal allowance of €50,000,” said Wilcox.

“Then tax from 5 up to 40 per cent will be levied – and many Brits are unaware of the fact that the kids actually have more rights than the spouse under French law.

“Unmarried Brits who live together are also very exposed – as the French will hammer you for 60 per cent.

“But the French tax authorities also have a system known as ‘assurances-vie’, which will allow unlimited amounts to be sheltered from punitive Gallic IHT laws – but it is crucial to set up an IHT mitigation plan before taking up residency.”

Spain, currently host to 761,000 full time resident Brits also has quirky death tax laws. Unlike the UK, assets in Spain do not pass automatically to spouses tax-free on the first death, and the surviving spouse can be vulnerable to Spanish inheritance tax.

“The tax-free allowance is just €15,957, and a further 34 per cent kicks in on amounts over €79,755 – but, in some circumstances, for example if they are not a blood relative, expats can be liable to pay 82 per cent under current Spanish law, unless they have made pre-domicile arrangements,” said Wilcox.

More and more expat Brits are also being caught out by UK IHT, which is payable on ‘worldwide’ assets when they die, depending on their domicile status.

“To change to a domicile of choice, a person needs to prove that they are a resident of that new country and that they intend to reside there permanently or for an unlimited time.

“Retaining residential property or even a burial plot within the UK can give the Revenue enough ammunition to challenge your domicile of choice abroad,” warned Wilcox.

“Pretty much regardless of where you are going, it is important to remove assets from one’s estate before leaving.

“But in doing so, it is vital to ensure that reliable trustees looking after those assets have the power to release funds as necessary back to the donors and, where required, to other named beneficiaries. Failing to do this is where so many expats fall down,” added Wilcox.

Story from mortgageintroducer.com

With the popularity of Spain’s Costa Del Sol continuing to soar as a holiday hotspot, investors are hoping to make a mint in developing more facilities, and in particular, golf courses along the ‘Sunshine Coast’.

Although once upon a time the Costa Del Sol was populated with nothing more than traditional Spanish towns and villages, over the past 50 years it has become one of the most visited holiday destinations in the world, due mainly to its climate.

After the potential of the place was realised, developers quickly moved in, building modern resorts and other facilities for tourists, meaning that not only the climate, but nowadays also the leisure facilities draw millions of visitors every year.

Yet with the amount of development already at a peak, the Costa Del Sol is looking at attracting more businesses who are prepared to invest in the area in the long term, in particular to attract golf tourists or golfers who might want to buy a holiday home in the region.

Spanish Property Insight spokesman, Mark Stucklin, said: “It’s a good place to buy a holiday home because of the climate, and because it’s probably got the best leisure offerings in Europe - golf courses, hiking around the coast, great shopping, a lot of restaurants In that respect it’s one of the world’s great holiday destinations, without a doubt.”

Famous golfer Jack Niklaus is among those who have promoted golf tourism in the Costa Del Sol. While it has always been a favourite for golfing holidays, developers are now making new bigger and better courses with the aim of attracting more golfers.

It is not only professionals such as Niklaus who have promoted the sport, but the Costa Del Sol is renowned as a playground for the rich, who often have an interest in the hobby. Developers are hoping that they will attract the golfing public, who may wish to emulate their lifestyles.

Travel Counsellors are real professionals when it comes to travelling the globe. With an average of 12 years experience behind our agents, Travel Counsellors always knows the score.

Whether you are looking to take a tour of the Costa Del Sol and book a unique package or whether you just want us to book you a flight over to your holiday home for a spot of golf, contact your local Travel Counsellor, who will be happy to sort out all your needs.

Story from travelcounsellors.co.uk

Reading The Telegraph Article Counting the Costa on May 5th 2007 was probably the first time home owners in Spain even suspected they may have been letting their properties illegally. In the article, a spokesperson for the Spanish Ministry of Tourism stated “There are strict conditions before properties are approved for rental to holidaymakers. Nearly all are not licensed, which means letting them to tourists is illegal.”

Busy forum web sites spawned claims and counter claims leaving the homeowner even more confused and uncertain. Kyero.com conducted an anonymous survey to confirm or refute the need for a licence to privately let a home in Spain. As ever, the answer is not clear cut ..

The most striking result of the survey is that a full 82% of respondents didn’t know whether the licence applied to them in their area of Spain. 9% said that it definitely did, and 8% said that it definitely did not. Clearly, there is a lack of knowledge and awareness about this particular aspect of Spanish law. All the popular tourism provinces of Spain were represented in the survey with Malaga, Alicante, Murcia and Granada accounting for 61% of the responses. Aside from the vast majority of respondents being uncertain of the regulations, even those who were certain were often mistaken in their certainty.

Applicable throughout Spain, the General Tourism Act of 15th December, 1999 defines two different types of properties: holiday houses and tourist apartments. A tourist apartment is one which has been constructed and licenced to be rented out to tourists as a commercial venture. Tourist apartments must adhere to a strict set of standards and guidelines and must have been licenced and sold by the developer as such (according to a Supreme Court Decision of September 17th, 1993). Holiday homes are private residences which may be rented to tourists but are essentially private dwellings.

Throughout much of Spain, the General Tourism Act is the only applicable legislation in force today and, in the case of holiday homes, simply states that they should be appropriately furnished and equipped. Even so, REGISTRATION of the property with the town hall is required to legally offer the property for rental.

Additionally, in the following provinces, there is another level of local legislation REQUIRING LICENCING of both tourist apartments and holiday homes:

• Barcelona, Girona, Lleida and Tarragona (Cataluña)
• Alicante, Castellon and Valencia (Comunidad Valenciana)
• Formentera, Ibiza, Mallorca and Menorca (Islas Baleares)
• Murcia
• Alava, Guipuzcoa and Viscaya (Pais Vasco)
• Asturias

In Barcelona, according to Mark Stucklin of Spanish Property Insight: “New regulations have been introduced which make it difficult to rent out property in Barcelona on a short-term basis to tourists. The regulations are complex, and vary from district to district. Generally speaking, you can only rent out property to tourists (legally) if you have a licence from the town hall. People may tell you that these licences aren’t important, and that everyone rents out regardless. You would be wise to ignore these people, and check everything on this subject with your lawyer before buying. Bear in mind that, if you try to rent without a permit, you risk being reported to the authorities (neighbours unhappy with rowdy tourists usually oblige on this front), and if anything happens to a tourist staying in your apartment without licences, you could be in serious trouble.”

Aside from Barcelona, it’s unclear whether the requirement for a licence is being actively enforced in each of these provinces. Anecdotal evidence suggests that in Mallorca and parts of Alicante and Valencia it is. Clearly there is need of further clarification here.

Despite legislation existing in Murcia, one survey respondent commented “My Solicitor (in Murcia) said we didn’t need a licence, such a licence should only be required by firms and not to individuals since it is not deemed as a professional activity”

Another respondent in Murcia: “I had no idea of this licence and when I spoke with my solicitor they said it did not exist and they’d never heard of it.”

According to Lawyer, Maria L. de Castro posting on the EyeOnSpain forum the difference between a holiday home and a tourist apartment is detailed in Royal Decree 2877 made on the 15th in October, 1982. In the provinces previously mentioned, local regulations define licencing requirements in addition to the General Tourism Act of December 15th, 1999.

Lawyer Mark Wilkins of The Rights Group comments on the situation on the Costa del Sol: “Whilst the ‘private’ rental of your property has always been permitted it seems that rental activities may fall foul of the Ministry’s increasingly strict criteria where you have placed your property with a commercial letting agent. As this changes the nature of your rental from a private arrangement to a commercial activity - which would usually require a licence and some local fiscal administration. This form of rental activity is seen as competing with the Ministry’s already licensed Tourism operations that have been built, regulated and are operated under the limits of, amongst other things, the local area’s General Plan (PGOU).”

Whether applying for a full licence or just registering a property for holiday rental purposes, not a single respondent in the Kyero.com survey knew how to tackle the process. One commented “I understand that in ALL parts of Spain, in order to make property available for rental a registration process is required. One problem is in finding out how and where to do this. The second issue is actually doing it.” Another concluded “Would prefer to be legal but if needs must ..”

In summary, it appears that registration of a property is always required to legally offer a holiday home for rental. In the provinces listed, a licence is also required. Such licence applications will likely be denied unless the property was initially constructed, licenced and sold by the constructor as a tourist apartment. In both cases, the actual application process remains a mystery with many homeowners unable or unwilling to do battle with the Spanish bureaucrats.

Rubbing further salt in the wound is the Spanish tax levied on deemed rental income on properties which are not main residences - even if they are not rented out at all. On one hand Spanish legislation makes the process of legally renting out a property uncertain, difficult or impossible. On the other, homeowners are taxed by default as if the property was freely available to be rented.

One thing all parties agree on is that homeowners should get expert local legal advice before renting out a property in Spain.

If you have just arrived in Spain (or are just about to), do you know what your tax liabilities are and how and where to pay your tax?

It is not just newcomers to Spain who must get their tax affairs in order. People do not get into the system for various reasons, e.g. they don’t realise they have any tax to pay in Spain; they are avoiding going ‘legal’, or they don’t know how to register and what tax they should be paying.

Even if you arrived two or three years ago and didn’t register for tax you should do so as soon as possible. Tax authorities tend to be more sympathetic with people who step forward and bring their situation up to date. Delaying the matter will only make things worse and penalties may be imposed.

For a start, the tax year in Spain runs from 1st January to 31st December, different from the UK which is 6th April to 5th April. This can be a slight advantage if you plan ahead before leaving for Spain.

The law dictates that you will become a tax resident in Spain if you spend more than 183 days of the tax year in Spain. The days do not have to be consecutive and you become liable whether or not you formally register as a resident of Spain.

So, for instance, you could leave the UK at the end of its tax year, say 30th March, move to Spain, then spend time out of Spain in another country so that your total days in Spain for that year are less than 183 days. In this way you can delay becoming a tax resident until the following year providing you then spend 183 days or more in Spain.

The 183 day rule is not the only provision in determining tax resident status. If you don’t spend 183 days in Spain in a calendar year you can also become a tax resident if your ‘centre of vital interests’ is in Spain i.e. the base of you economic or professional activities is in Spain; or unless proven otherwise, you are presumed Spanish resident if your spouse lives in Spain and you are not legally separated.

Tax liabilities

Spanish tax residents are liable for tax on their worldwide assets which includes any assets they may still have in the UK.

1. *Income tax* – Income is split into general income (renta general) and savings income (renta del ahorro). General income is taxed at progressive scale rates. There are four tax bands which range from 24% to 43%. Anything not categorised as ‘savings income’ is included here such as salary, pension and rental income. Savings income is taxed at a fixed rate of 18% and includes income from interest and dividends, income from a purchased annuity and capital gains. Remember that this is tax on your worldwide income and most assets taxable in the UK can be credited against the Spanish liability under the terms of the double tax treaty.
2. *Wealth tax* - Spanish wealth tax is payable based on assets held at 31st December each year. There are deductions of €108,182 (individual) and €150,253 (own home). Tax rates vary from 0.2% for assets up to €167,129 and 2.5% for assets valued at €10,695,996 and over.
3. *Succession tax* – This tax on inheritances and gifts is paid by the beneficiary and not the estate as is the case in the UK. It is paid if the beneficiary is a resident of Spain or the asset concerned is located in Spain. Succession tax rate ranges from 7.65% on assets valued at €7,993.46 or under to 34% on assets of €797,555.08 or over. Once you have worked out the tax due it has to be multiplied by a factor of between 1.0 and 2.4 depending on the relationship and existing Spanish wealth of the beneficiary. There are various allowances depending on the beneficiary’s relationship with the deceased.

It is worth noting that although there is no blanket exemption for inheritances between spouses in Spain as there is in the UK, Spain is slowly reducing succession tax between spouses and direct line descendants. In Valencia, Alicante and Castellon the inheritance tax rate is now less than 1% between resident spouses and direct line relatives. So if you have not yet settled permanently in an area in Spain it may be worth researching the rules for the different regions.

It is important to note that if you remain a UK domiciled person while living in Spain you will be liable for UK inheritance tax on your worldwide assets which will include Spanish assets, as well as be liable for Spanish succession tax. Although there is no Spain/UK double tax treaty for inheritance taxes, any tax paid in Spain can be deducted from the UK tax due on the same asset.

Tax Returns

Tax returns relating to the income and capital gains made during the tax year ending 31st December have to be made in May or June of the following year. So if you are a new arrival in Spain during 2007 you will not have to make your first return until June 2008. Tax forms can be obtained from most tobacco kiosks (estancos). If your tax affairs are straightforward and your total income is less than €22,000 you do not have to submit a tax return provided certain conditions are met. In many cases people would be entitled to a tax refund if they filled in a Spanish tax return.

Organising tax returns and paying tax is not something that most people do with enthusiasm. Nevertheless, it is the law and when relocating to Spain it is good to know what to expect tax-wise so that you are not taken by surprise or fall foul of the law. As daunting as it may feel to some, it does not have to be difficult. A professional tax adviser can help with your tax planning and advise you on how you can legitimately mitigate your tax liabilities both in Spain and the UK, even if in the future you decide to return to the UK to live.

Bill Blevins - Managing Director of Blevins Franks

A few years ago Spain was in the grip of a property boom, and foreign buyers were falling over themselves not to ‘lose out’. Much of the heat has now gone out of the market, not least because a constant stream of bad news has shaken foreign buyer confidence in Spanish property, whilst relatively high prices, and competition from cheaper destinations such as Morocco and Bulgaria, has drained demand. It is now a buyer’s market in many popular tourist areas, and bargains can be found if one is prepared to make the effort. But whilst the stock of unsold properties is accumulating, and prices in many areas are stagnating, there is still a sizeable overhang of overpriced properties lying in wait for ill-informed buyers. This is especially true of resale properties, as many vendors have not yet adjusted their price expectations to market realities. It may be a buyer’s market, but buyers need to be savvy, and seek out value if they are to avoid overpaying.

According to the Spanish government’s figures, average national Spanish property prices rose in nominal terms by 9.1% over 12 months to the end of 2006, ending up at 1,990 Euros/m2. This represents a clear slowdown in Spanish property inflation, down from 18.5% in 2003, 17.2% in 2004, and 12.8% in 2005. Based on the Spanish government’s figures, it looks like the Spanish property market is on course for a soft landing, in which property prices will rise in line with general inflation.

Continuing with the Spanish government’s figures, property prices rose the most in the province of Lugo (Galicia) at 18.5%, and the least in Caceres (Extremadura) at 3.3%. It is interesting to note that the best performing regions last year were in central and northern Spain, which are largely ignored by English-speaking buyers. On the other hand Spain’s Mediterranean coastal provinces and islands were some of the worst performers: Prices in Alicante province (Costa Blanca) rose by only 5.1%, and in Tenerife (Canaries) by 5.6%, though Girona (Costa Brava) managed a respectable 13.2%, and the Balearics 11.8%. Madrid had a bad year near the bottom of the table with 6.1%, whilst Barcelona did somewhat better with 10.4%, up from 8.9% last year. Overall, though, the government’s figures paint a picture of a slowdown in the Spanish property market.

Figures from Kyero.com – a leading Spanish property portal that publishes a Spanish Property Index - show that average asking prices fell in 2006, down by 1.6% to an average asking price of 245,000 Euros (asking prices are not the same as transaction values, which are likely to be between 5% and 30% lower in a buyer’s market). Kyero’s figures confirm the broad trends seen in the government’s data: The market is coming off the boil, and previously hot Mediterranean markets like Alicante (- 1.5%) and Malaga (+3.4%) are now struggling to deliver positive results. On the other hand the Balearics had a good year, up 15% to an average asking price of 458,800. Star performers were the provinces of Jaen (+23.2%) Seville (+17.8%), and Castellon (+16.6%). Jaen is still one of the cheapest provinces, with an average property price of 85,000 Euros, according to Kyero.com.

Interviews with property professionals in different parts of Spain lend some support to these figures, but if anything show that the government’s figures are too optimistic. Property professionals working in Malaga province on the Costa del Sol report that the overall market is tough, and prices are where they were 2 or 3 years ago. On the other hand they also report that attractive, quality property that is well priced still sells quickly. In Murcia and the Costa Blanca the story is more or less the same, though in the most over-developed areas of these regions it is increasingly difficult to describe anything as ‘attractive’.

In the Costa Brava and the Balearics, property prices still appear to be rising modestly, though properties are not selling as easily as they did 3 or 4 years ago. In Ayamonte, on the border with Portugal, off-plan investors were still driving the market in 2006, though that now appears to be cooling down. All agents, in all areas, report that demand from Spanish buyers was more robust than foreign demand, especially at the expensive end of the market.

So 2006 was a year in which the Spanish property market continued to cool down after the boom years of 2000 - 2004. Mortgage borrowing growth peaked, and foreign investment in Spanish real estate fell 12.6% (12-months to the end of October 2006), having also fallen in 2004 (-6%) and 2005 (-17%). Interest rates (Euribor) rose from 2.833% at the start of 2006, to 3.93% at the end, a 41% increase in percentage terms, adding another 1,000 Euros per annum to the costs of paying the average Spanish mortgage. Spanish property prices that have now risen on average 100% in the last 5 years, and demand, both local and foreign, is cooling in response to all these factors. As a result properties are taking longer than ever to sell, and the stock of unsold properties is increasing.

But perhaps the most alarming imbalance in the Spanish property market today is the high level of housing starts in Spain. There were approximately 800,000 housing starts in 2006, almost 3 times the EU average. Spain is Europe’s biggest cement market, consuming 66 percent more than Germany, whose economy is almost three times as large. This is clearly unsustainable, and Spain’s economy has become alarmingly over-exposed to the construction sector as a consequence (50% of all Spain’s capital investment goes into real estate, which is also responsible for half of all new jobs and a sizeable chunk of both Spanish GDP and GDP growth).

If housing starts continue at this level, or even at the rate of 600,000 forecast for 2007 by the Madrid House Builders’ Association (ASPRIMA), Spain could hit a crisis of oversupply, if this is not already happening. As things stand the industry does not appear to be adjusting to cooling demand. In an unusual step the Bank of Spain has warned the property sector this February about expanding capacity and increasing borrowing at a time when demand is clearly cooling.

But despite the slowdown, it is also looks as if there are deep reserves of potential demand for Spanish (coastal) property amongst foreign buyers, principally the British and the Irish. A recent survey from the Institute for Public Policy Research shows that there are already 761,000 Brits living in Spain (990,000 if you include part-time residents), and millions more wish to join them.

The demand exists, but given a) Spain’s high property prices, b) the chance that prices might fall, and c) the stink of corruption and illegal building wafting from Spain’s property market, many potential foreign buyers are deciding to wait and see. So the problem is not the level of potential foreign demand for property in Spain, which I believe is still strong. The problem is that buyers are worried about risking their savings in a market blighted by corruption scandals, illegal building, mindless development, and dodgy property companies.

One of the most important changes in the market is the fact that English-speaking buyers in general are now better informed, more aware of the common problems, and more demanding than in the past. This is a structural change that companies selling to foreigners will have to come to terms with. In the internet age, geographically dispersed buyers can share their knowledge and experiences to an extent that was not possible even 5 years ago. This has led to a power shift away from sales organisations and towards buyers.

To take advantage of the present market buyers need to be savvy, well informed, and looking for value. 2007 will be a good year for buyers who are prepared to look around, and do their research. Vendors who are serious about selling will need to drop their prices, as will developers of mediocre new developments (some of whom will run into financial difficulties this year).

The OECD expects a “modest correction” in Spanish property prices.

Lombard Street Research Ltd. (London) Diana Choyleva, an economist at Lombard Street Research Ltd. in London, is bearish, and predicts that the end of the housing boom will also be the end of Spain’s boom. Bloomberg quotes her as saying, “You don’t even need house prices to fall to have a big correction. All you need is house prices to stop growing. Most likely, things are going to begin to unravel in 2007. We’ve already had a slowdown in house price inflation.”

Spanish Ministry of Finance Pedro Solbes – Spain’s Minister of Finance – says that Spain’s recent property price increases are “difficult to justify”, and forecasts that property inflation in Spain will fall inline with general inflation (currently 2.4%).

Economist, architect, and Spanish property expert Ricardo Vergés Property analyst Ricardo Vergés, of Spain’s association of architects, is quoted in the Spanish press as saying; “Property should cost 3 times annual salaries, not 6 or 7, as is the case in Spain today. Vergés thinks that a property crash is more likely than a soft landing.

Standard & Poor’s: International credit ratings agency Standard & Poor’s forecasts an ‘abrupt’ landing for Spain’s property market in a recent report entitled ‘Storm clouds over European Property Markets’.

Institute of Economic Studies (IEE): Given Spain’s booming economy, job creation, and increasing number of new households, the Institute of Economic Studies expects the property market to continue growing, and discounts any sudden price correction.

Caixa Catalunya: One of Spain’s largest savings banks forecasts that Spanish property prices will increase by 8% in 2007.

C.B. Richard Ellis: Real estate consultants C.B. Richard Ellis also forecast average property price increases of 8% for 2007, and do not expect property inflation to fall to general inflation levels for a couple of year yet.

BBVA: One of Spain’s largest banks forecasts that average prices will increase between 3% and 5% in 2007

The Spanish People: A survey of Spaniards by Gallup at the end of 2006 revealed that 29.4% believe property prices will increase considerably in 2007, 6% believe property prices will increase a bit, 15.2% say prices will stabilise, and only 2.3% of Spaniards believe that Spanish property prices will fall a bit or a lot in 2007.

And lastly…. For my part I’m bearish about the wider Spanish property market’s prospects for the next few years. I think that over supply, rising interest rates, scandals, and high prices will all take their toll on demand. A slowdown in the construction sector is inevitable, which could weaken Spanish economic growth significantly, and further reduce demand. As a result I believe the most likely scenario is one in which property prices in many parts of Spain stagnate this year, and stagnate or fall next year. I’ve been saying this for the last 2 years, and have been wrong the last 2 years. Sooner or later I’m going to be right.

I am more optimistic about the market for quality property in coastal areas, and other areas popular with European buyers, where demand is more diversified. I think attractive properties in good areas and on the best developments will hold their value in the short term, and deliver solid returns in the long term. But when it comes to mediocre property in over-developed areas all I can say is there is far too much of it around, and I am not optimistic about it.

Story from Spanish Property Insight

Following on from my recent features on the Seniors Money Lifetime Loan I thought it would now be useful to present a case study to illustrate how such a loan would work in practice.

Mr & Mrs Johnson retired to Spain in 1985 and bought a lovely rural property in Tenerife which they converted to suit them. After 21 happy years they would hate to move elsewhere. They are in good health and looking forward to many more years in their Tenerife home. Unfortunately they had begun to think that it may be necessary to downsize their property and move to a cheaper apartment, although it was the last thing they wanted to do. They had four main concerns:

1. When they arrived in Spain they had plenty of money in the bank and while they were careful not to overspend they were able to live comfortably off their savings. However today they don’t have much money left, their pensions are small, their income does not go nearly as far as it used to and their capital reserves have dwindled. They have tightened their belts to a point which can no longer be called comfortable. They were aware that if they sold their property, now worth 300,000 euros, they could buy a cheaper place and free up capital, but they knew they’d be unhappy anywhere else.

2. A car is important for them because they live far from town, but their car is on its last legs and they desperately need a new one, but cannot afford to buy one.

3. The age of the house is starting to show and various repairs and home improvements need to be carried out but they cannot afford most of them.

4. While they are both healthy they are aware that medical issues may come up in the future and are worried about not having the capital to avail themselves of the best possible care.

Instead of selling their home, however, Mr & Mrs Johnson discovered that a Seniors Money Lifetime Loan will help them with all their concerns. Mr Johnson is 79 and his wife is 77. With a Lifetime Loan, the minimum age is 60 and at that point you can borrow 15% of the value of your Spanish property. The amount that can be borrowed increases by 1% for each year, to a maximum of 45% at age 90 and over. Where there are two “nominated residents”, the age of the younger is used to determine the loan limit.

Since Mrs Johnson is 77 they are able to borrow 32% of the value of their property. On their 375,000 euros property they can borrow up to 96,000 euros.
The Johnsons decided to apply for the maximum loan available to them and to break up this loan as follows:

• They will leave 20,000 euros as a reserve, which is not drawn down at the outset and no interest is charged on this amount until it is. The Seniors Money Lifetime Loan allows them to take “Express Top Ups” during the life of the loan. This way they can take four express top ups of 5,000 euros over the remainder of their lives should an emergency come up.

• They will then take a lump sum payment of 30,000.euros This will enable them to buy the new car and carry out the various home repairs needed.

• The balance of 46,000 euros will be divided over staged payments. They plan to take quarterly payments over the coming years to increase their income and enable them to live more comfortably. No interest will be charged on any payments drawn down from their maximum facility until it is received.

The Johnsons will retain full ownership of their Spanish property until both of them die. At this point it will be sold to repay the loan, plus costs and interest, they will not need to make any interest payments during their lifetime and the “no negative equity” guarantee will protect their home.

The Johnsons’ story is an example of what could go wrong on retirement in Spain. It is not a true story, but this scenario, or something similar, could easily happen. In situations like this a Seniors Money Lifetime Loan could prove very useful.

Story from Bill Blevins of Blevins Franks

Javier Usua and Ruth Graneda never got out of the car when they visited Sanchinarro and Las Tablas, two of Madrid’s biggest new suburban developments. The concrete-block buildings and empty streets were all they needed to see.

“We came to look at apartments but found ghost towns,” said Usua, a 27-year-old taxi driver. “You’d need to drive miles for a loaf of bread or cigarettes and my girlfriend found it creepy and unsafe so we turned around and left.”

The abandoned developments are evidence of a housing glut that will lead to Spain’s first decline in home prices since at least 1992, when the Housing Ministry started keeping records. Spanish builders constructed 750,000 houses and apartments last year, more than France and Germany combined, while annual demand runs about 60 percent of that, according to the Finance Ministry.

“The real killer of the housing market is the immense oversupply,” said Gonzalo Bernardos, a professor of economics at the University of Barcelona. “Prices are already unofficially falling.”

New and existing house prices will drop by 20 percent from now through 2009, Bernardos estimates. The country built an average of 432,411 houses per year from 1996 to 2005, more than France and the U.K. combined.

Spanish home prices have more than doubled since 1998, exceeding growth rates in the U.K. and Ireland, two of Europe’s fastest-growing markets. The increase has been driven by a drop in interest rates to less than 3 percent from about 15 percent as Spain adopted the euro, household incomes that swelled as women joined the workforce, and a surge in vacation home purchases by Northern Europeans, mainly Germans and Britons.

As prices start to decline, Spanish homeowners may face the same challenges as buyers in the U.S., which is in the second year of a housing slump. Falling prices may spur higher delinquencies as buyers face difficulty refinancing. Spanish buyers may face an even higher risk of losing their property because housing prices are based on appraisals rather than actual sales, and appraisers often inflate values.

“We live in a country where everybody understands that appraisals are poetry,” said Jesus Encinar, chief executive officer and founder of Idealista.com, a property Web site that tracks existing home prices in Madrid, Barcelona and Valencia. “Bankers have said to me, ‘Why do you care if the appraisal is fake? It will be true in the future.’”

The average house price in Spain was 276,300 euros ($370,670) in December, according to Sociedad de Tasacion, a property company. That’s up 107 percent since the same period of 2000.

Existing home prices in Madrid, now stagnant, may start to fall by 0.2 percent in the first quarter of next year, Encinar said. Madrid tends to lead the rest of the country, so prices throughout Spain probably will begin to drop by the end of 2008, he said.

Banks loaned 250 billion euros to developers last year, eight times more than in 1998, and 134.3 billion euros to construction companies, data compiled by the Bank of Spain show.

They loaned 544 billion euros to homebuyers, four times the value of mortgages in 1998. Bilbao Bizkaia Kutxa has introduced 50-year mortgages and Banco Bilbao Vizcaya Argentaria SA has started making 40-year mortgages. Bilbao Bizkaia also offers loans up to 100 percent of the appraised value. That means even a modest decline in home values, combined with rising interest rates, may result in higher foreclosures.

“The problem here is that people have this unshakeable conviction that prices simply cannot fall,” Encinar said.

The amount of Spanish families’ wealth tied up in property in 2004 amounted to 4.3 trillion euros, or 510 percent of gross domestic product, according to the Bank of Spain. U.S. households held $17.2 trillion of real estate, or 159 percent of GDP, in the same period, according to the Federal Reserve.

Defaults on Spanish home loans in the first quarter were the highest in at least four years, according to Standard & Poor’s. The S&P Spanish RMBS delinquency index for loans backing residential mortgage-backed notes increased by 23 basis points to 1.75 percent during the first three months, S&P analysts wrote in a report on May 29. That compares with an index level of 0.7 percent in March 2004.

“Banks have lent a tremendous amount to developers who used the money to buy land and now they have no choice but to build houses on it to recoup their money to repay their own loans,” said Pablo Gaya, head of analysis at Capital at Work Investment Partners in Madrid. “Any sharp downturn in the housing market would make it even harder for developers to sell and may lead to defaults on loans, which would cause a headache for banks.”

Rate increases have a more direct immediate effect on Spanish families because 96 percent of mortgages in Spain are variable rate, compared with about 20 percent in the U.K. and 12 percent in the U.S.

The Organization for Economic Cooperation and Development said in a Jan. 23 report that Spain’s decade-long real estate bonanza boosted household debt as a percentage of disposable income to 115 percent in the second quarter of 2006 from 45 percent in 1996, making the Spanish market among the most vulnerable to higher interest rates.

Concerns about Spain’s real estate market and economy are keeping Usua and Graneda from buying right now.

The couple now lives in a two-bedroom apartment in the central Madrid neighborhood of La Prosperidad that belongs to Usua’s father and uncles. They were hoping to purchase an apartment in Sanchinarro or Las Tablas to have their own place.

The plethora of “for sale” signs and construction in both areas also is scaring them off, Usua said.

“When rates rise and people who are already up to their eyebrows in debt find they can’t pay their mortgages, the last thing they are going to do is take a taxi, or eat out, and that affects you, me and everyone,” Usua said. The apartments they were looking at cost from 300,000 euros to 400,000 euros.

Just as developers profited from first-time buyers, they also have benefited from investors who bought property in anticipation prices would rise.

The result has been that builders were fooled about the true demand, said Bernardos at the University of Barcelona.

In Sanchinarro, Las Tablas and similar developments, “a flood of speculators bought up apartments thinking they would make a killing as the boom continued,” said Bernardos. “Now big developers are competing with these very speculators for sales as they flee the market.”

Olgar Del Corral, a 32 year-old plastic surgeon from Madrid, said she bought a second home because house prices “always rise”.

“It’s clear that investing in a property is a much safer bet than putting money into the stock market for example where you never know what is going to happen,” she said.

BBVA, Spain’s second-largest bank, estimates that 700,000 new houses will be built in 2007, 100,000 less than the number finished in 2006.

“If housing starts continue at present levels, the chances of a price crash in the Spanish property market will increase significantly,” said Mark Stucklin, head of Spanish Property Insight, a real-estate consulting firm in Barcelona.

Investors have already demonstrated their concern that the country’s property boom is over. Shares of the nine largest publicly traded real estate companies declined by an average 25 percent in the past six months.

Realia Business SA yesterday raised 783 million euros in an initial public offering that fell short of the property developer’s target. The shares were sold at 6.50 euros each and were indicated today at 7.50 euros. Fomento de Construcciones & Contratas SA and Caja Madrid, the company’s owners, had aimed to sell the stock for 7.9 euros to 9.7 euros.

Metrovacesa SA, Spain’s largest property company, offers 1,000-euro discounts and an additional 600 euros per child during promotional festivals. Lubasa, a closely held real estate company in Castellon, gives buyers vouchers worth 4,000 euros to spend in department stores.

Grupo Pinar, a Madrid-based developer, tempts clients with the offer of a Mercedes C-Class car or a 25,000-euro discount on the price of some of its homes. Valencia Grupo 90 Inmobiliarias throws in a free garage.

Juan Bautista Soler, president of Valencia Football Club and owner of private real estate company Grupo Bautista Soler, was selling nine houses per month from September to December. Now, he said he’s selling one per month.

“We’re facing what could be a significant crisis,” he said in an interview in London. “All developers are feeling it and I don’t know why they don’t come out and say it.”

The average value of approved Spanish mortgages fell 8.8 percent in March to 162,265 euros from an average 177,916 euros in February, the National Statistics Institute said last week on its Web site.

“If we do encounter problems in the labor market, then families and banks will have problems,” said Enric Reyna, president of APCE, the Asociacion de Promotores Contructores y Constructores de Edificios de Barcelona y Provincias, in an interview. “Interest rates have to be kept at reasonable rates to prevent problems because banks can’t extend mortgage repayments much more.”

A 30 percent decline in house prices in two years would trim 0.4 of a percentage point to 0.7 of a percentage point from economic growth each year, International Monetary Fund economist Julio Escolano said in a May 18 report.

According to analysts at Ahorro Corporacion, who estimate that Spain only needs 400,000 to 450,000 new housing units per year, a 30 percent drop in new housing starts is necessary to balance supply with demand. A reduction of that magnitude would result in about 200,000 job losses, the analysts estimated.

In Sanchinarro and Las Tablas, Esperanza Aguirre, president of the regional government of Madrid, opened the first light railway stop last month. No passengers descended from or boarded the bright red-and-blue train this week when it stopped at the station during lunch time. Spaniards traditionally go home for lunch.

“Not even God lives here,” Usua said.

Story from bloomberg.com

Some alarming things have been written about the Spanish property market in recent articles like ‘Survive the Costa property crash’ (Sunday Times, April 29), ‘Costas house price crash’ (Times, April 27), ‘Euro helps topple Spanish property’ (Telegraph 25 April), and ‘Spanish property boom ends’ (Financial Times, April 24). Based on the headlines you would think that the Spanish property market was in an advanced state of collapse. This is not actually the case.

The event that inspired all these gloomy articles was a share price correction of property companies quoted on the Madrid stock exchange, as jittery investors dumped construction stocks in April. At the time of writing shares of property companies are some 25% below their February highs. One company – Astroc – is down over 80%, though that still leaves it 120% up over 12 months – a great annual investment return by any measure.

The fall in property share prices was overdue and somewhat expected after speculation had pushed up prices too far. Much of the press reporting glossed over the stock market context, giving the misleading impression that it was the Spanish property market in trouble. Of course trouble in the stock market is not good news for the property market, as it reveals increasing pessimism about Spain’s housing market. But falling stock market confidence and property share prices it is not the same as a housing market crash.

In fact, the reality of Spain’s property market’s performance in the last quarter is not as bad as you might think from recent articles, but not as good as the official housing price figures from the Government imply. Spain’s decade long real estate boom is over, and it is a buyer’s market, but it is also a complex situation of regional markets performing in different ways.

Average national Spanish property prices rose by 7.2% to 2,024 euros/m2 over 12 months to the end of March 2007, according to figures from the Spanish housing ministry.

The story these figures tell is one of Spanish property inflation slowing down from 18.5% in 2003, 17.2% in 2004, 12.8% in 2005, and 9.1% by the end of 2006. This is the lowest rate of property price inflation since 1998, when Spain’s property boom started. Based on the Spanish government’s figures, it looks like the Spanish property market is on course for a soft landing, in which property prices rise in line with general inflation. At the same time, all areas are still experiencing annual property price growth, and the national average is double the general inflation rate, providing a reasonable return on investment.

By autonomous region property prices rose the most in Ceuta and Melilla (13.8%), followed by Galicia (12.3%), and the least in Madrid (4.5%) and La Rioja (2.6%). Price increases in all of Spain’s Mediterranean provinces were below 10% for the first time in 10 years.

The problem is that the government’s figures have to be taken with a pinch of salt. They can be unreliable, and sometimes show property prices as increasing when they are falling. It is difficult to gather reliable housing price statistics in a country like Spain where under-the-table cash payments are still widespread. When cash payments start to fall, as it appears they might be, property prices recorded on deeds go up, even if transaction prices are falling.

Whilst the government’s figures show reasonable, if cooling, price increases, figures from Spain’s land register show a clear slowdown in transactions during 2006. The total number of property transactions recorded in Spain’s property register – the Spanish equivalent of the UK’s land register – fell from 989.341 in 2005 to 916.103 in 2006, an annual drop of 7.4% in unit terms.

Resale property transactions fell by 4.97% to 526,509 units (57% of the total), whilst completed transactions on newly-built properties fell by 10.11% to 389,594 units (43% of the total). Transactions fell in Andalusia by 7.3% to 178,189, in Catalonia by 8.8% to 152,802, and by 8% in the Valencian Region to 136,720. These figures show a market contracting against a background of an increasing supply of new properties. The notaries association has announced reported that property transactions in March of this year were 30% down on the year before.

On the question of property asking prices, which say something about the confidence of vendors, figures from Kyero.com show big variations in changes of regional asking prices over 12 months to the end of April. For instance asking prices appear to have increased by 10.7% in Malaga province, to an average of €304,355, but fallen by 12.5% in

Mallorca, to an average of €515,000. This would imply that vendors are in the ascendancy in Malaga, but losing power in Mallorca. What is certainly true is that buyers and vendors have to adapt to the conditions of local markets, and negotiate accordingly.

Buyers and sellers who wish to take advantage of the situation will need to do their research, keep a close eye on the market, and study local market conditions carefully.

Full story from spanishpropertyinsight.com

The sandy Atlantic shore of the Costa de la Luz (Coast of Light) is a world apart from the more commercialized Mediterranean coastline and is a great favourite with the Spanish. Stretching from Gibraltar to the Algarve border, restrictions on development have meant that some of the finest beaches in Europe are totally unspoilt.

For more than 150 kilometres you pass only a dozen or so hotels and a few traditional coastal towns and villages, yet you are close to some of the most fascinating cities in Europe. Although the vast, often deserted beaches are a sufficient attraction, this area of Andalucia is steeped in history and culture. The wonderful cities of Cadiz, Jerez and Seville are close by, as are the hilltop towns of Vejer and Arcos de la Frontera.

Although other Europeans have been coming in small numbers to the Costa de la Luz for a few years now, the area has never been spoilt by mass tourism. The attractions of the Costa de la Luz are simple; friendly people, beautiful scenery and fine sandy beaches as well as delicious food.

The Costa de la Luz is at the southernmost tip of Europe. The beaches are more expansive and sand is finer and a more golden colour than the neighbouring Costa del Sol. Refreshing evening breezes blow in from North Africa, whose coast is visible from the southern peninsula. With over 300 days of sunshine per year, the climate can best be described as North African climate.

In August, the average daytime temperature is 30.4° C, whilst in January it is 17° C. The Costa de la Luz is probably the best kept secret in Spain, known only to the Spanish people and the occasional discerning foreign resident or visitor.

Currently the best places to buy in the Costa de la Luz are the small villages on the outskirts of Chiclana, such as Pago del Humo, Pinar de los Franceses, Rana Verde, and El Marquesado.

The benefits of buying in these villages are the value (properties tend to come with good size plots of land, at a good price), they are situated only 5 minutes (drive) from the coast, 30 minutes from Jerez Airport and they are located pretty centrally to all the major towns and cities in the area. On the downside, a car is needed to get about if you are located in one of these villages, as there are very few amenities in walking distance.

Prices have increased dramatically over the past 3 years, but the area still offers excellent value in comparisons to other parts of Spain and Europe.

There is a small British community in the Costa de la Luz, as well as a small German\Scandinavian community. However, the area is still 98% Spanish.

There are very few apartment style properties in the Costa de la Luz, due to the harsh building restrictions, so the majority of properties are bungalow style villas, usually on a 500m2 plot of land upwards.

Story from eyeonspain.com

People who wish to take advantage of the amnesty have until 22 June to notify HMRC of their intention to make a disclosure of all irregularities, not just those connected with an offshore account. In doing so, they will receive a fixed penalty of 10% of the tax/duty to be paid (and no penalty on disclosures of untaxed amounts less than 2500 GBP). The tax/duties which have to be disclosed are from the years 1987/88 to 2005/06.

People will then have until 26 November 2007 to quantify their disclosure. This must be sent to HMRC along with a statement of offshore bank accounts open at 5 April 2006, a statement of offshore assets held at 5 April 2006, a formal letter of offer to pay, a declaration that the disclosure is correct and complete and, of course, payment of the full amount disclosed including interest and penalty.

If the full amount cannot be paid by 26 November 2007 the HMRC must be notified immediately along with a statement of assets and liabilities and also proposals for clearing the debt.

HMRC have said they will not act on notifications which are not followed up by a disclosure and that, indeed, such notifications will be removed from the taxpayer’s computer records.

The majority of disclosures will be accepted, but those which are unlikely to be accepted could include:-

• Disclosures which are found to be materially incorrect or incomplete.

• Disclosures from those into whose affairs an investigation or an enquiry has already begun.

• Disclosures from people suspected of being involved in serious organised crime and those involved in wider criminality (presumably drug dealers and the like).

• Disclosures from those whose circumstances would result in criminal investigation in accordance with HMRC’s stated Criminal Investigation Policy. This category includes professionals such as lawyers and accountants and those who, during a previous investigation, appear to have made a significantly incomplete disclosure. HMRC has made it clear that it may use material disclosed as part of the amnesty process as evidence in a criminal investigation.

Story from Overseas Property Professional

Principal private residences could save cash. If buyers nominate a Spanish home as their principal private residence before a sale, they could escape substantial tax liability. Buyers would have to lodge a private residence relief “election” with HM Revenue & Customs within two years of buying a new property. If the holiday home is elected as the main residence a few weeks before it is sold, then the final three years of ownership become tax-free.

Based on the purchase of a Spanish property for €180K including costs, and a sale four years later for €280K after costs, David Franks explains that a 40% UK taxpayer would save 22% of the €100K gain based on the Spanish tax rate of 18%.

With three years tax-free, only one year (25% of the gain, or €25K) is taxable, he says.

“Tax in the UK is 40% which is €10K, but this is fully offset by the Spanish tax of €18K so no UK tax is payable”, says Franks. “Had the election not been made, the UK tax would be 40% of €100K less €18K Spanish tax, i.e. €22K. So €22K has been tax saved by filing two pieces of paper.”

By electing the property as a PPR, owners would also qualify for taper relief and a tax-free gain of 9,200 GBP this year.

Story from Blevins Franks

There’s a new Price Index tab on every property page on Kyero.com - it does what you’d expect it to do.

Now, whenever you’re browsing properties in Spain, you can quickly see how property prices have trended over the past two years compared to the national trend.

Of course we’re using the same independent and accurate data powering our full-blown Spanish House Price Index - the new charts are just a little more accesible and quick. You can always delve deeper into the original price index documents - we’ll continue to update them every month.

One of Spain’s largest providers of non-resident mortgages has stopped accepting applications after police raided a mortgage broker accused of providing it with false documents.

Caja Mediterraneo (CAM Bank) has instructed its branches to ignore non-resident applications until the authorities finish investigating the actions of the Costa Blanca-based broker.

The move presents new considerations for investors in property in Spain, particularly if the crackdown leads to stricter regulation.

The unnamed broker, the proprieter of which has been arrested, is accused of providing false documentation to CAM Bank in a bid to sell mortgage products which may not exist.

As it stands, there is no official regulation of the provision of mortgages in Spain. The Bank of Spain regulates every new product, but there is no law defining who can market them.

Heather Chambers, director of International Mortgage Solutions (IMS), a non-resident mortgage provider in Spain, says: “We are very happy that Spain is finally getting to grips with this practice.

“We have come across instances where clients have been talked into presenting false mortgage applications to obtain the finance that they require.

“In these circumstances the broker has made no attempt to protect or care for their client, all they are concerned with is the commission they will receive from the bank. The client is rarely made aware of the longer term implications of getting involved in such transactions, maybe even repossession.”

Chambers adds: “Even worse, some clients may have been sold a mortgage product that does not exist thinking it is self-certified or non-status, with the broker providing false papers to the bank without the client’s knowledge. [The police raid] should be applauded.”

Story from ifaonline.co.uk

As baby boomers hit 60 years of age – which is now being described as the new 40 – they still want to enjoy life to the full. This may not always be the case if finances don’t allow. True, many of today’s baby boomers are asset rich in that the value of their property, or the property bequeathed to them by their parents, has risen astronomically over the last decade or so.

But bricks and mortar won’t pay for a carefree life in Spain, for holidays, entertainment, unexpected household expenses or that new car you have always dreamed of. You may also want to help out your children and grandchildren – a wedding, university education, a step up the housing ladder – and baby boomers know how important that can be! So how do you raise spendable cash or improve your disposable income?

It is possible to remortgage your house through many of the schemes you see advertised in Spain as “equity release”, but in fact most are simple short term mortgage arrangements with all the risks of many of the schemes sold in the UK in the late 80s which led to thousands of individuals losing their home when the property crash hit the UK.

British expatriates in Spain have so far had this opportunity for equity release, raising capital from their property to fund retirement expenses, but most of these schemes are higher risk arrangements where the loss of one’s home is a real possibility if the property market and the investment markets decline significantly as they have in the past. Indeed, in most of the schemes it is possible for you to end up owing more than the value of your property if markets fall! It is for this reason my Firm have stayed out of this precarious market until recently. We have developed and launched a new arrangement – the Seniors Money Lifetime Loan – as an exciting new alternative which is free of the risks associated with most other Spanish equity release schemes.

Firstly, let’s take a look at what you need to be aware of with many of the existing arrangements for so called “equity release”.

• These schemes are unregulated with the Spanish authorities and therefore unsafe. Your money is unprotected and there is a risk that you could lose the bulk of your assets, the results of a life of hard work.

• The mortgage, which can be for up to 100% of your property valuation, is arranged for a five year period when it can be recalled or renegotiated. This is more likely to happen if property values drop.

• The cash raised cannot all be used for anything you wish. Usually, only 10% of the monies raised will be at your disposal while 90% has to be invested in certain types of funds outside of Spain to cover the interest due.

• You need to make interest payments on the loan. The value of the invested funds may fall and the yield may not meet the cost of the interest payments. If you fail to meet payments, the lenders have the right to sell your home without notice to recover the loan.

• If you settle the loan early and it is during a fixed rate period, you may have to pay penalties.

• If the price of your property dropped the lender might ask for additional security for the loan or foreclose and force a sale.

• The loan currency and the investment currency may differ. If the investment currency should fall against the Euro the investment returns may not cover the loan value.

• If you have to sell the property and the proceeds do not cover the loan repayment then the lender will claim for the shortfall against other assets of your estate.

Let’s compare these risks with the Seniors Money Lifetime Loan:

• Seniors Money is fully compliant with all legislation and regulation governing the way it conducts its business in Spain.

• Seniors Money’s advertising and marketing material is fully compliant with Spanish consumer protection legislation.

• You can never borrow more than 45% of the value of your property. You can borrow up to 15% of your home value at age 60 rising by 1% a year to a maximum of 45% at age 90 and older. There is a maximum loan amount of 500,000 euros; minimum loan amount is 40,000 euros.

• The cash raised can be used for any purpose you wish. You have access to the full amount approved and no part of it has to be re-invested.

• There are no regular payments to be made. The interest is added to the loan balance and is repaid when the property is sold.

• You have the option to repay interest at any time, without any penalties.

• As monies do not have to be invested elsewhere to cover the loan, currency movements and exchange rates are not something you have to worry about.

• A guarantee is provided that you will never owe more than the value of your property regardless of what happens to property prices, provided you are not in default of the terms of the loan.

In the UK in the 1980s unregulated equity release schemes operated which were similar to many of the current Spanish schemes and thousands of borrowers lost their homes. Many of you may recall this happening. The new Seniors Money Lifetime Loan is different. It is free of the risks of many of the other Spanish equity release products. It gives not only the cash you require but peace of mind too.

Story from Blevins Franks

Spain’s big expatriate population should be on safer ground when buying all forms of insurance from mid-summer.

The Spanish government has declared July 18 2007 as the deadline by which insurance brokers must conform to Europe-wide business standards.

A European Union directive requires sales staff describing themselves as “brokers” to sell a range of products from competing insurance companies.

The move follows widespread concern that agents acting for a single provider have been styling themselves as brokers. That could create an impression that the agent was trawling the market in their client’s interest.

Another requirement of the insurance mediation directive is that sellers must carry 1 million euros per claim professional indemnity cover. They must register as brokers, disclose business documents and adhere to an advertising code.

Spain has been dilatory about implementing the Brussels directive. Across the rest of Europe, it came into effect in January 2005.

In Britain, rules are enforced by the Financial Services Authority. UK-based providers operating in Spain are already answerable to the FSA and are unaffected by the pending changes.

Chris Barkell, director of sales at Exeter Friendly Society, which is active in Iberia, said tighter regulations were long overdue.

“There are a lot of people in Spain who call themselves brokers but aren’t. They will now have to decide whether they are going to be regulated. Some will merge and comply, some will go out of business.”

Two years ago Exeter launched a brokerage on the Spanish costas, Go Insure It. It sells products of Sanitas, a locally-based medical company owned by Bupa, and those of Norwich Union as well as Exeter’s policies.

Sanitas, which is owned by Bupa UK, has become Spain’s second largest provider of long-term care after buying Euroresidencias, which has care homes across the country.

Sanitas now owns 5,500 beds in 43 existing and proposed homes. New laws entitle dependent people to the care they need, whether or not they can pay. The move follows what is seen by some as a breakdown of tradition, in which the elderly were cared for by relatives.

Story from telegraph.co.uk

Eagerly anticipated, ‘The Village’ is an exciting new property development within the spectacular Valle Romano resort in Estepona, Spain, it is rapidly becoming the most sought-after destination for sports stars around the globe.

The Village continues to be one of the most talked about and distinctive real estate developments on the Costa del Sol. Now YOU can rub shoulders with the stars too, a limited number of apartments remain available, just £20,000 deposit with NOTHING more to pay until completion. Buy with 100% confidence, your apartment has a lifetime title guarantee, buy from just £50 a week.

A-List Lifestyle The unparalleled on-site facilities proving irresistible to celebrity buyers include England goalkeeper, Paul Robinson’s first ever Football Academy, a superbly equipped sports complex, three swimming pools, two 18-hole golf courses (one PGA standard), a luxury spa and a 5-Star hotel.

Combine these A-list leisure facilities with a prime location - just minutes from the beach - panoramic views across palm-filled countryside and an enviable year-round climate it’s easy to see why The Village is attracting a long-list of celebrity purchasers from the world of sport.

Paul Robinson, Fulham Captain Michael Brown, Blackburn’s David Bentley, Irish Captain Ian Harte, and Sky Sports presenter Jeff Stelling have all purchased properties at The Village, several of Real Madrid’s galácticos have already purchased properties along with a number of leading sports icons from around the globe.

Set to become a popular warm-weather training ground for a host of leading European football teams, The Village already has the official seal of approval by Arsenal, Aston Villa, Bolton Wanderers, Leeds United, Newcastle United, West Ham United, Sunderland, West Bromwich Albion, Celtic and Rangers.

Call + 44 1652 641596 (24/7) or call FREE from UK 0800 081 1939. From Spain call 902 021 888 - lines manned around the clock by UK operators or visit 1Casa for more information about The Village

Spanish agents are indignant and disappointed at the coverage of the Spanish property market on Tonight shown on ITV on June 1. But the auctioneer featured in the programme praised it for its balanced portrayal of what’s happening in the Costa Del Sol.

Programme presenter Jonathan Maitland began ‘The Pain In Spain’ with the issue of oversupply, saying that hundreds of homes were empty and thousands were struggling to sell. Permission had been given for 900,000 new homes last year in Spain – four times the amount in Britain in the same period. It then highlighted the “land grab” scandal, and showed a couple who had to knock down part of their house, which meant their patio doors now opened onto a main road.

Graham Adkins of Compass Worldwide said: “This is just more of the same – these half-hour programmes always generalise on the same old issues rather than focus on the reality and give a true balance. The land grab situation is only in Valencia, for example, and a small part of it, but they make it sounds as if it’s all over Spain.”

The illegal development on “rustic land” was illustrated through a family living in fear of having their dream home demolished. Tony Gatehouse of Medsea Estates said: “People make mistakes anywhere. They don’t need to come to Spain to do it. They thought they could go it alone and by-pass the agent. Agents spend a lot of effort and time ensuring products are legal and deliverable. An agent would never have let them buy there.”

The programme included one couple who bought their apartment in Estepona three years ago for £163,000 but had just one offer for £34,000 (50,000) less. “If we’d bought on the English property market, we would have done quite well,” they told the Tonight programme.

Darren Clark of T5 Estates said: “If they would accept €50,000 less than they bought it for, then I would buy it. That’s nonsense. We all recognise that the market has been difficult, but this is a tried-and-tested, well-established market and we’ve seen it all before. The majority of people are just accepting that they have to hang on to it for two to three years until the market recovers.”

Mark Stucklin of Spanish Property Insight, who was interviewed for the programme, said: “The reality is that Spanish property has actually increased in value by 160% over the last 10 years.”

Another vendor withdrew his two-bed apartment at auction when the highest bid was €100,000 below the reserve price. “The market is completely dead,” he said.

Graham Adkins said: “The market is not dead and not crashing, it’s just slowing down. The madness has gone out of it, which is good. A lot of the rogues have left the market, and it feels more realistic. The canny investors are buying now.”

Tony Gatehouse added: “A lot of developments were built with a view to contracts tying speculators to buying three to four properties so that they could sell prior to completion and get a few quid in their pocket. That was never going to work and it didn’t work. People were never in a position to complete, so they had to pull out.

“This happened only in one area in the Costa del Sol – they have put it across as though it applies to all of Spain. The government has now stepped in to stop this as selling prior to completion is defrauding the government and if they become aware of the practice, promoters are now charged the VAT. It’s only natural that such a practice has had an effect on the market after two years.”

One effect of oversupply in Marbella has been the growth of the auction market. “For some, auction is the last resort of the desperate,” said the presenter as Tonight saw Inez Rix of Auctions Direct struggling to auction five properties to a handful of bidders. None reached the reserve price and all were withdrawn – although one sold prior.

Speaking about it afterwards, Inez still feels the programme was a genuine, honest overview of the market at the moment. “We are the last chance saloon for many people. There are a lot of people trying to sell, and fewer buyers. Whilst the Spanish market is slow with some people losing money, the other side of the coin is there are some good deals to be had. There are also some hard-nosed investors who will only buy at a certain price.

“The market will bounce back, not for a few years yet, but it is a stable and mature market, likely to show returns in the mid to long-term.”

Story from OPP (subscription required)

People who buy property in Spain have to apply for a fiscal identification number known as a Número de Identificación de Extranjero (NIE). All foreigners who own a property in Spain need a NIE, which identifies them to the Spanish tax authority (Hacienda), and is required for paying taxes and many other financial transactions.

In the past, people applied for a NIE either during the property buying process or even after the purchase was completed. Now the law has changed and it is a legal requirement to secure a NIE before the transaction is completed.

As a NIE takes between two to six weeks to process, if you are intending to buy property in Spain then you need to plan ahead to make sure you obtain it before you decide to purchase.

It is also necessary to have a NIE to set up your utilities, to apply for a Spanish driving licence, to set up a business or purchase anything over €3,000.

To obtain a NIE you need to visit the local provincial Foreigners’ Office (la Oficina de Extranjeros), or the nearest National Police Station (Comisaria de Policia) that has a foreigner’s department. You will have to present a photocopy of the relevant identification page of your passport which contains your photograph, proof of address in the UK and Spain (as you do not yet have a Spanish address your solicitor or estate agent can be used). You also need to supply written justification of why you require a NIE which can be supplied by your lawyer, estate agent or bank manager.

A NIE can also be obtained from the Central Police Headquarters in Madrid or, if applying from the UK, your local Spanish consulate. Usually, most British expatriates employ a Spanish gestor (an intermediary between you and the authorities) who will apply for the NIE on your behalf.

The NIE also enables the Hacienda to check that you have paid your taxes to date. A completed tax return should be submitted normally in May or June of each Spanish tax year (calendar year) in relation to income and capital gains for the preceding year ending 31st December. If you do not use a fiscal representative you can pick up a tax form from most tobacco kiosks (estancos). If you have simple tax affairs with a total income of less than €22,000 you do not have to submit an income tax return provided certain conditions are met. However, in many cases people would be entitled to a tax refund if they filled in a Spanish tax return so it is worthwhile completing and submitting the form.

High quality financial advice for expatriates and Spanish property owners from Blevins Franks

With its desert scrubland and mountain landscape, it’s easy to see why Almería in southeastern Spain has graced the silver screens as the setting for spaghetti westerns. Europe’s only desert region was once one of Spain’s poorest areas until a fistful of dollars revamped the infrastructure in the 1990s, prompting an influx of property development. And, more than a decade on, this dusty corner of Spain still has what the other Costas are fast running out of – space, and lots of it.

I visited three developments in Cuevas del Almanzora, the Andalucian region blessed with blue skies, clean coastal waters and plenty of sunshine – even deserts have their advantages.

The sites are owned by the Anglo-Spanish Almanzora Bay Group, which has cast its net wide in an attempt to attract a variety of investors – its 1,250-acre portfolio includes a desert golf course and leisure complex, a traditional fishing village and beachfront development.

A 50-minute journey by car is all that separates Almería international airport from the Desert Springs Resort, a gated complex of more than 300 units built in five architectural styles, apparently based on local colonial designs. Prices start at €150,000 (£102,000) for a two-bedroom “colonial” apartment and rise to €1.4 million for a “country house” with five bedrooms, four bathrooms, a pool and landscaped garden. The properties also have access to the 18-hole desert golf course and sports facilities.

But what is already here is nothing compared to what is to come, which includes a total of 2,000 units that will cover less than 15 per cent of the land, a second golf course, two hotels, a watersports and fishing lake, plus a quay with shops, cafés and restaurants, a second football pitch and even an international school. Quite a change from the land’s former use as a melon and tomato farm.

And while there is no doubt that the glorious weather – which rarely drops below 16C (61F) – lush greens, and peace and quiet are very big pluses, the downside to Desert Springs is that it does not feel very Spanish. Most of the buyers here are British and Irish, older and, unsurprisingly, golf enthusiasts.

To encounter a more Spanish experience, you need a car to drive out to one of the surrounding towns and villages. It is a 15-minute trip to Villaricos, the commercial fishing village and 19th-century silver-mining town where the Almanzora Bay Group has already developed more than 250 apartments and townhouses. Prices here start at €150,000 for a “village” apartment slotted into one of the narrow streets, and peak at €340,000 for three-bedroom courtyard townhouses with views of the harbour and pebble beach, set within private gated communities.

“The key to Villaricos is that it is a Spanish fishing village, and we very much want to keep a Spanish flavour,” says Goodhall, managing director of the Almanzora Bay Group. And regeneration of the sleepy village is under way, which includes replacing the asphalt streets with typical Spanish paving. A further 2,000 properties are planned, says Goodhall, that will “fill in the gaps” between current properties and surrounding villages and, it could be argued, pose a threat to the distinct current Spanish feel of the village depending on who buys here.

For a completely different type of property, Playa Marqués is a five-minute drive from Villaricos, a beachfront development of two or three-bedroom cottages starting at €250,000 and “Malibu” beach houses that, punctured with portholes, have a distinct nautical feel. Topping €1.45 million, these houses have three bedrooms, three bathrooms, a swimming pool and access to a sandy beach only a pebble’s throw away.

Prices have increased by between 8 and 15 per cent in the past 12 months; those first to buy at Desert Springs in 1999 claim that the value of their properties has risen threefold. So it seems that it’s not just the weather that has recently made this area a bit of a property hotspot.

Story from freshplaza.com