The Latest Spanish Property News from Kyero.com
August 31st, 2007
As the tiny Valencian village of Buñol erupts into its annual Tomatina festival, revellers seek somewhere to stay. Despite being located less than 40km from Valencia city, Buñol is one of the region’s quietest inland villages, where the only life that stirs on an average afternoon are a few old men standing around and chatting.
For much of the year, visitors are rare and foreigners even rarer, despite the fact that you can buy property here for less than €99,000.
Unless you love the idea of living in a remote village surrounded by some of the most beautiful countryside Spain has to offer, this may seem like a dubious investment choice.
However, once a year the narrow main street of Buñol transforms into the site of one the world’s most coveted festivals, as tourists from across the globe vie for the opportunity to take part in the renowned annual tomato war, Tomatina.
Buñol mayor, Fernando Giraldós, said yesterday that he is expecting 40,000 people to take part this year, with visitors from the UK and other parts of Europe, as well as Japan, Canada, the USA and New Zealand, who will more than quadruplicate the usual population of 9,500.
To ensure all the warriors have plenty of ammunition, the town hall has ordered 115,000 tonnes of tomatoes, up 15 per cent on last year.
In fact, the only thing that the town hall isn’t providing is accommodation, and as there are no hotels in the village, any owners of rental homes in the area will find their properties in great demand.
August 30th, 2007
Have you recently moved to Spain? If so, have you reviewed your financial planning to take your new circumstances into account? Your saving and investment structures should be specifically chosen to suit with your current circumstances and aims for your future. Now that your situation has changed, it’s very likely that your financial planning also needs to change.
This is especially true if you have moved to Spain on retirement. Retirement is enough of a change to warrant a financial review, when you add in a new country this becomes even more imperative.
Retiring to Spain is a move to a foreign country where tax and investment rules are different to the UK. You worked all your lives to provide for a relaxed and enjoyable retirement. Unfortunately, without the right financial planning, some people could find themselves financially deprived in future years. A review of your financial situation, preferably with the advice of a professional financial adviser, will help ensure your money is invested wisely for your new status as a retired expatriate. Savings and investments set in place while living and working in the UK may have been good choices at the time but relocation to Spain means changes usually need to be made to ensure your investments remain as tax efficient as they were in the UK and designed for regular income, capital growth and wealth preservation as needed.
I thought it would be helpful to run through a typical scenario of a couple recently arrived in Spain; the issues they had to consider and the constructive approach taken by their financial adviser.
Mr and Mrs Black are aged 66 and 61 respectively. A year ago they sold their UK home to purchase a property in Spain which left them with €250,000 in the bank. Mr Black has a full state pension and Mrs Black a smaller pension from part time employment. They have two ISAs and a PEP, some shares and a with profits bond. The ISAs, PEP and bond are tax free in the UK but not tax free for Spanish residents. The shares pay a dividend which is taxed in the UK and liable for Spanish tax, but under the Spain/UK double tax treaty the tax is not levied again in Spain.
They left their €250,000 in a Spanish bank account which is attracting an interest rate of 3%. Inflation in the Eurozone at the time of writing is 1.9% which means that in real terms their capital is only earning 1.1% interest. The Blacks wanted to see if they could earn more from this money and made an appointment with an independent financial adviser recommended by other British expatriates. The adviser is located in Spain and up to date with both Spanish and UK investment and tax legislation.
The financial adviser asked to meet Mr and Mrs Black as a couple, aware that each partner’s views are important in deciding how to go forward. Regardless of who takes responsibility for financial investment, both spouses should understand their investment structure, the reasons for it and be comfortable with it.
The adviser spent time fully discussing their aspirations and aims and filling in a financial planning questionnaire to get a complete picture of their financial assets and how they could be best utilised to achieve their goals. They considered whether their combined pensions were enough for day to day living in Spain and if they would need income to top up their pension. In this case, the adviser would include income producing investment structures in his recommendations. He asked about their pensions. Were they guaranteed and inflation proof? Inflation is an issue of particular concern for retired people - inflation could diminish the capital in the bank by as much as 50% in 20 years - and in order to combat it some of their investments should be designed for capital growth.
The adviser probed Mr and Mrs Black as to how they would spend their money. Did they anticipate any major expenses or were they planning to take regular holidays abroad or make some improvements to their property? Did they want to provide financial help for their children or grandchildren? Establishing such future expenses helps calculate what income and capital growth is needed. The time frame of such capital outlays is also important. If money will be needed in, for example, a year’s time, then a medium to long-term investment would not be appropriate. Some money could be deposited in a high interest bank account as necessary and the rest invested to meet their income and capital growth aspirations.
Of course he also ascertained their views as to how much investment risk they wished to take so that he could make appropriate recommendations. In the meeting he explained why they should consider liquidating their PEPs, ISAs, with profit bond and shares and moving the capital into a tax efficient offshore assurance bond. This would greatly lower their Spanish tax liability and help their money go further. The proceeds would be invested in appropriate structures to meet their financial objectives and placed within the offshore bond.
It’s wise to take the eventuality that one of you may return to the UK after your spouse dies into account when setting up your new financial planning. One key issue is UK inheritance tax; even if you manage to establish a UK non-domicile status after living in Spain for a number of years, thus escaping the UK inheritance tax net, if either of you return to the UK in your later years you will be liable for this tax again.
The possibility of this happening caused the adviser to suggest setting up an offshore discretionary trust to protect Mr and Mrs Black’s assets from UK inheritance tax. This can also protect against Spanish succession tax, the rules of which are quite different from the UK.
Another important issue discussed was what currency their investments should be denominated in. A Euro denominated investment would match their spending currency and avoid the risk of exchange rates having a detrimental effect on their wealth. If they are likely to return to the UK, or spend money in the UK over the coming years, then keeping some money in Sterling would probably be appropriate.
When the financial adviser felt that he had a comprehensive idea about Mr and Mrs Black’s financial needs he wrote a detailed report, confirming the information he had gathered and making recommendations based on this information. Everyone has different aims and objectives and his investment plan was tailor made to fit the Black’s situation and requirements. The report contained various choices as to the investment path they could take and stated the costs involved, the investment terms, the risks and benefits.
If they decide to proceed, their adviser will monitor their investment portfolio and review it regularly with them. He will keep the couple informed of new investments and tax changes and guide them financially throughout their retirement in Spain.
August 29th, 2007
Grand townhouses in Majorca’s capital are being restored as holiday homes.
With a name that loosely translates as ‘little palace’, Fernando Palazuelo is made for his job. Having renovated 62 buildings in Barcelona’s old town in the 1980s before it was fashionable, the Spanish developer moved on to converting palacios - grand townhouses - in the Majorcan capital of Palma, a property market that quietly thrives amid a broader picture of Spanish volatility.
Basking in the sun: Palma’s busy marina attests to its cosmopolitan appeal, while the historic architecture gives it a character of its own
Fernando’s own Palma home, a painstakingly restored 13th-century palacio with high, carved wooden Arabic ceilings and original frescoes, serves as a blueprint for his latest project, Can Sans, an early Gothic house which he is renovating and turning into 12 apartments costing from £206,000.
The design of each is dictated by features the builders unearth. Some have arched doorways and windows, others boast high ceilings with “flying bedrooms”, platforms suspended on cables from the roof.
“These palacios reflect the history of the city, but when I started working here 20 years ago converting old houses wasn’t known about,” says Fernando.
“Even now, most developers will throw out valuable items, not realising they are original pieces of Arabic architecture.”
Buyers are more appreciative. “We’ve already sold six apartments at Can Sans, to British buyers who really know their history,” he says.
“They instantly understand the significance of these kind of architectural features.”
Most foreign buyers are drawn to Palma for its cultural scene and mix of enchanting old town and sea, evoking a smaller version of Barcelona. But with Majorca seeing price rises of about 10 per cent a year, Palma’s Paseo Dalt Murada has been labelled the most expensive street in Spain - prices for apartments in period buildings average £10,300 a square metre. As a result, the island is also considered a good, long-term investment opportunity.
“Majorca is one of the sounder investments in Spain today,” says Mark Stucklin from Spanish Property Insight, a consultancy. “It has a limited supply of property, it attracts the rich and there are great renovation projects in Palma.”
Jan Westwood from The Property Finders agrees that with “sound market fundamentals”, Majorca is a safe prospect for investors. “Demand outstrips supply, prices are still rising and Palma, in particular, has excellent rental prospects as it’s only 10 minutes from the airport and a popular city break destination,” she says.
“British buyers go for apartments in the old town, behind the cathedral or in Portixol, a tiny bay east of the city undergoing major change. Expect to pay around £2,500 per square metre for a standard apartment, or from £4,000 in a restored palacio.”
Besides its healthy housing market, Palma’s great appeal, says Terence Panton from Engel & Volkers’ Palma office, is its year-round life. “It’s a cosmopolitan city, but it still has a small-town Spanish feel. It hasn’t become homogenised.”
Palma’s prices, Terence predicts, will match those in Barcelona or Madrid in the next two or three years. “There aren’t many houses left to renovate and prices have risen about 400 per cent in the past five years, which was when British people started buying in Palma.
“Spanish developers responded to growing demand by converting the old noblemen’s and merchants’ houses, typically with three storeys and high ceilings, in areas such as la Calatrava and la Lonja,” he adds, suggesting other areas like Santa Catalina or the old gypsy quarter of Sa Gerreria as having potential.
The entire ground floor of Palacio de la Portella, the last sea-view palacio left to be converted, is on sale for £680,000 through Engel & Volkers. For those undaunted by the highest of high ceilings, there are two-bedroom apartments in a 17thcentury converted palacio with views of the cathedral from £310,000, also through Engel & Volkers. Or Kuhn & Partner are selling 10 apartments in converted houses in the old town from £400,000.
There is much to be said for buying into a building where renovation has been done. Belinda Mariotti and her husband, Paolo, undertook a labour of love with the old-town apartment they bought three years ago and are now selling for £817,000, also through Engel & Volkers.
“It lay abandoned for 20 years before we came here on holiday with no intention of buying but fell in love with the town,” says Belinda.
“We’d previously restored a country house in Umbria so we thought we knew everything, but this was quite different. First, we had to sub-divide the ground floor into two apartments. This apartment was inches thick in dirt, damp, and needed replastering, plumbing and rewiring.”
The couple spent £240,000 on renovation. “We wanted to retain the Spanish colonial feel.”
But even after all that work, Palma’s allure remains as strong as ever. “I fancy a sea view this time,” says Belinda. “And something already renovated.”
August 28th, 2007
An estimated 1 million Brits now live in Spain – and after decades of Little England mentality, there are signs that the expatriates are integrating at last into the Spanish way of life.
Graham Forster may have come to Spain partly in search of the sun, but sea and sand can’t have had too much to do with it. The pretty Andalusian village where he has settled is a 40-minute drive from the coast – or would have been had I been able to find the winding road to it on my map.
Eschewing the concrete costas and looking inland, the 49-year-old Liverpudlian watchmaker found a perfect place to settle in Álora, a whitewashed village in the shadow of an ancient hilltop castle. “I wanted the Spanish lifestyle, rather than Little England in the sun,” he explains, taking a rest from fixing clocks in the afternoon heat.
Five years ago, he moved here with his family and enrolled his son Jonathan and daughter Jessica in the local school. After four years of lessons and considerable help from his neighbours, Forster felt that his Spanish was good enough to open his own shop, which serves Brits and Spaniards in equal measure. “This is it now,” he says decisively. “We’re staying here for good.”
Álora is one of dozens of remote Spanish villages where Britons have settled in recent years. Far removed from the British enclaves on the coast, many of these latest settlers are becoming involved with their adopted villages to an extent their predecessors never dreamt of. But it is a slow and uncertain process with a looming catch: the more of their compatriots arrive, the harder it will be to integrate.
Even so, the latest and most intrepid wave of Britons to settle in Spain is challenging deeply-ingrained stereotypes of the dreaded “Brit abroad”. For a start, they aren’t all pensioners. “I think the traditional image of the retired Brit coming to live in the sun is diminishing,” says Bruce McIntyre, the British consul in Málaga. “The normal person who used to come here and live on their state pension can’t now afford to do so.”
Instead, he sees younger people moving over with their families, often entrepreneurial types with successful businesses in the UK. In short, the sort of person who is more likely to make a go of Spanish life, and not just wanting to live out their final years in the sunshine.
“I think the newer generation are integrating more,” McIntyre says, looking at his assistant for confirmation. “Yes, a lot of them are intermarrying,” agrees Rosslyn Crotty, who has lived in the region for 30 years. “There still is a lot of Brit-marrying-Brit. But there are also a lot marrying Spanish nationals now.” It is impossible to say with any certainty how many British live in Spain. Most do not register with their local authorities, often for fear of attracting the attention of the tax-man. That said, the estimates are huge – and growing at an impressive pace.
The UK Foreign Office works under the assumption that more than 1 million Britons are living most or all of the year in Spain – a huge number in a country of 45 million people. In dozens of towns and villages across the sunny south and west of the country, Britons now outnumber Spanish residents by a wide margin.
Recent surveys suggest that there is no shortage of others willing to make the move. In 2005, an average of 2,000 people moved away permanently from the UK each week, according to the Institute for Public Policy Research. Spain was the most-popular destination after Australia.
The latest official figures reveal that 315,000 Britons are registered with their local Spanish authority, giving them the right to vote in local elections. That figure is rising by 15 to 20 per cent a year. For the first time, Spanish politicians are starting to court the British vote in local elections. In places such as Majorca and Alicante province, Britons are themselves being elected as local officials; one town has even had a British deputy mayor.
Karen O’Reilly, a British anthropologist, conducted a now-famous study into The British on the Costa del Sol. During her fieldwork in Fuengirola 15 years ago, she found that the British and Spanish hardly mixed at all. “If you could draw it,” she says, “you’d have a Venn diagram with very little overlap.” On recent trips, however, she has begun to notice tentative signs of change. “People are now becoming more involved in the Spanish economy,” she says. “They are learning little bits of Spanish. It’s not a massive sea-change, but it is changing.”
August 27th, 2007
A politically charged building scandal has tainted Marbella’s reputation. Now the new mayor is spearheading a legal clean-up – but some British owners may still lose out.
It was the Spanish playboy Prince Alfonso von Hohenlohe who put Marbella on the map in the 1950s, when he founded the swanky Marbella Club and brought his jet-set friends from Madrid there. In recent years, however, despite the perfect climate, the town’s reputation has been under a cloud. Corruption has been so rife within the property market, buyers have been driven away.
Now, after a long-running clampdown that has resulted in scores of arrests, and local elections designed to usher in a new era of honesty at the town hall, Marbella is trying to rebuild its reputation and restore buyer confidence, particularly among foreign investors. It has a new urban plan from the regional government of Andalusia, based in Seville, and an amnesty is being declared on many of the illegal developments.
The person responsible for the clean-up is the town’s new mayor, Angeles Muñoz, 47, the Popular Party candidate, who came to power in May. “We are going to remove the legal insecurity so that buyers can feel confident,” she says. “To do this, we will have to legalise practically all the 19,000 properties that were built with illegal licences.”
The task that her new administration faces is a daunting one. “British purchases are down something like 70% since 2003,” says Chris McCarthy, head of Viva Estates, a local agency. “Property prices peaked that year, and our average sale price of €325,000 hasn’t budged since. June was the worst month in five years, and a lot of agencies are downsizing or closing.”
“Leading up to the new millennium, we had 20% per annum capital gains for five years, but it’s been downhill since 2001,” says Diana Morales, who heads an eponymous high-end agency. And, though the proposed amnesty will benefit many British buyers innocently caught up in the scandal, others are likely to see their holiday homes bulldozed and their hopes of a life in the sun crushed.
There has been no political honeymoon for Muñoz. A GP who started out in local politics, she served as a junior minister in the previous national government, and the party she represents is the only one not implicated in the corruption scandal. Within months of her election, however, her political opponents are already muttering about potential conflicts of interest – her Swedish-born husband, Lars Broberg, is a local businessman with property investments.
Marbella’s problems stretch back to 1991, when a local developer, Jesus Gil, was elected mayor. Though initially popular, having boosted employment and cut street crime, Gil oversaw a culture in which anything from building permits to municipal contracts could, allegedly, be bought. Illegal licences for an estimated 30,000 properties are thought to have been granted under an urban plan he instituted in 1998.
Gil, who left office in 2002, died in 2004. Investigations into his years in office began shortly afterwards. There were dozens of arrests – those taken into custody included the then mayor and her predecessor – and among those now standing trial on charges of money-laundering and corruption is Juan Antonio Roca, Gil’s town-planning chief. He is accused of leading a gang that obtained £15m in bribes and bungs. In what allegedly amounted to a development free-for-all – provided the payoff was right – properties were built on land earmarked for parks and public facilities. Now, in return for an amnesty on properties built in such areas, the town “must be compensated with land for new infra-structure and facilities”, the mayor says.
Developers who benefited from illegal licences granted under previous administrations are expected to provide the land – a total of 118 hectares is due to be handed over. “Most of the developers have already agreed to do this,” Muñoz confirms.
However, 752 properties will not be legalised, because planners argue that they have been built on essential public land, so 377 owners – some of them Britons – are facing the prospect of these properties being demolished. Judicial proceedings are in progress. Meanwhile, the new urban plan, and the amnesty deal it contains, is due to get final approval from Seville next year.
Many of the properties that may be razed are in the vast Banana Beach development, just outside the town. John Toomey and his Spanish wife, Marisa, both 61, bought there in 2004, when the cost of a three-bedroom flat with sea views such as theirs had risen to about €500,000, and the prospect of any illegality was not on the horizon.
“We took great care with the legal search, using a local lawyer,” says John, a property lawyer himself, from Harrow. “There was a building licence from the town hall, and there was no record of any problems in the property register – which, by law, should give you all the assurances you need.”
The Toomeys are understandably bitter about the prospect of losing their seaside home. “The government in Seville was happy to take tens of thousands of euros from us in stamp duty, but now they say our property is illegal, while arbitrarily legalising thousands of others,” says John. “Seville is treating us like criminals, and has never expressed the slightest sympathy, even though it is to blame for the situation. We trusted the system, only to end up innocent victims of the public administration’s corruption and incompetence. One British couple who own in Banana Beach are in their mid-eighties. It is their only home, but they need to move to a nursing home, and can’t sell. It is a terrible situation.”
The new mayor – like much of the town’s population, according to recent polls – hopes demolition will not occur. “I do not believe that demolitions are an appropriate solution for Marbella, and I will do everything in my power to protect the interests of innocent buyers,” she says. “We will appeal against demolition orders.”
At best, however, that will leave some owners, such as those at Banana Beach, in legal limbo. Given the length of the dispute about the legality of such developments, some of the affected owners would prefer swift demolition and a compensation package.
“I haven’t been able to get a straight answer from anyone in five years, and this looks set to drag on,” says Russell Ellis, 63, a pensioner from Sidmouth, in Devon, who in 2002 spent €189,000 on a two-bedroom flat on Banana Beach. “I would prefer a decision tomorrow – even a bad one – so we can move on. But I’m not holding my breath.” To some in the property industry, the unlucky owners in the Banana Beach complex are scapegoats. “What will happen in cases where the developer can’t, or won’t, compensate the town hall?” asks Morales. She fears that the solution will only spark more confusion, although she does admit that July was “an excellent month for the local market”.
There are voices of optimism in some quarters. “The worst is definitely behind us,” says Desmond O’Connor, head of Alanda Homes, a blue-chip developer and the Spanish division of McInerney plc, Ireland’s largest home-builder.
Michael Hornung, director of Marbella Club Real Estate, the property division of the exclusive club, also feels that the town is about to turn the corner. “Wealthy buyers are coming back,” he says. “They know Marbella is cleaning up its act.” Building work slowed during the corruption investigation, but John Fleetham, 47, a developer from Sheffield, has since invested £1m in three plots, with planning permission, in the upmarket Sierra Blanca urbanisation. “I believe Marbella will bounce back,” he says. “If you have made any money in the UK, this is where you want to be. This place is aspirational.”
Muñoz, meanwhile, plays up plans for a new terminal and runway at Malaga airport, and, eventually, a high-speed train link to Marbella, which will boost visitor numbers.
James Hewitt, 49, the former lover of the late Princess Diana, is one newcomer who couldn’t be more enthusiastic. He arrived here a year ago, with plans to establish a bar-restaurant, and is renting a flat while he gets the business off the ground. “Whatever the recent problems, the quality of life here is unbeatable, and that will always attract people,” he says. “My quality of life here is three times better than it was in London, for about a quarter of the price. With the mild climate and outdoor lifestyle, I feel as if I’m living 600 days a year.”
Mark Stucklin runs www.spanishpropertyinsight.com, an independent online consultancy; spanishpropertydoctor@sunday-times.co.uk
August 24th, 2007
Increasing numbers of Britons are looking into investing in an Overseas Property as the process of retiring to the sun has become ‘easier, cheaper and more attractive’, it has been reported.
According to the Property Investment service provider for the over-50s, Saga Overseas Homes, Spain remains the number one choice for British retirees looking to relocate due to a number of factors, including price and practicality.
Commenting on the trend, Chris Simmonds, managing director of Saga Overseas Homes, said: “Growth in the UK housing market has generated a lot of equity for homeowners, and despite the similar boom in Spain, many people are finding that their money still goes a lot further on the Mediterranean coast, and they can have a new and idyllic home in the sun.”
In addition, Mr Simmons revealed that the growth in cheap flights from the UK and the strong ex-pat communities within Spain make the country the ideal choice for people looking to retire abroad but are nervous about living in a distant and foreign land.
Recently, HSBC signalled its confidence in the continuing strength and popularity of the Spanish property market, with the bank launching a bi-lingual service for Brits looking to invest in the country.
August 23rd, 2007
AIM-listed Spanish agent Medsea Estates saw its value fall by 25% within hours of recent press headlines about a ‘nosedive’ in the Spanish stock market.
Founder Tony Gatehouse - who spent six months with auditors to show clients it was properly regulated - said he had to hire a top PR firm in the City to put him in front of editors to explain the true story behind the headlines.
Gatehouse told OPP : “We are the only truly financially-regulated agent in Spain - there’s no one regulated by the FSA but I’m regulated by AIM’s financial rules and I have to be able to verify everything. If I make a false statement I could go to jail.
“The stories knocked confidence in the consumer and knocked 25% of Medsea’s value within 24 hours. So we hired Weber Shandwick PR, who are known in the City, to get us in front of investor titles like Share Magazine. I explained how Spain was portrayed in the media and how they got it wrong. Because it all started with one large company.”
Gatehouse says the media has looked at Spain as one region. “The Costa del Sol is not Spain,” he said. “It was sold on flipping - people were going out to buy one property and went home with four. Agents were selling volume and the price was being pushed up.
“The other question is where developments were being built. After their sales, some of the buildings weren’t to spec but IFAs and others sold and then moved on.”
Medsea is now developing Residencial Argosol in Murcia, and is about to open an office in Madrid, as well as a call centre to sell direct to Spanish homebuyers. Gatehouse insists there is still value in Spain but does not want to encourage people who need to buy-to-rent to support a mortgage. He said “I want profit like everyone else but ever since I entered business I always had the philosophy that I won’t sell at any cost.”
He added that talk of an oversupply all over Spain is not as bad as the press has made out. “If there’s such a glut, then how come I’m selling today off-plan that’s two years away?” he asked.
Meanwhile, Medsea is planning a new advertising campaign in the UK to raise awareness of its brand that is already well known in Spain. It has managed to raise its profile among the key over-fifty market through its exclusive deal with SAGA Overseas Homes.
August 22nd, 2007
Every year, hundreds of thousands of Britons pack their bags and go to live in sunnier climes. James Salmon explains how upping sticks permanently will affect your savings, pensions and tax.
There are two crucial things to consider when you move abroad: residency and domicile. Generally, when you move to another country and become one of its residents, you’ll be subject to its tax on your income, pensions and savings. Your domicile is where you are from: so if you live in Spain but were born here, you are resident in Spain but UK domiciled.
The tax situation is complicated, but the UK has what’s known as double taxation treaties with most countries which ensure you can’t be taxed on the same money in both countries. As a resident of your new country, you can still be subject to UK tax - for example, if you keep a property here and rent it out. But the double-taxation agreement ensures you won’t pay tax on that income in the country where you now live. If you work abroad, you could pay a lower than normal tax rate - speak to your foreign employer.
How you become a resident of another country depends on its laws. If you move to France intending to live there, for example, you become a resident on arrival. It’s harder to become an Australian resident, though you’ll still pay Australian tax on any income you make Down Under. In Spain, you’re resident if you live there for more than 183 days a year.
Many Britons who become resident abroad remain UKdomiciled - and where you are domiciled is crucial in inheritance tax planning. UK inheritance tax (IHT) will be payable on your worldwide assets if you are UK-domiciled. But if there’s a double tax treaty, you’ll get relief from IHT in one country for the IHT paid in the other.
To change your domicile, you’ll have to lose all links with the UK: this means closing bank accounts and selling off other assets. And you will have to tell the taxman you are leaving by submitting a DOM1 form to your local tax office. You can download one at www.hmrc.gov.uk.
The French do not differentiate between residency and domicile. And once you become a French resident, the UK taxman has no claim on any of your worldwide assets apart from your UK property. You pay tax at French rates on all other worldwide assets.
You need to tie up all your UK tax affairs before you move. If you’re working, you’ll need to send your P45 to your local office. Anyone moving abroad also has to send a P85 form which you can download at www.hmrc.gov.uk or phone HM Revenue & Customs’s residency helpline on 0845 070 0040 with any tax queries.
Phone The Pension Service (‘845 606 0265) to find out if you can have your state pension paid into an overseas bank account. It can also tell you if you’ll get increases in line with inflation each year (‘845 300 0168).
Unless you are moving within the European Union this won’t happen, so your state pension will effectively be frozen at the rate you’re paid when you leave.
You can’t put any more money into your Isas - and the interest will be taxed in the country you’re moving to. If you want to keep some money in sterling to fund spending on visits to these shores, open an offshore account (usually these are based in the Channel Islands or Isle of Man) with a subsidiary of a UK bank or building society.
Interest rates on sterling accounts are usually higher than Euro equivalents. Think about consolidating different personal pensions into a Sipp (self-invested personal pension) before you go. None of the usual destinations known for expat Brits offers such a flexible type of plan.
Do not ignore currency risk. A big fluctuation in exchange rates can cost you dear. Use a currency specialist such as HiFX or Moneycorp to move large amounts. High Street banks can charge up to 4% more to transfer your money. So on a £100,000 switch into Euros, you could be £4,000 better off.
SAVINGS: Insurance bonds are very popular in Spain, but unlike France, it doesn’t have special tax-free bank accounts.
PENSIONS: Until you fill in your first Spanish tax return, your state pension is taxed in the UK. You’ll also have to pay Spanish tax for the first year and apply for a rebate from HMRC. Public sector pensions will also be taxed in the UK and will not be taken into account as part of your earnings. If you have an occupational pension scheme your employer may offer to transfer your pension payments into a Spanish bank account — but you may get a terrible exchange rate.
If you can take your 25% free cash, do it before you move because you can’t once you become a Spanish resident.
TAX: If you’re under 65 you can earn €5,050 (£3,437) before paying tax (rising to €5,950 for the over-65s (£4,050) and €6,150 (£4,154) for the over-75s. From then you’ll pay 24% tax up to €17,360 (£11,814), stepping up to 43% if you’re earning €52,360 (£35,631) or more.
IHT rules are hideously complex and vary between the country’s 17 regions. The person who inherits is taxed based on how much they received and their current wealth, as well as their relationship to the deceased. And you cannot pass on all your assets tax-free to your spouse as you can in the UK.
The IHT tax free allowance is just €15,957 (£10,860), which you can pass on to your spouse and children. Children under 21 have an extra €3,990 (£2,715) allowance a year until they reach 21, with an overall total of €47,860 (£32,564). Above this, your assets are taxed between 7.65% and 34%. But it can be higher if you are leaving money to others apart from your spouse and children, says Mike Warburton from accountants Grant Thornton.
August 21st, 2007
In today’s world of financial planning, increasing wealth and reduced financial confidentiality, more people than ever, including expatriates living in Spain, are setting up trusts to preserve the value of their assets and lower tax liability. If you are not sure whether you and your family can benefit from a trust consider the following questions.
Does your spouse find financial affairs difficult?
Many people wish to make their spouse their prime beneficiary. However, some people find it difficult to handle monetary affairs and are anxious about financial planning. If you should pass away first and have set up a trust, the trustees will manage your spouse’s financial affairs according to your instructions. Your spouse will not have to worry about making financial decisions and planning the best way to arrange assets and investments.
This can be done through the trust deed which sets out the terms, provisions and conditions of the trust and a letter of wishes which you, as the settlor (the person who sets up the trust) writes to the trustees (the people who are managing the trust). The letter of wishes, although not legally binding, will detail how you would like the trust to be managed and who is to benefit from it.
What if you can no longer make decisions?
Unfortunately, some people become incapable of managing their financial affairs through mental illness such as the onset of dementia. If you have already made a conventional will and named a power of attorney, then the power of attorney can arrange matters for you. However, he or she won’t necessarily know what your true wishes are and may be influenced by your close family. If you do not have a power of attorney, it can be a protracted business getting one appointed and may involve the courts.
A trust can override this problem and the trustees will carry out your wishes set down in the trust. They can even arrange nursing care and attend to the bills on your behalf.
Are you in a second marriage?
Second or even third marriages can throw up a lot of problems especially when you pass on. It is likely that you would prefer to leave the majority of your wealth to your current wife and your blood children.
If you do not make legally binding arrangements to ensure that your preferences are carried out there is a danger that if your current wife inherits your estate it could pass on her death to her children by another marriage, or if she remarried, to her widower on her death and eventually to his children.
There are other complex family situations which can cause all best intentions about inheritance to go amiss. For instance, a legacy destined for a daughter, say, who then divorces could find that under the divorce settlement the bulk of that inheritance ends up with the estranged husband.
The trust deed can stipulate what should happen in many similar situations and potential situations and can be written so that in intricate family networks only the heirs you name in a trust will benefit from your wealth.
How confidential is a trust?
A trust is a private legal entity which owns your assets and is managed by trustees. It does not need to be registered and the settlor does not have to be publicly associated with it. If a trust is placed offshore, i.e. in a country other than where you live, it is out of reach of the laws of the country where you reside. In effect, the names of the settlor and beneficiaries can be kept anonymous even from the taxman. With the virtual loss of banking secrecy these days, offshore trusts are even more of an attractive option where confidentiality is concerned.
What about inheritance tax?
Settling you assets in a trust can avoid inheritance tax (IHT). British expatriates living overseas should think about an offshore discretionary trust whereby their assets can be removed from UK IHT altogether, providing they are non-domiciled in the UK, even if they eventually move back to the homeland to live. Assets placed in a discretionary trust can be passed down through generations of beneficiaries where they will not be liable to UK IHT for the lifetime of the trust.
Offshore discretionary trusts have other benefits in that they can avoid foreign succession law and taxes (although some areas of Spain have removed succession tax between spouses under certain conditions). Such a trust also allows you to add and remove beneficiaries according to changing circumstances and your wishes.
What about other taxes?
A trust is very tax efficient. As well as inheritance tax, trusts can minimise or avoid income tax, capital gains and wealth tax. A trust can hold many assets such as equities, bonds, bank deposits, life assurance policies and investment portfolios. A personal portfolio bond, which is a type of insurance bond that can hold selected investment assets, has even further tax advantages when held in an offshore discretionary trust.
Are there any other benefits?
Trusts offer various advantages which is why they are increasingly popular vehicles for managing wealth. A trust is made specifically for the benefit of your personal circumstances and those of your family. In a trust your assets are protected from political and economic unrest and exchange control restrictions. A trust is a defence against bankruptcy and unwelcome creditors. If a trust is in place it does away with the need for probate which can be time consuming and costly. A trust also consolidates your assets making it simpler all round for their management and distribution on your demise.
Who can be a trustee?
Almost anyone can be a trustee. Even you, as the settlor can be a trustee. Some people appoint children as trustees but it is not recommended as there could be a conflict of interests if they are also beneficiaries. Trustees are usually a bank, institution, organisation or a company that offers trust services. It is important to maintain a relationship with the trustees so that they are fully aware at all times of your circumstances and ongoing wishes.
How do I set up a trust?
Trusts are fairly easy and inexpensive to set up depending on their complexity. Professional advice is essential. Choose carefully and research different companies to make sure that they are reputable and have full trustee indemnity insurance.
Article by Blevins Franks
August 20th, 2007
All the statistics available paint a picture of a soft landing in progress, in which Spanish property price rises are converging slowly on the general inflation rate. However, anecdotal evidence from property professionals suggests that the market is much weaker than the figures suggest, at least in some areas, and for some types of property. Areas with a glut of new apartments appear to be struggling the most
Meanwhile, mortgage interest rates are still rising, and planning approvals, at around 200,000 per quarter this year, are still far too high. This is likely to put further pressure on the market, and increase the risk of more serious problems in the next 1 or 2 years.
On the other hand, the Spanish economy is still growing strongly, with unemployment falling, and against this background it is unlikely that the Spanish property market will crash.
The big question, however, is what will happen to Spanish economic growth when construction activity falls, as it must (some 18% of Spanish GDP is housing related, compared to an average of around 9% of the EU). If Spain goes into a construction-lead recession in the next 2 years, which cannot be ruled out, then property prices in the most over developed areas could fall by 20% or more.
Despite the high level of construction activity in Spain, the supply of quality property is scarce, especially in popular coastal areas. A combination of poor urban planning and unimaginative developers churning out identikit apartments has blighted vast swathes of the Spanish coast, which now looks like a wall of cement in many areas.
Price differentials between the pockets of quality and the rest are likely to increase, with quality property rising in value, whilst the rest of the market stagnates at best. Under the circumstances, the present buyer’s market might be a good time to find quality property for a reasonable price. Having said that, buyers need to be aware that there are still many overprice properties on the market, so detailed local research is key to identifying value.
August 20th, 2007
Bank calls a halt to applications from foreign buyers after broker is arrested.
Spain’s largest non-resident mortgage provider, Caja de Ahorros del Mediterraneo, has instructed brokers to refuse applications to foreign buyers following a raid on the office of a mortgage broker based on Spain’s Costa Blanca.
The proprietor was arrested on the grounds of providing false documentation to banks and CAM Bank is heavily involved in the investigation.
Brokers and banks operating in the Spanish market believe the intervention by the Spanish authorities is long overdue. Heather Chambers, director of International Mortgage Solutions, said “[The] raid should be applauded. Spain is finally getting to grips with this practice.
“We have come across instances where clients, in the non-regulated environment that exists here, 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. 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.”
The practice of obtaining false documents or overselling a product that ultimately is not available has been cited as a major contributor to the overheating of the Spanish property market.
Darren Fretwell, head of UK sales and international mortgages at NatWest International, said: “We regard this as a really positive step. The Spanish authorities are taking steps to stamp out malpractice in an unregulated market.”
August 17th, 2007
OPP asked Andree Frieze, editor of Homes & Holidays, Sunday Mirror about her views on Spain
Is the media to blame for buyers losing confidence in Spain?
No, I think on the whole it’s been reported fairly, although the media does always like a ‘disaster’ banner headline where they can.
Is anyone else to blame (agents, developers, ‘greedy’ investors who ‘flipped’?)
It seems to me it’s a mix of factors coming together. Over-development in certain areas has reached a point where a new property is cheaper than a pre-owned one, which combined with the ‘deals’ that developers and agents can throw in, lures buyers after a ‘bargain’.
In addition, the property scandals where developers have built on land they didn’t actually own has taken the shine off Spanish property, as have the corruption stories.
Will Spain fight back from its bad press and how will it do so?
Spain has already taken measures to sort out its troubles, such as introducing new legislation with the Ley del Suelo. This obliges developers to open all planning and development projects up to public consultation, as well as bringing land valuations and expropriation rights into the public arena. These measures will help to reduce the ‘land grab’ scandals while making all development more transparent.
Will you still write positively about Spain or is the Spanish dream over for your readers?
Spain will always prove popular with Brits because of its proximity to the UK, the cheap flights available and its ‘home from home’ appeal. Its reputation as a sure place to invest may be dented, but remember that Spain is a huge country where ‘hotspots’ come and go.
The ‘Costas’ may have had their day, but there is still plenty of other coastline to be explored, as well as the huge interior where golfing, sporting and family resorts are taking precendence.
For Joe Public looking for a home in the sun, whether for holiday or retirement, Spain still takes some beating. But, if you’re an investor chasing big bucks and a quick turnaround, then you won’t gain from Spain.
August 16th, 2007
Eco-friendly British property buyers head to Spain as Seville becomes the country’s most cycle-friendly city.
If a greener future is one of your priorities, that fact that Seville is set to become the Spanish city with the most bikes for rent will make it an appealing place to buy or rent. With the latest addition to their public transport, the municipal government is making an effort to cut down on traffic by supplying hundreds of rental bicycles to residents and visitors.
Named Sevici after the Spanish word for bike, the system launched with 300 bicycles at 30 stations. By the end of the year there will be 1,500 bicycles at 150 pick-up points, with an easy-to-use system available for everyone who passes through Seville. In Spain, Barcelona and Cordoba already have similar bike rental programmes, with similar schemes running successfully in Paris and Lyon in France.
The JCDecaux company is supplying the bicycles to the city authorities for free in exchange for the right to advertise on the use the bikes and stations.
You can buy a weekly coupon for €5, and then the first half hour of each use is free, with additional hours costing €2 each. The bikes come complete with lights, a basket, mudguards, chain guards, spoke guards, bell, stand and an integrated lock.
Seville authorities tested the programme in free trials last spring, which proved that locals and tourists alike are eager to cycle through this scenic city.
August 14th, 2007
Property buyers who’ve retreated to peaceful Zamora may find their home dramatically increasing in value.
The Castilla y Leon region is known for many things, but a gold rush isn’t one of them - until now, that is. Zamora city and the province around it are largely ignored by expat property buyers, attracting only a rare few who prefer tranquil surroundings and speaking Spanish to a lively costa social life. Soon they may find themselves with many more neighbours than they used to have…
Irish mining firm Ormonde Mining PLC has discovered high-grade gold deposits near the village of Pino del Oro - aptly enough, the village’s name means ‘Golden Pine’. Pino del Oro is right by the Portuguese border, and it’s possible to buy rural properties here very cheaply, under 50,000 Euros, although that may well be about to change as local farmers realise they could, quite literally, be sitting on a gold mine. Look out for western Zamora province seeing property price rises!
August 13th, 2007
A number of surveys over the last few months indicate a rising trend toward retirement overseas.
Over half of Brits plan to retire overseas. A customer survey compiled by Insure4Retirement.co.uk indicates that over half of all Britons hope to retire abroad. The telephone survey, conducted between October 2006 and February 2007 this year, polled a sample group of 1,022 participants resident in the United Kingdom and aged over 50. With Spain, France and Canada cited as the most popular retirement destinations, the single biggest worry for retirees (40% of those polled) is concern about maintaining a secure income. This was followed by the spiralling cost of healthcare and fear of hospital waiting lists.
Or is it two fifths? Research undertaken by GfK financial for Bank of Scotland International, from a representative sample of 1,321 surveyed between 24th and 30th April 2007, found that 42% are interested in buying property abroad or moving abroad. Respondents ranked Australia in the top spot with 10%, followed by New Zealand at 9%. America and Canada were joint third with 7% each. France topped the European destinations with 6% of people wanted to move there, followed by Spain at 5%.
Data from the ONS shows that one million Britons have retired abroad over the last decade - with Spain out on top with 74,433 pensioners moving there since 1996. This is followed by France (which attracted 34,051 pensioners), Italy (32,795) and Portugal (6,165). This leaves 703,900 who have retired to other parts of the world.
August 10th, 2007
A study by Barclays Bank in the Spanish press indicates that British house hunters are turning their attention towards emerging, less expensive areas such as Murcia, Almeria, Galicia and inland regions such as Castilla.
Buyers are now being advised that actual value, not potential value, is the safer way to judge a purchase in Spain. ”Castellon is the last real Spanish Costa and it has kept its Spanish roots. What a lot of Brits are looking for now is in-land farm houses and barns,” said Andrew Chappell of Mianna, on the Costa Azahar.
Colin Guanaria, founder of Bonnin Sanso in Menorca, said traditional homes on the island are increasingly attracting young families. ”Menorca is the jewel in the Balearic crown. There is very little new development here - its 90% resale and 50% of these are buyers from the UK. They are either the ‘Grey pound’ or mum, dad and 2.2 kids.”
August 9th, 2007
The Costa del Sol Action Group (CDSAG), which claims to represent more than 700 families who have suffered losses totalling more than £80 million due to bad advice, has told OPP about its latest class action against a group of financial advisers.
The lawyers acting for the CDSAG, IURA Despacho Jurídico of Fuengirola, instituted proceedings in Spain’s Supreme Criminal Court in Madrid culminating in a class action on behalf of ‘selected aggrieved parties’ against ‘certain financial advisers and product providers in Spain and the UK’. The CDSAG also reports that some of the accused have appeared before the courts in Benidorm and Marbella.
“The class action is now approaching its final stages and we anticipate prison sentences and swingeing financial penalties on the guilty parties,” said Gwilym Rhys-Jones, Adviser & Investigator for the CDSAG. The Group, which offers it services free of charge, claims a criminal ‘denuncia’ has now been accepted by the Fiscal (Public Prosecutor) which alleges fraud and illegal misappropriation amounting to more than £2 million mostly representing the life savings of British pensioners.
“Interestingly, those responsible look like ending up serving prison sentences in both Spain and the UK,” adds Rhys-Jones. “The CDSAG has already been responsible for the arrest in Spain of the seasoned three times jailed fraudster John Michael Doust who is currently on bail for an upfront mortgage fees fraud. In that case the Provincial Fraud Squad of the Málaga National Police asked the CDSAG to put the case together after which arrest warrants were issued.”
The Comisíon Nacíonal del Mercado de Valores (CNMV) and the National Fraud Squad in Madrid estimate that up to 17,000 expatriates in Spain have suffered bad advice from unscrupulous and unauthorized financial advisers. This suggests that there is enormous potential for FSA regulated IFAs in the UK to offer services to Brits buying overseas.
August 8th, 2007
Spanish councils work to maintain Spanish beaches in an effort to improve their tourism and property markets.
Despite the fact that properties located on the Spanish coasts are generally much more expensive than inland homes, Brits still prefer to buy beachside homes. The most popular regions lie along the South and East Coast of the main land in Andalucia, Valencia, Murcia and Catalonia, as well as the Canary Islands and the Balearic Islands.
Due to the appeal of Mediterranean and Atlantic ocean views, it’s unsurprising that more than 40 per cent of the population of Spain lives on the coast, in addition to more than six million holiday homes, many of which are owned by British investors and are only occupied for part of the year.
This phenomenon is nicknamed Muro Med - or ‘Mediterranean wall’, and is the focus of a report titled The Mediterranean and the Horizon 2020, which reveals that heavily built-up areas account for more than 50 per cent of the Spanish Mediterranean coastline.
Scientists are concerned that this excess of development could affect the country’s coastal flora and fauna, eventually leading to dangerous levels of erosion, and in an effort to protect the wildlife of the pine forests, sand dunes, and wetlands, regional governments are taking steps to preserve some of the country’s natural highlights.
Murcia, one of Spain’s property hotspots, has banned all building within 500 metres of the beach, and other regions are set to follow sit in a bid to protect the country’s coastline and ensure that it remains a draw for overseas property investors, as well as tourists.
August 7th, 2007
Spanish consortium signs contract to build new, larger international airport at Corvera.
In many parts of Spain you’ll hear people state that an airport is going to be built. As property prices rise whenever a budget airline starts flying into a nearby airport, this can be of great interest to investors as well as to people buying holiday homes who need quick and easy access. Now the contract to build and manage the future international airport for Murcia at Corvera has been signed, construction could begin as soon as the start of 2008.
The contract has gone to Aeromur SA, a Spanish firm that it owned by a consortium of several Spanish banks and construction firms. The new airport should triple the number of visitors who arrive in Murcia each year, fuelling this historically poor region’s economic growth.
If you’re thinking of investing in this area, there are plenty of golf courses and residential developments currently under construction, with options to suit most budgets. Just remember that the airport is expected to take two years to complete, so if you’re very nearby things may be a little noisy during that time.
Spanish Homes magazine always advises people thinking of purchasing a property in Spain to employ their own lawyer, not one connected with the developer or estate agent in any way, to ensure that the property has all necessary permissions and paperwork before handing over any money. If you’re buying off-plan, you are entitled to a bank guarantee to protect your stage payments, free of charge. If a developer is unable to provide you with one, don’t purchase on that development.
August 6th, 2007
Predictions of a ‘crash’ prove wrong as homes in Spain continue to rise in value. The latest figures from Spain’s Housing Ministry show that property prices in Spain have continued to rise, albeit at a slower rate than in previous years. The past year’s 5.8% rise is the lowest since 1998, but it does show that values are continuing to rise and the much-talked-about crash still isn’t happening. That said, experts are predicting that the rises will continue to slow, bringing property price rises in Spain closer to the country’s inflation figure.
As always, Spain has very distinct internal markets. While the holiday hotspots of Murcia and the Balearic Islands rose above the national average (9.5% and 7.8% respectively, the highest rise was 10%, recorded for Ceuta y Melilla, the tiny Spanish enclaves near Morocco. The provinces along the Costa Verde also recorded above-average rises, but nearby Navarre was way below at just 3%.
Anecdotal evidence from people living on the Costa del Sol suggests that the market there is extremely varied, with some home owners having to drop their prices to make sales and others selling extremely quickly. Wherever you buy in Spain, the key is always going to be desirability: buy the best-quality home you can afford in the best possible location. If you’re buying in a location flooded with average two-bedroom apartments, an average two-bedroom apartment might not cost you as much as a penthouse or a larger two-bedroom apartment with a sea view, but you’ll find it significantly harder to rent it out or sell it.
August 3rd, 2007
If you’re looking for a property somewhere sunny, Tenerife is a clear winner.
Spain’s National Statistics Institute has revealed the warmest, wettest and sunniest parts of the country for 2006. Given their location off the coast of Africa it’s no surprise that the Canary Islands have come out top in several categories. The Canary Islands are the only part of Spain to have a genuine year-round warm season (although much of the southern mainland is far, far warmer than Britain even in winter and so is still pleasant if you want to escape the November drizzle).
Tenerife was the star performer, with the highest average temperature in 2006 (21.8 degrees centigrade) and the most sunshine too (nearly 3,565 hours in the year, or almost ten hours every day). That said, the sun was shining on Izana, high up on El Teide, Spain’s highest mountain, which was one of the coldest parts of Spain in 2006. The warmer parts of Tenerife ‘only’ managed 8.6 hours of sun a day! Lanzarote was a close runner-up in the temperature stakes, and Rota Army Base in Cadiz was the sunniest mainland destination with 3,010 hours of sun during the year. The Canaries also had the lowest rainfall, which is perhaps not good news for the islands’ farmers but did mean people were able to enjoy rain-free holidays. Fuerteventura airport had only 63.1mm of rain in the whole of 2006. Lanzarote and Santa Cruz de Tenerife were the next lowest, with about twice the rainfall of Fuerteventura.
Where should you avoid if you don’t like the cold and wet? Owing to altitude, Spain’s inland provinces can be cold. Puerto de Navacerrada ski station in the Sierra de Guadarrama mountains was the coldest place in the country, averaging a temperature of just 7.9 degrees in the whole year. Izana on Tenerife was nearly as chilly. Anyone who’s ever visited Galicia will be unsurprised to know that Labacoa near Santiago de Compostela was the wettest place in Spain, with well over two metres of rain landing on the town in 2006. Other Galician towns were nearly as soggy. The least sunny areas were all further along the Costa Verde, with Asturias, Bilbao and Cantabria airports all being less than half as sunny as Santa Cruz de Tenerife.
There’s more to living in Spain than endless sun, of course, but if you’re craving the warmth and light or want to invest in property in a location which will attract tenants year-round Tenerife is clearly the place to buy.
August 2nd, 2007
The Bank of Spain has reported a doubling of Spanish people looking to buy abroad, compared to 2005.
In 2005, the Spanish government highlighted a need for more urban and suburban homes to accommodate Spain’s growing city and town populations. There is now a nationwide shift to providing affordable housing, with places like Castellon still relatively inexpensive. Spanish buyers are more common here and developers are now turning their attention to terraced homes and semi-detached resort-style projects, which consist of an increasing proportion of the Spanish second-home market.
Discerning city dwellers in Madrid, Barcelona and Valencia are also looking to pick up more accurately-priced holiday homes - away from the areas destined for the overseas market.
Andrew Benitz, director of Titan Properties in the Costa de la Luz, claims the large increase in the number of wealthy Spaniards over the last 10 years has led them to invest abroad, much like UK buyers, to chase high capital growth and rental return.
“They invest their money overseas because that’s where the real profit is,” he said. “Spanish developers have helped the decline in the domestic market because they are focusing on selling property abroad.”
August 1st, 2007
Festivals and major sporting events prove beneficial to owners of rental properties in Spain. Glastonbury was a wash-out and Wimbledon nearly got wrecked by the rain. Don’t even mention the delays and early finishes in the cricket. It’s no wonder that Spain’s sporting events and festivals are pulling in increased numbers of foreign visitors keen to see their favourite bands or sports without getting drenched. The recent event in Benicassim saw 40,000 people visiting the Valencian town to see bands like Arctic Monkeys and Muse, and around 12 million Euros was spent in the town.
During a time of high demand, owners of rental properties are able to charge premium prices. Major events are good for capital growth, too: the Americas Cup brought the international yachting set to Valencia in 2007. The average price for a one-bedroom property in Valencia province in the second quarter of 2006 was 122,000 Euros, according to data from Kyero.com. For the second quarter of 2007, only 12 months later, the average price is 147,000 Euros, a 20% increase. After the news that Valencia is to host a Monaco-style street-based Formula 1 Grand Prix, anyone who owns an apartment along the route is going to see their home’s value rise and will make a very healthy income during the Grand Prix period each year.
Don’t just look for somewhere that’s attractive to tourists once a year. Bunol’s tomatina, the infamous tomato fight, brings in thousands of tourists for a short spell each year. However, while Bunol is a pretty place to live, it’s inland and extremely quiet and won’t have much to appeal to most holidaymakers for the rest of the year. A city or coastal destination will attract people year round, on the other hand. Try Cadiz or north Tenerife for carnivals, Jerez de la Frontera, Malaga or Seville for feria and flamenco festivals, or look to one of the many golf courses that host international golf tournaments – the western end of the Costa del Sol is a good hunting ground for those.
Finally, don’t forget: it’s a business opportunity, so don’t hog the property yourself while the event is in progress!
