The Latest Spanish Property News from Kyero.com

Heavy storms cause flooding in southern and eastern Spain – property owners check on their homes.

While usually warm and sunny, just as we’ve been hit by tornadoes in the UK, Spain has been suffering from flash floods. Almost all of Andalucia, the desert region of Almeria aside, was put on alert by Spain’s equivalent of the Met Office. (In the event, even the football stadium in Almeria city was flooded.) The warnings were warranted: hailstones the size of tennis balls were reported in some areas, trains and roads were affected and at least two people have died.

One of Spanish Homes’ magazine’s writers, who’s based in Granada province, reports that there’s been a lot of flooding and damage to gardens, plus some property damage within the Lecrin valley, although weather forecasters are predicting a return to normal weather soon. Around 15% of Jerez’ grape harvest has been ruined, and politicians in Nerja and Almunecar, both severely affected by the weather, are considering applying for aid from the central government.

If you own or are planning to buy a holiday property in Spain, it’s worth checking the terms of your property and contents insurance carefully. If you let out your property, make sure that you get a policy that covers you if you are unable to let out your property for some reason and have to supply alternative accommodation to holidaymakers. Whatever you use your Spanish home for, if you’re based in the UK, it’s always a good idea to take out a policy that covers the cost of you returning to Spain to assess damage and oversee repairs.

Story from homesworldwide.co.uk

FOR most of us, Seville represents everything typically Andalucian: orangetrees, clip-clopping horses, tapas bars and mighty monuments to the region’s history. But 50 miles down the motorway, the citizens of Jerez de la Frontera would beg to differ. Jerez is the home of that most Andalucian drink, sherry. It’s also the birthplace of those beautiful Carthusian horses and (despite the claims of rivals) it is the cradle of flamenco.

That’s a big legacy for a city of 200,000 people but, with a confidence bordering on the arrogant, Jerez wears the mantle well.

Apart from its year-round warmth, Jerez is wealthy (thanks in no small measure to the sherry industry) with an elegant centre full of manorial 19th-century houses on tree-lined avenues and grand squares. When the heat of the summer months gets too much, the broad, sandy beaches of El Puerto de Santa MarÍa are only 20 minutes away.

So it is surprising that this corner of Spain has hardly entered the radar of overseas buyers – until now. Over the past 18 months the property market here has been bucking the volatile national trend. The market is stable because it has been dependent on Spanish buyers – who have seen a 40 per cent price increase in the last five years. And with a 12 per cent rise predicted for 2007, the city looks more attractive than ever.

For Barbara Wood, of The Property Finders, the crucial factor is improved access. “Western AndalucÍa is seeing the benefits of massive road improvements, and Jerez is perfectly positioned to take advantage of this.” Jerez has been well connected with Seville and the Costa de la Luz for some years, but a new motorway running east will eventually stretch to Antequera. New ring roads are also in use or under construction, linking with the city’s airport, which is well-served by low-cost carriers.

The domestic market’s interest in Jerez ensures that it isn’t cheap – although British buyers will find prices a pleasant surprise.

Chris Mercer has recently opened an estate agency in the city centre specialising in older properties. A growing swell of foreigners – particularly British and Irish – prompted the move, but his enthusiasm for Jerez is obvious.

“I defy anyone to stroll along the streets and not to be smitten,” he says. “There’s so much that’s typically Spanish and the renovated properties coming onto the market are perfect for foreigners.” His buyers either look for a low-maintenance property for weekends and holidays or for something that needs refurbishing and renovating.

“Lots of the renovated properties are sympathetically done, with modern buyers in mind. We have several on our books that would fit into London’s Docklands,” he says. One-bed flats start at around £90,000, but just over £500,000 gets you a mansion house with a huge patio, roof terrace and even a tower (more than 10,764 sq ft in all) round the corner from the main shopping area. “Jerez has been overlooked, so it is still remarkably good value, considering the beautiful environment. And it has strict planning regulations, which means that its look doesn’t change,” says Mercer.

Ana Davidson, of Marbella to Marrakech property finders, says that foreign buyers want “something they can do up and perhaps convert to a high standard, keeping a penthouse for themselves and selling off the rest or making a business from it. The older houses with an internal patio are the most sought after.”

Fiona Elliott-Goodall, of Andaluz Homes, has lived in the city for years and praises its easy access to mountains and the beach, while Barbara Wood says that Jerez combines modern amenities with the feel of Seville as it was 25 years ago. “Everything is easy to get to, and street life, restaurants and cultural activities abound. The city should see steady capital growth over the next five years.”

Story from timesonline.co.uk

Do you know would your affairs in the UK and in Spain would be looked after in the event of a serious illness or following your death? This is a highly topical subject, following recent major legal changes in the UK and Spain.

Lifetime- Enduring Powers of Attorney

In an Enduring Power of Attorney (EPA) one person gives another (or others) authority to represent them by managing property and financial affairs. An EPA is an especially useful precautionary measure, prior to (but not necessarily anticipating) any serious physical or mental incapacity, and /or where you have assets in one country but live in another. This is irrespective of your age. Without an EPA, the inconvenience, delay and cost of dealing with your affairs in the unfortunate event of your incapacity, can be enormous. It should be considered, perhaps, as a form of insurance.

Both in the UK and in Spain, there have been important changes recently. In Spain, the situation has been radically simplified this year. You can now make a Power of Attorney for your Spanish assets before a Notary (in dual language- Spanish/ English, if preferred) which endures beyond physical or mental incapacity. The process is straightforward and only the person granting the Power of Attorney needs to appear before the Notary.

Conversely, in the UK matters have unfortunately become more complicated in this area during 2007. With effect from 1 October, EPA’s for UK assets are replaced by Lasting Powers of Attorney. The main purpose is unchanged. However the procedure in the UK is now less straightforward than previously, so professional assistance is recommended in all such cases.

Importantly, Powers of Attorney (both English and Spanish) are effective only until the death of the person granting the Power of Attorney. Thereafter, matters are regulated by the deceased’s will. (Or if none, then by the Intestacy Laws).

Following Death- Wills

Executors are usually nominated in UK wills. They are often (but not always) also beneficiaries. Your executors’ responsibility is to administer your estate. The executors’ responsibility is quite distinct from the interest of the beneficiaries. Once executors have ensured that everything is in order with the estate and any debts, expenses and taxes have been discharged and paid, the executors are then responsible for the distribution of the estate to the beneficiaries.

The concept of executorship also exists in Spain. However, Spanish wills often simply refer to the beneficiaries, such that the beneficiaries themselves have the responsibility to administer and then distribute the estate. Unsurprisingly, the process of administering a deceased’s estate in Spain can be a daunting task for the families of non- Spanish owners of properties here in Spain. Following a death, beneficiaries should therefore consider appointing appropriately qualified and experienced representatives, to ensure that everything is handled in a prompt, professional and thorough manner, on their behalf.

More information from English-wills.com

A ‘SOFT landing’ is forecast for the Spanish property market, according to a new study from Banco Bilbao Vizcaya Argentaria, with demand and supply reaching sustainable levels.

“House prices have undergone a further slow-down, the moderation in demand from households has gathered pace, and the indicators of activity are starting to show some deceleration on the supply side,” the report said.

“Household spending on housing will slow in 2007 and 2008, a fall-off is expected to be intense but without turning negative in real terms,” it added. “Investment in housing is therefore expected to fall back from a growth rate of 2.8% in 2007 to 1% in 2008.”

Story from OPP

Spain’s struggling twentysomethings are to receive cash handouts to help them to move out of their parents’ homes.

In an attempt to tackle a big housing crisis – and capture young voters – the Socialist Government is to offer €210 (£150) a month to those aged 22 to 30 whose salary is less than €22,000.

The move comes after a ten-year housing boom that has sent property prices rocketing by 150 per cent and left thousands of young Spaniards unable to afford soaring rents. Many are living with their parents until well into their thirties.

Prices have been pushed up partly by the voracious appetite of British investors and holiday-home buyers to snap up villas in the Spanish sun. In a series of mass demonstrations across the country over three years, thousands of low-income Spaniards have demanded more affordable housing.

With six months to go before the general election next March, cheaper housing will be a significant issue for all parties.

With his eye on the youth vote, José Luis RodrÍguez Zapatero, the Prime Minister, unveiled a Bill to help young people to pay for their own accommodation. The grants will run for four years and renters can also qualify for a one-off payment of €600 (£420) towards their deposit.

When the scheme starts in January, about 180,500 people will benefit from it at a cost to the Government of €436 million. The Government also plans to allow renters whose annual incomes are less than €24,000 to benefit from tax cuts as property buyers from January, a measure that will cost €348 million in lower tax receipts.

Mr Zapatero called the plan the “emancipation of the youth” and claimed that eight out of ten young Spaniards earned less than €22,000 and would benefit from the payouts. He added: “You know that for many Spaniards housing is one of their main problems. I think today we are taking a big step in the right direction.”

The conservative opposition Popular Party attacked the plan as blatant electioneering. Eduardo Zaplana, a spokesman, said that the Socialists had failed to deliver on previous plans to build 180,000 subsidised housing units and had not honoured promises to make it more attractive for landlords to rent out many thousands of unoccupied properties. He said: “How can the Prime Minister do this after the housing issue was so important in their earlier programme and they have not fulfilled anything at all?”

Just as for many Britons, a Spaniard’s home is his castilla, so owning one is many people’s dream. Many are so desperate to get on to the property ladder that they have taken out mortgages for their whole lives. Most do not want to pay rents, which have been on the rise for a decade.

Average rents in Spain are only €720 a month, but in Madrid, Barcelona and San Sebastián landlords can charge almost double. In the capital the average rent is €1,138.

Story from The Times Online

House prices in Spain have risen faster than anywhere else in Europe, surpassing even the UK market. Mortgage lender Halifax has revealed that the slowdown in the Spanish property market is a positive thing, after five years of exceptional price rises.

According to their figures, Spain’s property prices doubled between 2001 and the end of 2006, and increased by nearly 60 per cent in the past two years alone, compared to a 40 per cent average across the eurozone as a whole.

A large number of the buyers boosting the market in Spain are British, with a recent poll by the Taxpayers Alliance revealing that two in every five people in the UK are seriously considering moving abroad. This is a dramatic increase since last year and the highest since records began in 1991, with over 300,000 leaving in the last year, with Spain one of the most popular destinations.

According to Halifax, Austria and Portugal experienced the lowest price increases in the period since 1991, with prices rising by six per cent and seven per cent respectively, while prices in Germany fell by five per cent.

Despite the massive increase in prices over the past five years, Spain is still one of the cheaper eurozone countries in which to buy property, with prices averaging at £150,200, compared to an average of £187,100 in the UK.

As the market in Spain slows, property buyers will be able to catch their breath before committing to a purchase, a fact that is likely to result in less mistakes, both personal and legal.

Story from homesworldwide.co.uk

Denmark and Britain have the most overvalued housing markets in Europe and are currently the most vulnerable to price falls, according to a new survey by credit-rating company Fitch Ratings. The agency looked at 16 developed nations and compared rises in house prices with past performance and current household incomes. Its findings state that in both Denmark and the UK the combination of increased consumer debt, higher interest rates and overvalued property, in relation to incomes and rents, could bring economic problems. France was another region where homes were currently considered overvalued in comparison to average incomes in the country, but the market there is not seen as quite as vulnerable.

According to Fitch Ratings, the markets currently offering the best value are Germany and The Netherlands, where prices were still in step or below average levels of debt and incomes. Perhaps most surprising was Spain, which appeared in the top ten of overvalued house price markets but was not ranked highly in terms of risk or vulnerability.

Story from easyjetinflight.com

BARCELONA is commonly known as one of Europe’s cultural capitals, drawing millions of tourists in search of art, sun and GaudÍ’s fabulous architecture. Yet there remains one dark spot on the city’s map: El Raval.

Defined for years by its poverty, prostitution and health problems, El Raval has been slow to reinvent itself. Its flats are often small and shabby, the narrow streets keep out the light, and crime is high. Yet El Raval is seen by its residents as having an enviable authenticity, where artists, students, bohemians and immigrants have found a home. And now, with its increasingly cosmopolitan and sophisticated air, El Raval looks set to become the latest area of Barcelona to share in the city’s cultural make-over – and to provide opportunities for the bolder sort of incomer.

For 15 years or so, the authorities have been seeking to give El Raval a new profile. The area was renamed from El Barrio Chino (The Chinese Neighbourhood) and retouched for the 1992 Olympic Games, but progress since has been fitful. A major cultural complex with two big institutions, the Barcelona Centre for Contemporary Culture (CCCB) and the Barcelona Museum of Contemporary Art (MACBA), was opened in the mid-Nineties in the north of the area. With its all-white façade and huge glass windows designed by the American architect Richard Meier, the complex lies close to Barcelona’s main square, Plaça de Catalunya, and attracts thousands of visitors every year. The opening of the city’s new university nearby further invigorated the district last year. To the south, the heart of El Raval was torn out in 1999 when a new pedestrian area was created, but an alternative cultural scene continues to thrive in the surrounding old narrow streets, which are full of tiny galleries with their displays of radical art.

For first-time buyers, El Raval is still cheap, but prices show a reassuring rise. Last year the average cost of a three-bedroom flat in the area was €198,016 (£134,150) compared with €151,767 in 2003. In the neighbouring area, Eixample Esquerra, a flat of the same size goes for €288,230 – 45 per cent more. El Raval is one of the few areas where you still can find bargains for less than €200,000 – though not necessarily in the best of condition.

The wider area around El Raval, Ciutat Vella, is one of the most expensive sections of the entire city, says NurÍa Gimó, of the estate agent Tecnocasa: “El Raval has lately become fashionable. The boom of art galleries and new cultural centres, together with the new university, have given the neighbourhood a new type of crowd that has reinvented the new Raval.”

Most of the people living in El Raval seem to agree that its modernisation is for the better and that it is possible to preserve the area’s cultural richness, although a minority fear that many of the more eclectic inhabitants may be edged out by the gentrification. As one resident says: “In the near future, the small shops and bars with personality and a great mix of people will probably move to another, less stylish part of town, away from the city centre. But it will always be El Raval where it all started.”

FACTFILE

The average Barcelona flat is 721 sq ft and costs €300,000 (£202,485) – or £280 per sq ft.

There is no special tax for foreigners, but the wealth tax for nonresidents in Catalonia is between 0.2 to 2.5 per cent and is levied from the first euro. For residents, the wealth tax starts at €108,200. In both cases any second property is included. Income tax is 24 to 45 per cent.

Capital gains tax is 18 per cent for both Spaniards and foreigners. Sources: Agencia Tributaria (Spanish tax office); Tecnocasa Real Estate Agency, with Pompeu Fabra University; Generalitat de Catalunya (The Autonomous Government of Catalonia)

Story from timesonline.co.uk

España Expo is all about the best of the Costa del Sol. It’s the perfect opportunity to get a taste of that authentic Spanish experience and offers visitors a unique combination of lifestyle and cultural information along with a range of expert financial, legal and real estate professionals, all offering confidential one-to-one advice and regular seminars.

There’s the chance to discover the story of the last fascinating 50 years here on the Costa del Sol and find out what the future might hold. España Expo staff will be ready and waiting to help with all kinds of lifestyle information, whether it’s about the best restaurants or beaches or advice about healthcare, education or living and working in Spain.

España Expo’s exhibitors include some trusted and familiar names, all under one roof. Organisations such as the Halifax, the UK’s biggest bank, a number of respected and experienced national and international developers and VIVA Networking with their innovative Networking Suite, ensuring that visitors get instant, on-the-spot communication with more than 250 local agents.

The Imperial Furniture Showhome is also available onsite to help with furnishing and design ideas and the España Expo restaurant, La Zona, will be serving food and refreshments. There’ll be free tapas and a complimentary drink for anyone who brings along their España Expo invitation. Download your invitation and Expo Show Guide from espana-expo.com.

España Expo is also offering a unique opportunity for a romantic Weekend Away for two which includes a visit to España Expo. It’s a once-only offer of a three-night short break for two adults in a studio or one-bedroom standard apartment on a self-catering basis and includes return flights to Málaga from a selection of main UK international airports. The amazing price is just £125 per person and as well as taking in España Expo, why not take a walk on any of the glorious local beaches or a leisurely lunch in a traditional white village, perhaps visit the Picasso Museum, enjoy a round of golf, or pamper yourself in a luxury spa.

Experience a few days of the Spanish lifestyle for yourself; all that romance and passion has got to be good for you! Find out more about the Weekend Away Offer at espana-expo.com.

September 14th, at the 2007 International Property Awards, a judging panel of 26 industry figures unanimously voted Kyero.com the best property portal in Spain.

Chairman of the judging panel, Eric Pickles MP, opened by saying “This year, following a rise in the number of entrants and an impressive increase in quality, competition was exceptionally fierce and the judging very close.”

The presentation dinner was attended by 350 representatives from 57 companies, each nominated for an award in their particular field of expertise. Dan McClean, Director of CNBC Europe, sponsors of The International Property Awards, commented “The winners of this year’s awards represent the leaders in the property industry.”

Martin Dell, Managing Director of Kyero.com accepting the award on behalf of the staff of Kyero Media, commented “I am delighted that the hard work and dedication of every member of the Kyero.com team has been independently recognised and rewarded. Since 2003, each one of them has worked unstintingly to make the task of finding a property in Spain as simple and intuitive as possible.”

Awarded the highest accolade of five stars, Kyero.com was automatically entered for an even higher level of recognition - Best International Property Portal. Nominated alongside Daft.ie and Rightmove.co.uk - the largest property portals in Ireland and England respectively - Kyero.com faces formidable competition at the awards ceremony in Las Vegas on November 16th 2007.

According to the sponsors of the Grand Gala in Las Vegas, although only one company will be presented with the award of Best International Property Portal, all companies are considered world-class by virtue of their participation at this level.

Learning of the nomination, Martin Dell commented “We faced stiff competition in this year’s award for Best Spanish Property Portal - but this raises the level of competition to a new high. Both Rightmove and Daft are the established leaders in their own countries and we’re honoured to be competing with them as equals. Whether or not we win in Las Vegas, we’re very proud to have been nominated”.

As British investors continue to flock to Spain, new findings are revealed about the country’s earliest expats. Scientists have discovered evidence that Ice Age man emigrated to southern Spain as long ago as 22,000BC.

Data from the Office of National Statistics showed that 2006 was a bumper year for Brits moving overseas, with 196,000 people saying goodbye to family and friends in the UK and trading in their workaholic lifestyles for a new adventure. The number of Brits moving abroad has gone up by 50 per cent in just one decade, and these figures are expected to continue rising, with many heading to Spain.

However, according to the Nerja Cave Foundation, this desire of northern Europeans to head south isn’t a new phenomenon. In fact, the scientific foundation has released details of more than 150,000 archaeological remains unearthed in excavations that occurred in the late 1980s.

Studies of the findings have only just been completed, as scientist analysed evidence that suggests that Ice Age northern Europeans may have reached the Costa del Sol earlier than previously thought.

The team of experts examined material extracted from the caves and discovered a number of tools among the collection that appear to be from the Solutrean culture, characteristic of a period previously unknown in the Nerja Caves.

If this is the case, then the Ice Age travellers discovered the pleasures of the Costa del Sol as long ago as 22,000BC, showing that the British taste for Spain hasn’t diminished for thousands of years.

Story from homesworldwide.co.uk

As winter begins even in Spain, bookings from British holidaymakers enhance the Costa Blanca’s buy-to-let market.

Throughout the UK’s drizzly summer, hoteliers and holiday homeowners in Spain saw record number of bookings from British tourists, especially on the Costa Blanca.

Many are fully booked well into October, with most customers paying high season prices despite the fact that the market is usually quietening down for winter at this point.

The majority of these holidaymakers are flying over from the UK, and are expected to add up to an overall occupation figure of 85 per cent this winter.

The tourism board announced that tourism figures on the Costa Blanca rose by two per cent during the summer period, which, despite being small percentage, makes a big difference from last year’s figures.

This is despite the fact that national tourism dropped this summer with Spanish tourists who would usually have headed for the Costas opting instead to either go somewhere closer to home, or head for last minute deals abroad.

Brits who have invested in Costa Blanca holiday homes will see their bookings boosted further when the BBC airs a new episode of their travel show, Wish you were here. The travel programme will include a chapter on the attractions of Benidorm, hosted by Ricky Tomlinson.

Instead of focusing on packed beaches and English pubs, Tomlinson, who describes himself as one of Benidorm’s biggest fans, will explore historical attractions, cultural sights and up-market restaurants, showing an unexpectedly refined side to the traditionally tacky tourist resort.

Story from homesworldwide.co.uk

Figures from the Bank of Spain reveal that foreign investment in Spanish property increased by 19.2% in the first 5 months of the year compared to the same period in 2006. The amount invested by Spaniards in property outside of Spain almost doubled over the same period.

The total amount invested by foreigners to the end of May was 2.252 billion Euros, almost the same as the amount invested in 2005, though still significantly below the 2.925 billion Euros invested in the peak year of 2003.

How does one reconcile this increase in foreign investment in Spanish property at a time when the market is clearly turning down?

One explanation might be that many of the off-plan sales made in 2004 and 2005 are only now being recorded as investments as buyers take possession of their properties and complete the purchase before notary. This is the moment when the investment is recorded in the national accounts.

Nevertheless, the figures do seem to suggest that foreign demand for Spanish property has picked up significantly since last year, even though property professionals report that the market is still very slow. By the end of the year we should know whether foreign demand has rebounded, or whether these figures can be explained by some other factor.

Story from Spanish Property Insight

As Benjamin Franklin once said, ‘in this world, nothing can be said to be certain, except death and taxes’. It is true that there is no escape from some taxes, but it is possible to avoid others and man has been attempting to do so since time immemorial. Over recent years, however, it has got considerably harder and the first decade of the twenty first century could well be remembered for the death of banking secrecy.

On an international level, the Organisation for Economic Cooperation has been fighting ‘harmful tax practices’ and pushing for ‘exchange of information’, to help each country collect as much tax revenue as possible. It has been successful in getting countries to sign treaties whereby they will exchange information in cases of tax fraud – if someone is under investigation for tax fraud personal banking information may therefore be released to his tax authority.

Then of course, within Europe, we now have the Savings Tax Directive. Some jurisdictions have been able to retain banking secrecy and instead apply a withholding tax but the ‘ultimate aim’ is to have all EU countries and participating jurisdictions (including Switzerland) automatically exchange information, hopefully from 2011.

The UK’s tax revenue, HM Revenue & Customs (HMRC) was evidently not satisfied with these arrangements and, by taking leading high street banks to court, managed to override the Directive’s withholding tax provision. These banks were forced to disclose information on their offshore clients. This was a highly significant victory - it proves that tax authorities are winning the battle against tax evasion and are now able to push banking secrecy rules aside and obtain confidential information and trace tax evasion.

The Revenue is now investigating at least 100,000 taxpayers and a further 60,000 have come forward voluntarily to get their affairs in order. It also plans to expand its investigations to all the banks in the UK.

The UK is not the only country taking ever successful steps to prevent tax evasion and recoup lost tax revenue. Here in Spain, the authorities also take the matter very seriously and are currently on a mission to tackle property fraud. In July Luis Pedroche, director of the Spanish agency for tax collection, announced that a full third of the agency’s resources will be dedicated to preventing and controlling real estate fraud, one of the biggest sources of tax evasion in Spain.

Sur in English has also reported that a new computer programme, which will link the computers used by property registry offices and public notaries throughout Spain with the national tax agency, so it automatically knows when a house is sold. The programme will compare the sale price to the average property prices in its area and flag up if the declared value is suspiciously lower than it should be.

The tax office is also increasing the number of inspectors working on this area of tax evasion. It will be encouraged by its success so far – 90% more investigations were carried out in 2006 than in 2005.

So what will happen next? Considering the success the UK Revenue has had, the writing is well and truly on the wall for banking secrecy – it is only a matter of time before its demise, though quite how much time remains to be seen. Many consider the EU too optimistic when aiming to eradicate it within Europe by 2011, but at some point it will happen. In any case, from 2011 the withholding tax will rise to 35% in 2011 and many would be able to pay a lower tax rate in their country of residence.

The current withholding tax option is rather misleading. It appears to give people a choice as to whether to declare these savings or not. Legally, though, there is actually no choice, worldwide income should be declared even if you are paying the withholding tax.

Once a tax authority finds out about a previously undeclared bank account – whether through changes in the Savings Tax Directive rules or other methods - it will want to establish how much income was undeclared over the years, how much tax was unpaid, where the money came from and whether it was correctly taxed at the time (eg, capital gains tax, inheritance tax etc).

There is still no need to pay more tax than necessary but you must use legitimate methods to do so. For example you can move your savings and investments into tax efficient structures (ones that fall outside the Savings Tax Directive) and reduce or eliminate tax on your income and capital today as well as on any assets you leave your heirs in the future.

Article by Blevins Franks

Euribor – the interest rate most commonly used to calculate mortgage payments in Spain – rose again last month to 4.666% (to be confirmed by the Bank of Spain). This will push up the cost of financing a Spanish property purchase with a mortgage in Euros.

There have now been 23 consecutive monthly increases in Euribor, pushing it up to its highest level in 7 years since December 2000. Euribor is now 29% higher than it was a year ago, and 122% higher than in June 2004.

For a typical 25-year Spanish mortgage of 150,800 Euros with a rate of Euribor + 0.5%, monthly mortgage repayments will rise by 89 Euros a month to 895 Euros, adding roughly another 1,000 Euros to the annual cost of paying the mortgage. 95% of mortgages in Spain are variable rate – a much higher proportion than for most other Eurozone economies – so borrowers in Spain will bear the brunt of the rise in Euribor.

Euribor rose in August despite the massive injection of liquidity by the European Central Bank to prevent the subprime mortgage crisis in the US turning into a credit crunch in the Eurozone. A re-pricing of risk and tightening credit markets mean that Euribor can be expected to continue rising.

According to the Bank of Spain, mortgage repayments now eat up 44.8% of gross household income, well above the recommended level of 30%, and the Spanish savings bank ‘Caixa Catalunya’ estimates that average household debt is now 115% of household income, compared to 71% in the year 2000. The organisation of users and consumers (OCU) has warned that the latest increase in mortgage interest rates will “stretch households to the limit.” But mortgage delinquency rates, though on the rise, are still close to historic lows.

Many mortgage analysts expect Euribor to keep rising in the second half of the year, though at a slower rate. However, Pedro Solbes – Spain’s finance minister – is of the opinion that Euribor will soon peak. In the face of rising interest rates, and falling consumption and construction, the government has revised downwards its forecast for GDP growth from 4% to 3.8%

The holiday home market will be the first to feel the pinch from rising mortgage rates. Financially stretched Spanish households will abandon the holiday home, or plans to buy one, before defaulting on the main home. The Spanish are the biggest buyers of holiday homes on popular Spanish coasts, so rising interest rates are bound to have a big impact on the property market in these areas.

Euribor is derived from the Eurozone base rate set by the governing council of the ECB during monthly meetings presided over by Jean Claude Trichet – President of the ECB. The ECB raised base rates from 3.5% to 3.75% in March, and then by a further quarter point to 4% on 6 June, but then left them unchanged in July and August. The ECB was widely expected to raise rates again in September, to 4.25%, but after recent turbulence in the credit markets the bank is now tipped to hold rates at 4% in September.

Story from Spanish Property Insight

The AIPP is conducting a consumer survey and are asking for your help in identifying how the international property market can be improved.

By promoting the highest standards of professionalism in the overseas property industry, the Association of International Property Professionals (AIPP) aims to provide the consumer with confidence, and the industry professionals with a united voice.

The AIPP is a non-profit organisation whose sole aim is to improve the standards of professionalism in the international property market, helping the industry and the public.

The results of the survey will be released in September 2007 and your answers to the following questions will help them achieve that goal:

• Which aspects are most important to you when choosing a country in which to buy a property?
• Which aspects, if any, most worry you about buying property overseas?
• Which aspects would make you feel more secure in buying property overseas?
• What resources do you use to find information on buying property overseas?

Take the 2 minute AIPP Consumer Survey now

Plans to improve the current harbour facilities of Cartagena in south-eastern Spain could lead to increased property values in the region.

Homeoverseas reports that around €1 billion (£675 million) is to be spent by the local authorities on transforming the town’s current harbour into a major port to ensure strong links with the Far East and boost the local economy.

“This is an opportunity that Cartagena, the region and the country as a whole cannot afford to lose. The regional government is going to give all the support possible to this project,” explained Murcian regional president Ramon Luis Valcarcel.

Work on the massive project is set to begin as early as next year and could transform Cartagena into the ideal property hotspot for investors looking to purchase holiday homes or rentals. There is also likely to be a strong increase in visitors to the region due to the new transport links established by the building of the new port.

Story from holidaylettings.co.uk

The cost of a Spanish home has doubled in the past five years.

House prices in Spain have risen at a faster pace than anywhere else in the eurozone over the past five years, outstripping even a strong UK market, figures showed today.

Research by mortgage lender Halifax found the cost of a Spanish home had doubled between 2001 and the end of 2006, leaping by 57% in the past two years alone.

Over the same five-year period, prices in the UK were up 90%, more than double the 40% average across the eurozone as a whole.

Austria and Portugal recorded the lowest price inflation over five years, with prices increasing by 6% and 7% respectively, while in Germany prices fell by 5%, Halifax said. Spain also has a higher percentage of homeowners than any other eurozone nation, with 82% of its inhabitants being owner-occupiers, compared with 55% in the Netherlans and 45% in Germany. In the UK, the owner-occupier rate is 70%.

Despite the 100% increase in prices over the past five years, Spain is not the most expensive eurozone country in which to buy property.

That title goes to Ireland, where the average house price reached £209,300 last year. This compared with an average of £190,900 in the Netherlands, £187,100 in the UK and £150,200 in Spain.

The cheapest properties in the eurozone were in Finland, where the average house price was £92,300.

Tim Crawford, group economist at Halifax, said Ireland’s house prices had been driven by the country’s strong economy, immigration and the creation of a large number of new homes.

He added that prices in Ireland were now on a par with those in the south-east of England, with Dublin as expensive to live in as London.

However, he said it was unlikely that prices in either area would sustain this level of growth over the coming years.

“We are possibly starting to see prices settle in areas where they are higher,” he said.

The low interest rates and economic strength that have driven Spain’s housing market are subsequently pushing prices up in France and Belgium, and Mr Crawford said he expected this trend to continue.

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Spain’s proactive approach to tackling the spreading deserts makes it ideal for long-term property investment.

If you’re keen to live in a country where green issues are at the top of the agenda, you really can’t do better than Spain. The country’s proactive attempts to curb global warming have already led to the central government reducing energy consumption in its own buildings, with a goal of saving at least nine per cent by 2012 and 20 percent by 2016.

So Madrid was the obvious location for the United Nations-sponsored conference examining the threat of the global spread of deserts, which runs until September 14th.

Prince Felipe, heir to the Spanish throne, opened the conference with a speech, saying, “We should never forget that the impact of desertification is not only felt in zones where the problem originates, but also in areas much further away.”

The 12-day gathering of more than 2,000 senior politicians and experts is the eighth conference of the 191 nations that have signed the Convention to Combat Desertification (UNCCD), which was adopted in Paris in June 1994.

Spain has more areas of unspoilt wilderness than any other country in Europe, but these areas need to be protected.

More than one-third of Spain’s surface faces significant risk of desertification, according to the Spanish environment ministry, and Almería is home to Europe’s only desert. The Canary Islands are also considered to be at high-risk of desertification.

The country is well aware of these risks, and Sunseed Desert Technology is a non-profit organisation that has been developing ways to rehabilitate Spain’s desert areas since 1986.

Located in the tiny village of Los Molinos del Rio Aguas, Almería, Sunseed is run chiefly by volunteers who help with environmental research into desert studies, soil rehabilitation, permaculture techniques and sustainable living.

The Madrid conference’s aim is to identify funding priorities and adopt a new ten-year strategy to stem desertification, set measurable objectives and offer a realistic timetable for achieving them.

The country’s ongoing attempts to ensure a greener future means that property investors seeking a sunny, but ecologically-sound location, should consider Spain.

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One of the quieter Canary Islands sees massive growth in number of residents from 1998 to this year.

Popular with watersports fans for decades, it seems that Fuerteventura has also become extremely popular with expats. Back in 1998, the official population of the island was just 49,020 but by the 1st of January 2006 it had risen to 89,680 (figures from Spain’s National Institute of Statistics). Now News Canarias states that the official population from the 1st of January this year is 105,000 – and that’s just the inhabitants who’ve chosen to register officially.

Building is continuing on the island as more new residents are drawn there by the year-round warm weather and average property prices lower than those on Gran Canaria and Tenerife. Corralejo, Caleta de Fuste and Villaverde are among the most popular areas. If you plan to purchase a property here for residential use, make sure that you do not purchase a touristic apartment as these are licensed only for holiday use.

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The National Association of Estate Agents (NAEA) and the Federation of Overseas Property Developers, Agents and Consultants (FOPDAC) have signed a formal agreement this week to merge FOPDAC with the international section of the NAEA.

The new name is to be ‘NAEA International incorporating FOPDAC’. Both the NAEA and FOPDAC are long established in the field of international estate agency, and work to improve the standards of those working in this specialised field. Anyone who has had dealings with overseas estate agents will know how important this is.

The two organisations are both members of the European Confederation of Estate Agents (CEI) and worked together in 2005 to bring about the introduction of a new International Code of Practice, which has since been accepted by the 40,000 estate agent members of the CEI.

‘This is a significant step for both organisations and I am delighted that we are now joining forces in this way,’ said Ian Tonge, chairman of the NAEA International working group.

’Members and consumers will be able to benefit from the combined knowledge and experience of both the NAEA and FOPDAC. Through this partnership we hope to make a further, positive difference in the international property arena.’

’After working for so many years to achieve the goal of both organisations making a positive move towards giving the clients ‘peace of mind’ when purchasing through a registered agent, Geoff Pilgrem the original Founder of FOPDAC in 1973 would be proud of the progress that has been made in the International market place,’ commented Des Rowson, committee member for FOPDAC.

Keith Baker, legal advisor for FOPDAC: said, ‘I have worked with FOPDAC for 30 years but I am keenly looking forward to implementing the ambitious goals being set by the new combined team. This has been a very easy merger to negotiate as it rapidly became apparent how close our philosophies were.’

’This is an important occasion in the history of both organisations as the NAEA and FOPDAC are brought together. We have no doubt that this will prove a highly beneficial union for both consumers and the industry over the years to come,’ added Peter Bolton King, chief executive of the NAEA.

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