The Latest Spanish Property News from Kyero.com

Whilst Spanish construction giants, the so-called G14, encompassing household names such as Martinsa-Fadesa, Realia and Reyal Urbis, are sobbing into their cervezas at the slowdown of their industry and plunging share values, holiday home hunters are cracking open the cava as a market slowdown forces developers to think creatively about how to attract buyers. And current chair of the G14, Martinsa-Fadesa, has certainly got its thinking cap on.

Andrew Benitz, Director of Titan Properties, is promoting the largest and fastest selling golf resort in Spain, Martinsa-Fadesa’s Costa Esuri, in the province of Huelva on the Spain-Portugal border. As the Spanish housing market weakens sales there have understandably slowed requiring a strategic rethink from the developer.

Andrew comments, “Martinsa-Fadesa is in a stronger position than many of its compatriots since its creditors have recently shown considerable faith and refinanced its debt holdings favourably. The loan involving 45 Spanish and international banks promises interest-only repayments for three years and Martinsa-Fadesa’s cashflow now has renewed strength. Other developers with liquidity problems have not thus-far been so fortunate and are becoming strangled by falling cash flow, rising costs and no access to new credit. The good news for buyers of Martinsa-Fadesa product is two-fold, their money is safe thanks to the company’s financial backing and secondly the buyer is in the driving seat and entitled to various perks.”

Fernando Martín, Chairman of Martinsa-Fadesa, is no stranger to strategy having been President of defending La Liga champions Real Madrid, and his company is now offering up some sumptuous incentives to investors. Newly completed apartments and townhouses across Costa Esuri now come with an attractive 5% guaranteed rental income for year one, which on an entry level 160,000 euro unit is a healthy 8,000 euros, whilst each year thereafter rentals fall into the hands of a leading provider of self-catering accommodation to the likes of ebookers.com and lastminute.com. Units will be fully furnished and equipped according to stringent health, safety and fire regulations set by international tour operators and, based on Titan Properties’ close relationship with Martinsa-Fadesa since Costa Esuri’s launch, the whole package has been specially negotiated by Titan Properties for the benefit of its clients.

Andrew continues, “Covering 6.5 million square metres of land alongside the picturesque River Guadiana, Costa Esuri has plenty to offer both the investor and holidaymaker. The first of two 18-hole championship standard golf courses designed by José Canales and under Aymerich Golf Management opened in December 2006 to rave reviews and the second will be unveiled later in 2008. A large commercial centre containing four storeys of high street stores, boutiques, restaurants, bars, a bowling alley and Eroski supermarket is well underway and zones have been designated for sporting facilities plus four and five star hotels, the first of which is to be open by the end of 2009. Suddenly Spain makes for a very interesting investment proposition.”

A 5% rental guarantee is well-and-good but for the investment to stack up, not just Costa Esuri but the area as a whole needs to make mid- to long- term sense. The province of Huelva has this covered. Staying within Costa Esuri planning permission has been granted for a freshwater marina along the Guadiana, the only of its kind in Europe. With 1,000 moorings, upon completion around 2010, this marina, together with the golf courses will enable Costa Esuri to rival the likes of Puerto Banús and Vilamoura. Looking at the province as a whole, property prices in Huelva rose by 7.6% in 2007 the best growth performance on coastal Spain; on price/m² beachside or golf-front property is 39% more expensive on the Costa del Sol and 48% more expensive on the Algarve and tourism in Huelva increaseed by 74% between 2001 and 2006 versus 10.1% on the Costa del Sol.

Fully furnished two bedroom apartments within Costa Esuri start from just 160,000 euros with 5% guaranteed rental income for year one. Two bedroom townhouses within the resort start from just 194,000 euros with the same rental guarantee and furnishing package. Costa Esuri is an hour from Seville Airport, only 35 minutes from Faro Airport and closest to Huelva Airport which could be fully operational by 2012.

Full story from www.easier.com

Valencia’s Generalitat regional government has asked the central government in Madrid for permission to introduce regulations enabling it to sell some of the thousands of unsold properties lying empty in the region as VPO or social housing.

VPO, (Vivienda de proteccion official) classed property is offered to first time buyers, or people on relatively low incomes, subsidised by developers and government as way of helping certain sections of the community onto the housing ladder.

Valencia’s regional councillor for housing, José Ramón García Antón, met with national minister for housing Beatriz Corredor, to discuss the proposal, which would initially offer some 10,000 properties under the VPO scheme with price reductions of around €15,000. The subsidised stock would only be available to households with a combined income of under €45,000 per year. Certain VPO projects in Alicante for example are only available to families earning under €20,000 per year.

Reports vary as to the amount of unsold stock on the Spanish market, however according to CB Richard Ellis the figure stands at one million, with 50,000 – 100,000 of those located across Valencia. A recent report published in El Pais supports this and suggested that one third of the 1.8 million properties built in Spain since 2005 remain unsold.

Increase in interest Analysts believe that as more stock languishes on the market, and developers struggle to find investors to take this up, more projects will be reconfigured to accept VPO buyers.

“There are some advantages for VPO projects (Vivienda de proteccion oficial) for developers,” said Charles de Ros Wallace, director general of Spanish-based CAM Bank. “This means that the end buyers are subsidised if they buy a VPO house and therefore we are going to see some developers reconverting certain developments into VPO projects throughout 2008. This will take off, dependent on the price that the government establishes for VPO, and if it is economical for the developer.”

One of Spain’s largest developers, Martinsa-Fadesa, has already taken this step and is offering 47 units in its Costa Esuri project in Ayamonte, Huelva to domestic first time buyers after an approach by the region’s Socialist government.

The arrangement with Ayamonte City Council will offer “advantageous financing conditions” to young professionals under the age of 35 who are on low incomes and residents in the area. Those eligible can rent the property at €450 per month after which time they can buy the property at the same monthly rate fixed for five years.

Full story from OPP (registration required)

Two of every three foreigners who have arrived in Spain in recent years had jobs in their homelands and decided to emigrate in search of a better quality of life, says a survey released by the INE statistics institute.

The 2007 edition of the National Immigrants Survey addressed that subject for the first time and also highlighted the fact that there currently are 2.16 million homes in which at least one adult was born outside Spain.

The fact that one of every four foreigners who have gotten married in the Iberian nation over the past 15 years wed a Spanish citizen also reveals the extent to which Spain - historically an immigrant country - has been socially transformed by the immigration phenomenon.

The purpose of the survey is "to establish a first broad panoramic view of resident migrants", INE said in a statement, adding that it does not seek to estimate the current number of foreign-born people in the country but rather "their structures and behavior."

Spain has experienced a rapid increase in immigration in recent years, due both to a robust economy and the country's geographical and historical ties with regions of the world that have experienced political or economic turmoil, such as North Africa and Latin America.

A total of 39.2 million people lived in Spain in 1995, just 500,000 of whom - or just over 1 percent - were foreign-born.

According to an estimate published in June 2007 by INE, Spain's population currently stands at 45.1 million, 4.48 million - nearly 10 percent - of whom are foreign-born.

The public face of immigration for many has been the masses of African citizens who have crammed into makeshift vessels in a desperate attempt to reach the southern coast of the Iberian peninsula and Spain's Canary Islands.

But the report published Thursday by INE indicates that just 1 percent of all immigrants seeking the "European dream" arrive by that route, compared with the hundreds of thousands of foreigners - above all Latin Americans - who have arrived by plane.

Another notable characteristic of the immigrants who choose Spain as their destination is that they do not travel there via other countries; almost nine of every 10 immigrants who have reached Spanish territory arrived directly from their country of origin.

Meanwhile, another poll on the impact of immigration - which was carried out on behalf of the UNESPA insurance industry group and released Wednesday - revealed that 70 percent of Latin American immigrants who live in Spain intend to stay.

The survey, for which foreigners who have lived in Madrid and the surrounding region for more than two years were interviewed, also showed that this desire to remain in the country exists despite obstacles such as unemployment or low incomes.

Almost 20 percent of those surveyed are unemployed and almost half earn less than 1,000 euros (about 1,570) per month, yet the same proportion of these migrants still send money to their relatives back home.

Forty-four percent of the respondents have a steady job and 26 percent are seasonally employed. Another 11 percent are self-employed, a figure that is three times higher among Asian immigrants.

A further indication of immigrants' desire to remain in Spain is the fact that 37.2 percent are saving for retirement, which is higher than the rate among Spanish citizens. Among migrants, Latin Americans are the most likely to sock away money for the future.

"Latinos are the ones who most (safeguard their future)," the president of UNESPA, Pilar Gonzalez de Frutos said.

Full story from surinenglish.com

Prices are dropping. Spain’s official property price statistics show that property prices continue to rise in Spain. However, everything points towards erroneous statistics and that the fall has begun and the downturn will continue.

The average Spanish house prices rose by 3.8% last year and 0.8% during the last quarter, according to new statistics from the Spanish Department of Housing. However, the evidence shows that the Spanish property price statistics give a false picture of the actual situation. ‘The official property price statistics are based on evaluations given by so-called independent evaluators in connection with the finance or refinance of a property. There is every reason to believe that these figures paint a more positive picture than is called for,’ says Mark Strucklin of spanishpropertyinsight.com

For example, the official Spanish price statistics say that property prices in the town of Fuengirola on the Costa del Sol have experienced a yearly growth of 0.6%. But Erling and Bente Lomsland have not received a single offer on their townhouse in Fuengirola, which was put on the market a year ago for 420,000 euros. The asking price was recently reduced to 390,000 euros but so far this has not helped to generate more interest in the property. ‘There is no doubt that house prices have dropped this past year, and I think that they have to come down still further. The estate agents that we have spoken to have told us that they’re not selling anything, but they are renting a lot of properties,’ says Erling Lomsland who works shifts in the North Sea and wants to sell the townhouse and buy an apartment.

Holger Vestøl, of the Spanish division of Norsk Megling and also sales director for the Spanish real estate company Blue Sky Properties, sells properties along large parts of the Spanish coast line. His main market is Malaga province, which has seen a property growth of 4.2% since last year according to the official Spanish property price statistics.

‘We get daily phone calls from customers who wish to reduce the price of the properties they have for sale. We are also selling properties that cost less today than when we sold them the last time five years ago. There has to be something wrong with the statistics because it is obvious that prices have dropped,’ says Vestøl.

Despite many price reductions, the majority of those with property for sale in Spain are refusing to lower the prices to a level that will ensure them a sale. The sale of existing homes was down 34% in February compared with the previous year, according to Mark Stucklin of spanishpropertyinsight.com. It would seem that buyers are not willing to pay what vendors demand, and vice versa.

The fall in the number of transactions began in the second quarter of 2006 according to Martin Dell of property portal kyero.com, and it would appear that the turning point for the Spanish property market was actually reached two years ago.

Stucklin of spanishpropertyinsight.com feels that property prices in Spain have already dropped significantly. ‘We are all trying to peer through the mist as far as Spanish property prices are concerned, because of the lack of reliable statistics. My best information would be that the average prices have already fallen by 5 – 10% and in some places as much as 20%, particularly for properties in less attractive locations. Attractive properties in popular locations are faring the best.’

The Spanish-based estate agent Holger Vestøl believes that the downturn will continue. ‘It will take at least one to two years before all this is over. It will be a good time to buy property in Spain in one to two years, but it will be up to the individual to choose the right time.’

According to official Spanish property price statistics property prices fell in eight out of thirty-six Spanish holiday towns over the last year. The quality of the statistics is, however, negated in that they are based on evaluations carried out in connection with financing properties, and that there is no general standard for the way that properties are measured. *For example, terraces are calculated as part of the plot, according to spanishpropertyinsight, whereas terraces are not counted at all in Norwegian price statistics, which lowers the price per square metre in Spain compared with Norway.

The Spanish property company Tembo Group is giving a 35% discount on several apartments in a new development in Estepona on the Costa del Sol. Many developers have begun lowering prices dramatically on new holiday homes. According to Mark Stucklin of spanishpropertyinsight.com over half a million new homes are standing empty in Spain. In addition to this, last year saw a record number of new construction projects, meaning that even more new properties will soon be on the market.

‘But many of these will probably remain uncompleted for several years. The seven publicly quoted Spanish construction companies have seen a 73% drop in sales of new properties during the first quarter, and more building projects are being seized by the credit companies,’ says Stucklin.

Danish Kenn Michelsen in the Spanish Tembo Group is also beginning to get a little worried about the sale of apartments in the hotel project Maritim Beach Resort & Suites Estepona. With a guaranteed rent back to the hotel 11 months a year, plus a guaranteed minimum return of 4%, the project is largely dependant on investors. Sales began a year ago and so far 43 out of 166 units have been sold, six months before the hotel opens. A month ago a 35% discount was introduced on several of the apartments with second-best location. An apartment of 50m2, a stone’s throw from the beach but without sea views, costs around 1.2 million Norwegian kroner, down from 1.8 million just a short while ago. ‘We have to adapt to the market and right now it is a buyer’s market. Many investors have gone on to places like Dubai, Morocco and Cap Verde,’ says Michelsen.

Martin Dell of the property portal kyero.com believes that Norwegians hunting for a holiday home in Spain prefer new properties. ‘In many cases new properties are cheaper than existing ones. Several property developers have lowered prices by 25 – 30%, and some by as much as 40%,’ says Dell.

Article by Øystein Krogsrud, Dagens Næringsliv (Norway’s Financial Times)

Urban land prices are starting to fall in Spain as developers who are short of cash are forced to sell in order to make money.

The price of land in Spain fell by 2.7 per cent to €277 per square metre in the last quarter of 2007, according to figures from the ministry of housing. This was a significant drop compared to the same quarter of the previous year.

According to the website Spanish Property Insight (SPI), the price of land fell in some areas of the country more than others. Although in some provinces the drop was as little as one per cent, in others it was much higher. In Alicante prices were down by 33 per cent, Córdoba 25 per cent, Barcelona 15 per cent, and Málaga 13 per cent.

The fall in prices is due to the recent downturn in the Spanish property market as an increasing number of developers are being forced to sell land to raise cash, or face going bankrupt. Around a fifth of Spain's housing has been built in the last 10 years to cope with the increasing demand for homes there from British buyers. However, due to the global credit crunch and the fact investors are now choosing to look at housing markets elsewhere, many new developments are now standing empty and properties are not being sold.

According to SPI, the cost of land can sometimes be up to 30 per cent of the cost of a new home, and in some areas, such as Madrid, as much as 50 per cent.

Although falling land prices should eventually mean developers will have to lower their prices, this is going to take time to happen. At the moment SPI says developers have an estimated stock of 500,000 unsold newly built properties to sell before the fall in land prices will flow through to property buyers.

However, the Euro Residentes website reckons the Ministry of Housing in Spain has ruled out a sharp fall in property prices and has said the housing sector will recover in 2010, when the demand and supply of housing will readjust itself.

Full story from www.homesworldwide.co.uk

After much criticism, and growing pressure from the European Parliament, the government of the Valencian Region has announced its intention to overhaul urban planning laws, including the infamous ‘land grab’ laws that allow developers to expropriate land from private owners.

The decision to “coordinate all the town planning laws and satisfy Europe” was announced last week in Alicante by José Ramón García Antón, Valencia’s minister for public works, transport and town planning, at the end of a conference on the construction sector.

This will be the second time in the space of a few years that the Valencian government has been pressurised into changing its urban planning laws by a tidal wave of criticism, largely from outside the region.

In 2006, the Valencian government replaced the original ‘land grab’ law, known as the Ley Reguladora de la Actividad Urbanística (LRAU), with Valencia’s present town planning law, called the ley Urbanística Valenciana (LUV).

Though a slight improvement, the new law does not stop unscrupulous developers, in cahoots with local politicians, from presenting planning schemes that expropriate land from private owners, in some cases forcing them to contribute hundreds of thousands of Euros to the urbanisation costs. Ironically, the new law also came in for criticism from local developers for being too complex.

Victims of Valencia’s planning laws, many of whom have lost their homes and been financially ruined by greedy local developers and politicians, were forced to take their complaints to Brussels when it became clear that the local administration saw them as nothing more than ungrateful whingers. The European parliament has condemned Spain 3 times since 2003 on this question.

Many of the victims would argue that the worst aspect of Valencia’s town planning law is the right it gives developers to propose planning schemes on land that doesn’t belong to them, forcing affected owners to give up land at a fraction of its true value, and contribute tens of thousands of Euros or more to the costs of urbanising the land lost.

The EU has no jurisdiction over national planning laws, so is powerless to intervene on this front. Instead, the European parliament has attacked the LUV, and the LRAU before it, for violating EU public procurement procedures.

The chances are that any new law introduced by the Valencian government will do the minimum to comply with EU directives on public procurement, whilst allowing the so called ‘land grabs’ to continue.

Full story from spanishpropertyinsight.com

Necessity is the mother of invention, they say, and the property sector is awash in necessity right now. Quite simply, houses are no longer selling on the Costa del Sol and the province of Malaga like hot cakes. The only response is to dream up more imaginative ways of selling properties, and this is what the companies are doing. Now, instead of putting the house on the market and waiting – a very short time, until recently – for a buyer to come along, the company sales departments are putting their heads together and coming up with a wide range of attractive offers, from free gifts to monthly payments and trips abroad. It may be a slow period for builders, but the advertising departments are working round the clock.

The latest sales techniques were unveiled recently at the Property Salon in Madrid (SIMA), and they give us some idea of the lengths to which the builders and promoters will go in their efforts to unload houses on us. Lotteries, gifts, discounts and easy payment facilities were being offered to attract the attention of the buyers at the SIMA fair, and they reflect the state of the market at this time. Property prices are falling all the time, and this is good news for buyers, especially first-time buyers. This is a positive aspect of falling house prices, in a market in which price negotiation and additional incentives played no part in the recent past.

One of the most spectacular offers is that of the Cordoba company Prasa, which proposes to pay a monthly salary to buyers for a period of a year after they have purchased a property. This promotion, which was valid only for the week of the trade fair, consists of a dozen cheques, each corresponding to three per cent of the purchase price of the house in question, to be paid each month to buyers of one of their houses. Company sources said this week that the promotion means a payment of, for example, 800 euros each month for a year to a person who has purchased a house whose monthly mortgage is 1,100 euros. “The only amount remaining to be paid is then 300 euros a month,” says a Prasa spokesperson. The offer was valid for, among others, five promoters selling properties in the city of Malaga, Mijas, Estepona, Chilches and Torremolinos. In spite of the fact that the Malaga market had a high profile in the SIMA fair, through many big national building companies (only Madrid had more houses on sale at the fair), there were relatively few local or regional companies represented at the fair. One of those that were there was Sando, whose most important offer was a discount of up to 20 per cent on houses purchased during the fair. The company was promoting a total of 18 residential developments in such diverse places as Madrid, Andalucía, Valencia and Warsaw. Plans for the future of this company include the building of more than 5,600 houses in Eastern Europe. The strategy used by this company – the offer of attractive discounts for the duration of the fair – was also the most common form of marketing at the SIMA trade fair, even if many of these discounts took the form of monthly gifts, purchase price reductions and loan facilities. The Alcalá 120 company, for example, offered discounts of up to 20,000 euros for two promoters in Madrid, while Afirma proposed the return of 20 per cent of the deposit paid by the buyer.

But the price war currently being carried out in the sector goes a lot further than a trade fair. Many companies are offering bargains everywhere throughout the country. The Lar Group, for example, has launched what it calls its ‘Campaña 6% TAE’, which consists of the return of this amount of money – six per cent of the purchase price of the house – on the handing over of the keys. The total amount must not be more than ten per cent of the value of the house, however. According to the Lar group, the initiative means that in the case of a house valued at 350,000 euros, to give one example, the buyer pays half the amount before receiving the keys, which takes two years, and with an income of 17,304 euros on it over this period, the buyer is, in reality, paying only 332,696 euros for the house in question. The Malaga executive of the Ñ XXI Group, Emilio Jaime Sánchez, says that the key to property marketing these days is to motivate demand, as he puts it. “The company must adapt to the different circumstances as they arise, and the key to success is adapting to these changing circumstances,” he says. For this reason his company has initiated a series of measures aimed at stimulating sales, among them providing rental clients with a first option on the house they are renting, and not paying any deposit when purchasing. The scheme is aimed at people who may have the capacity to pay the monthly mortgage but do not have the savings needed to put a deposit on a house. Sánchez says that the Ñ XXI group has different formulas by which the company guarantees to purchase the client’s old houses, as well as additional incentives on the new house. “This is another incentive we are proposing to buyers, and if anybody buys one of our houses and then decides to sell it again, we buy back the old house as long as the client buys another house from our group,” says Emilio Jaime Sánchez. A spokesperson for another Malaga building company, the Hexa group’s Jesús Cabello, says that his company has had this same policy of guaranteeing re-sale of old houses for some time past. His company goes a step further, he adds, in that it offers the new house fully furnished, while the buyer is consulted on the choice of furniture and fittings before accepting the keys. Meanwhile, the company takes care of the purchase of the old house. Cabello says that another interesting company strategy is helping maintain clients over many years. “We offer our clients and employees a sum of money in cheques that can be spent in the El Corte Inglés department store, which has a comprehensive home furnishings section, if that client introduces us to somebody who then goes ahead and buys one of our houses,” says Cabello.

As far as many experts in the field are concerned, these discount and free gift policies are no more than a reflection of the property market at this time. Quite simply, it is a buyer’s market, and as one well-known Malaga builder comments: “Any buyer can walk into any show-house these days and come out the owner of a new house, because he can bargain the price down to what he is prepared to pay.” In other words, for the first time in many years, the client can lay out his own terms. As far as financial expert Agustín Ciatelo, head of IHS Consulting, is concerned, the important thing is not to frighten buyers away, because, as he says, they are still out there. More and more builders and promoters are turning to companies like his for advice, and the result is what we have today: a wide range of special offers aimed at attracting more clients.

Full story from surinenglish.com

First-time buyers (FTBs) from the UK are increasingly considering investing abroad, an expert has revealed.

Nick Fullerton, managing director of FC Exchange, stated that the housing market in Britain is currently in a state of "turmoil".

This, he said, has led to people who are looking to get on the housing ladder for the first time looking elsewhere.

Mr Fullerton said FTBs do not wish to take a hit in the domestic market and believe that investing abroad offers better growth potential and value for money.

He added that other buyers in the UK are concerned about the plummeting house prices in Britain and would prefer to invest in expanding markets overseas.

As a result, FC Exchange has seen a surge in the amount of enquiries related to purchasing a house abroad.

Mr Fullerton said: "These record figures are encouraging and demonstrate the continuing appetite to invest in overseas property."

According to research by A Place in the Sun magazine, France and Spain are currently the two most popular markets with British property buyers.

Full story from propertyshowrooms.com

Developer San Jose applied for court protection this week against it's creditors. This means that anyone who put down a deposit on an off plan property through San Jose must join the queue of creditors to try and get their money returned.

UK law firm, Irwin Mitchell will hold a meeting to explain the situation, what the options are and what action they propose. The meeting is due to be held as follows:

Sunday 25th May 2008 at 16:00
Meeting room Trident 1 & 2
Holiday Inn
Birmingham Airport
Coventry Road
Birmingham
B26 3QW
England
Tel: +44 870 4009007
Directions

Those wishing to attend should register with Irwin Mitchell in advance:
Irwin Mitchell Abogados
Edificio Singlehome 5ºB-C
Avda Severo Ochoa 28
29603 Marbella
Málaga
Spain
Tel: +34 952 857 630

VERY few regulators emerge from this crisis looking good. The Americans did not see the poison from unregulated mortgage originators seeping into the credit system. The Germans did not spot the huge exposures to off-balance-sheet entities at various Landesbanks, and the Swiss missed the grenades strapped to UBS's investment-banking arm.

Following the Northern Rock affair, the reputation of Britain's Financial Services Authority (FSA) has taken the biggest knock of all the regulators. In Madrid, by contrast, a sense of quiet satisfaction prevails, thanks to two distinctive policies. One helped Spanish banks to avoid the worst of the subprime fallout and the other to prepare for the downside of an economic cycle.

The first was to demand that banks set aside the same amount of capital against assets in off-balance-sheet vehicles as they would against on-balance-sheet assets. That may not have squared with the rules of the outgoing Basel 1 accord, which offered capital relief on off-balance-sheet activities, but it did fit international accounting rules on consolidation. “We did not do anything special,” says Jose María Roldán, the head of banking regulation at the Bank of Spain. “SIVs looked like the business of the bank and did not transfer risk substantially.” The policy also reflected lessons learned during the country's own brush with banking disaster in the 1980s, when banks that looked fine in isolation turned out to be in dire straits when the accounts of parent groups were consolidated.

With no reason to set up SIVs, the Spanish banks did not bother. Other countries could have saved themselves a lot of trouble by taking a similarly rigorous view of consolidation. “In trying to dodge the rules, banks created a second and poorly capitalised banking system,” says Francisco González, chairman and chief executive of BBVA. “The Bank of Spain approach is a simple solution to the problem of too much leverage.”

The second policy does clash with international accounting standards. Since 2000 the Bank of Spain has had something called a “dynamic provisioning” regime, where bank provisions go up when lending is growing quickly. The scheme is based on the difference between banks' specific provisions for identified losses in any given year and a “statistical” provisioning amount that reflects average losses on assets over the whole business cycle. Over the cycle the effect is neutral, but the timing of the provisioning should make the troughs less deep and the peaks less vertiginous. “There is a gap between when risks are taken and when they materialise which needs to be bridged,” says Mr Roldán.

The banks themselves support these rules (although they doubtless moaned when they were introduced). Setters of accounting standards are less keen. In particular, the idea of a statistical provision flies in the face of IAS39, an accounting rule that requires provisions to reflect the specific losses expected on assets.

Clearly the Spanish authorities do not have all the answers. The country's housing market is cooling rapidly after a lending boom which the dynamic-provisioning regime could not prevent. Observers worry about the vulnerability of the country's regional savings banks. The statistical provision, which the Spanish banks calculated using data from two business cycles, is based on the assumption that all cycles are roughly similar, which they plainly are not. Liquidity is drying up: in the years before the crunch Spanish banks had come to rely more on wholesale markets for funding, and many have turned to the European Central Bank for help.

All the same, fellow regulators are now beginning to pay attention to what the Bank of Spain is doing. It would be ironic if the accountants forced Spain to change its tune just when other countries are beginning to hum along with it.

Full story from economist.com

This week Spain celebrated 30 years of democracy since the death of General Franco. Last week, 40 years since the 1968 Eurovision song contest, it was revealed that El Generalisimo rigged the vote to hand victory to Spain, denying Cliff Richard a win with his song 'Congratulations'.

Unfortunately, such official skulduggery has characterised the Spanish property boom since the late 70's. A boom, which according to most sources, is now well and truly over.

This week, the Spanish Ministry of Housing released new property market data for 2007. After quite a bit of investigation, the true slowdown from 2006 to 2007 appears to be between 11% and 16%.

What is frustrating in dealing with the Ministry's data is that it's necessary to strip away several layers of obfuscation in order to arrive at the truth of the matter.

Mark Stuckling's incredulity at a leading Spanish Bank predicting a 2.2% drop in prices in 2008 says it all. There's something missing in official Spain - it's the courage to stand up, honestly appraise the problems and systematically propose workable solutions.

I've said it before - the lack of believable housing market data in Spain is one of the biggest causes of the 'boom to bust' scenario we're suffering from right now. Better informed buyers working from reliable sources of data will stabilise a market and create growth. A lack of such data has caused instability, fear and a suppression of market potential.

Unfortunately, our own house price index - which tracks the advertised prices of housing - isn't much help at the moment. Private sellers, estate agents and developers are not advertising the backstop price that vendors are willing to go to, often because the vendors are prepared to wait for an asking-price sale.

I was interviewed by the Norwegian FT last week on just this problem: Savvy buyers smell opportunity in Spain at the moment - but without first-hand-experience or reliable data to work from, when is the right time to enter the market and at what price? We'll get the article translated when it appears and let you know what they conclude.

On a brighter note, it's refreshing to read of a Spanish judge holding a town hall responsible for planning irregularities. I do hope that justice is served. Speaking of justice, if you've money tied-up with troubled developer, San Jose, make sure you register your interest with Irwin Mitchell as soon as possible.

Sitting outside a beach bar at the weekend - the aroma of fresh sardines on the BBQ, the surf crashing noisily on the pebbles - I found it hard to reconcile that peaceful scene with the turmoil of the Spanish economy.

Spain has a vast natural wealth to offer yet its governments have succeeded in exploiting its resources for short-term gain, rather than cultivating their long-term potential.

What's sad is that Spain's fundamental strengths are as valid now as they ever were - the best climate in mainland Europe, a cosmopolitan and welcoming population and a good transportation and communications infrastructure.

The current property market mess overshadows these facts, but it's a welcome intrusion because the time has come for better financial management and control of the market. I hope that the present government seizes the opportunity to comprehensively clean up Spain's dirty laundry of corruption, inefficiency and bureaucracy left over from Franco's days.

Perhaps they could get started with a phone-call of apology to Cliff Richard?

Martin Dell, Kyero.com

Yesterday it emerged that the sales of Spain’s largest listed developers fell by more than 70% in the first quarter of 2008. Today we read that Caixa Catalunya – one of Spain’s leading savings banks – forecasts that average Spanish property prices will fall by 2.2% in 2008.

2.2% – What planet are they on?

In reality, average prices are already significantly down on last year, perhaps by as much as 10% or more. Just ask any taxi driver, bank manager, ex-real estate agent, or waiter in your local bar. It’s what they call common knowledge. They only people who don’t appear to know are officials at the ministry of housing, and ‘expert’ authors of reports like this one.

At least the report, titled ‘Informe sobre el consumo y la economía familiar’ (Report on consumption and household budgets), recognises that prices might fall more substantially in some areas, for example in Madrid (6.6%), the Valencian Region (5.6%), Galicia (3.4%), Aragon (3.2%), Cantabria (3.1%), and La Rioja (2.5%). The smallest fall in prices is forecast for Murcia, with 0.4%, whilst property prices in Catalonia and Andalusia are predicted to fall by just 1.2%.

We know that the market is plunging, with developers’ sales down 70% plus, overall transactions down by close to 50% in key regions like Catalonia, and yet the best the suits at Caixa Catalunya can come up with is a fall of 2.2%. Suggests to me they don’t know much about economics, and the laws of supply and demand.

Full story from Spanish Property Insight

Buyers at the Trampolin Hills residential golf development in Campos del Rio could suffer “massive losses” as a result of planning irregularities at the resort, a judge has warned.

In a statement on the 12th May, reported in Murcia’s regional paper ‘La verdad’, judge José Miñarro García said properties at Trampolin Hills “appear to have been sold without appropriate administrative licences.” The developer admits that most of the resorts 2,575 properties have already been sold.

The judge condemned the municipal government, run by the socialist party, for turning a blind eye whilst hundreds of properties were sold without all the appropriate planning permissions.

In a little bit of good news for owners at Trampolin Hills, he also stressed that the town hall would have to compensate buyers for any losses resulting from a purchase of illegal property at the resort, not far from the city of Murcia.

“If buyers suffer massive losses, which is hypothetically possible, then the town hall, having allowed the construction and well publicised sale of properties without appropriate planning permission, is clearly responsible for damages,” Miñarro is reported to have ruled.

The ruling is a result of legal action taken by the opposition Popular Party (PP) against the Socialist-run local government, whom they accuse of changing the urban plan for Trampolin Hills without the support of the town council, as required by law. Some socialists are reported to have private business interests in the resort.

The judge also ruled that opposition PP have right to debate and vote on planning decisions relating to Trampolin Hills, and demand a halt to all works until the project has all pertinent permissions.

The judge said this would help to prevent a situation in which demolishing illegal properties at Trampolin Hills was ‘socially and economically’ unviable.

Trampolin Hills has been marketed heavily to British buyers, offering estate agents commissions of close to 20%.

Full story from Spanish Property Insight

Developer San Jose applied for court protection this week against it’s creditors. This means that anyone who put down a deposit on an off plan property through San Jose must join the queue of creditors to try and get their money returned.

This is going to be a long and complicated process with no guarantee of success, but group legal action is now called for to try and recover as much as possible from the developer.

UK law firm, Irwin Mitchell has agreed to hold a meeting next week to explain the situation, what the options are and what action they propose. They have set a provisional date for a meeting in their Brimingham offices on Wednesday 21 May 2008. They need to know how many people are interested and able to attend.

Register your interest by completing this form today. Your details will only be used by Irwin Mitchell lawyers to contact you.

In the meantime you can also see the discussion about this subject on the Eye on Spain forum.

Justin Aldridge, Eye on Spain

The PIMS Index of Property Market Sentiment Falls from 2.2 in March to 1 in May 2008.

In the space of two months the Index of Market Sentiment, published by Property Investment Management Spain, has fallen from 2.2 to 1. This is a drop of over 50% and indicates a significant shift in market sentiment. The most optimistic score is 4 and the most pessimistic score is 0. So the market is considerably more pessimistic now than it was two months ago.

The facts tell us that transactions are down 40% compared with February 2007 and that sales are 60% down compared with September 2007. Prices have come down but they haven’t collapsed. Why not?

One of the reasons is how the government and developers are responding to these conditions. The government has announced tax concessions and other measures to encourage lettings. Developers are taking advantage of these and introducing “rent with an option to buy schemes”. The occupier rents the property with an option to buy at a date in the future at a price which is fixed now. If they take up the option the amount they have paid in rent between now and then is discounted from the purchase price.

This matches the purchaser’s needs with vendor’s needs. The purchaser keeps their options open and feels protected against a total collapse of the market. The developer gets cash now and, very importantly, hasn’t reduced the purchase price. The purchaser keeps the sense that they may not be throwing all their rent money away if they opt into a better market in the future.

There are other techniques which were very apparent at SIMA (the international property fair) which took place in Madrid in April. Headline prices are the same as say summer 2007. But developers have found other ways to reduce the price without it looking like the price is reduced. There are plenty of cars being given away; a proven if unimaginative motivator much favoured by television game shows in Spain. There were other offers too such as getting paid a salary for a year as soon as you sign up.

The most imaginative and cleverest offer is where the developer is offering to discount the property by the amount of down payment: the bigger the down payment, the bigger the discount (with limits). The developer gets what they need which is cash now and the purchaser gets a discount depending on how much they put down. Greed meets fear head on. And most importantly the price stays the same.

The key is in people’s perception. If people think there will be a price collapse this in itself could produce a price collapse. Could it be that the government and developer’s imaginative techniques may stave off the much heralded price collapse in the Spanish property market?

The general impression amongst agents is that there are plenty of buyers out there but they are waiting for prices to come down. We also know that mortgages are available in Spain so long as you are not “sub-prime” i.e. you can genuinely prove an income of 3 or 4 times what you are borrowing and you are able to deposit 10 or 20 percent of the purchase price. Spain remains the favourite location for the British to buy holiday and retirement homes. Perhaps when the market does come back it may come back quite strongly.

The PIMS Index of Property Market Sentiment is published bi-monthly by Property Investment management Spain

Jeff Greensmith of FINCAS direct had some great information about the property market in Catalonia in response to our Spanish Bad Guys, Part 2 article. Here’s his update on the situation in Catalonia:

The lack of coordination between Catastro and Registro de la Propiedad definitely strikes a chord: how many times have Registro staff told me that ‘we don’t have anything to do with the Catastro’, and vice versa. They say it as if they were proud of it!

As a seller of mainly rural properties in Catalonia I regularly get involved in planning questions and still — despite the fact that I speak Catalan and Spanish and have lived here for over 20 years — often find it very hard to get clear, straightforward answers to questions about planning issues. Local councils, central planning authorities, the Catalan environmental department.

To an extent it’s part of Mediterranean culture, the tradition of getting on with your life in spite of local authorities, the nod and a wink to the mayor, the ‘do what you want but we don’t want to know about it’ attitude. Spanish clients instinctively understand it of course, but it’s near impossible to explain to a northern European buyer.

But many Spanish local and government authorities have improved radically over the last 15 years, so let’s hope we’ll begin to see some coordinated improvements in the property sector.

In Catalonia, a new law, the Llei d’Habitatge, came into force on April 9th.

Among other things, it sets out to regulate estate agents:

- Compulsory register (but it hasn’t been set up yet). Agents’ register numbers will have to appear on advertising

- Insurance now required

- Bank guarantee will be required if deposits are retained by the agency and not paid to seller

- Agents must have a signed mandate from the seller for every property they offer, stating price, commission etc along with details of the property.

Apparently the law also aims to set up quotas of lower cost housing for sale, similar to the ‘viviendas protegidas’ but with more control. Hopefully some of the over supply of apartments etc could be converted.

Jeff Greensmith, FINCAS direct

Data recently released by the Spanish Ministry of Housing for 2007 reveals that the market slowed by at least 11% in 2007 compared to the previous year. The total Euro value of property transactions fell from €159 Billion in 2006 to €142 Billion in 2007.

	2005	% +/-	2006	% +/-	2007	% +/-
Q1	€27.3B	+22.9%	€37.4B	+37.2%	€38.9B	+4.0%
Q2	€34.9B	+22.9%	€41.5B	+18.9%	€39.7B	-4.2%
Q3	€31.9B	+23.4	€36.8B	+15.6	€31.9B	-13.5%
Q4	€37.9B	+24.4%	€42.9B	+13.1%	€31.3B	-27.0%
Total	€132B	+23.5%	€159B	+20.3%	€142B	-10.6%

The year-on-year slowdown is actually likely to be closer to 15% as the government figures do not account for cash changing hands as part of a property transaction. Due to a government crackdown, more property deals are now more completely notarised than previously. This has the effect of making current prices appear to have grown - when in fact the growth is due to a greater proportion of the transaction being notarised.

The Government trends are further compromised because they combine sales of newly built properties with those of resales. This means that market trends are obscured because sales of newly built properties today were essentially transacted several years ago - but completed today.

Today's sales of new build properties are a reflection of market activity several years in the past, not an indication of the current health of the market. Finally, a further muddying of the official figures occurs because sales of subsidised housing are often included.

Analysing the volume of non-subsidised resale property transactions is the best indication of longer term property market trends in Spain.

The number of resale transactions fell from 532,838 in 2006 to 403,642 in 2007 - a 24% decrease year-on-year. What escapes many analysts is that this isn't a new trend. The number of transactions have been declining steadily since Q2 2006, with Q4 2007 showing a hefty 41% decrease in just 12 months.

	2005	% +/-	2006	% +/-	2007	% +/-
Q1	125,717	+4.5%	136,363	+8.5%	122,087	-10.5%
Q2	148,922	+5.1%	145,289	-2.4%	116,508	-19.8%
Q3	122,405	-1.9%	117,109	-4.3%	85,044	-27.4%
Q4	151,585	+2.8%	132,071	-12.9%	77,996	-40.9%
Total	550,634	+2.7%	532,838	-3.2%	403,642	-24.2%

If we compare the sales volume of new build properties, we see a very different picture because it lags the resales trend by at least 18 months.

The 2007 new build figures below show a similar trend to the 2006 resales figures - and are clearly on the decline.

	2005	% +/-	2006	% +/-	2007	% +/-
Q1	60,950	+4.6%	86,358	+41.7%	89,712	+3.9%
Q2	80,216	+13.3%	94,333	+17.6%	93,733	-0.6%
Q3	82,842	+25.2	93,081	+12.4	86,836	-6.7%
Q4	82,052	+13.6%	103,384	+26.0%	90,068	-12.9%
Total	306,060	+14.4%	377,156	+23.2%	360,349	-4.5%

Compare these two sets of numbers to the official market index from the Spanish government. Below, they add in subsidised housing and present their index of the market trend.

	2006	2007
Q1	+11.8%	+7.2%
Q2	+10.6%	+5.8%
Q3	+9.8	+5.3%
Q4	+9.1%	+4.9%
Total	+10.3%	+5.8%

The Government line until quite recently has been that price growth was slowing down but that prices increased in 2007. In reality the volume of resales has fallen by 24%, the volume of new builds by 5% - and house prices have definitely not increased to compensate for this overall decrease in volume. Overall the number of property transactions is down from 909,994 in 2006 to 763,991 in 2007 - a decrease of 16%.

With such a marked slowdown in the Spanish property market, the question everyone asks is "Why aren't we seeing house prices falling by 20-30%?" The broad answer is that only 'distressed sellers' are willing to negotiate aggressively on price at the moment.

In the category of 'distressed' we find individuals who must sell for whatever reason and developers who need to service their bank debt. These two categories do not constitute the entire market by any means - and it is for that reason that asking prices have not fallen across the board.

The property market in Spain is a buyers market currently IF the seller needs to sell. Many sellers are maintaining their asking prices and are happy to wait until the market bounces back.

Download the updated and translated data from the Spanish Ministry of Housing

• Average house prices
• Number of sales
• Value of sales

Martin Dell, Kyero.com

Last week I asked Who are the bad guys in Spain? This week, two news articles provide the answer.

The tedious account of a meeting in Planning Abuse in Almeria reveals a partial list of things wrong with the property market in Spain:

• No regulated steps for conveyancing
• No registration, supervision or compulsory insurance for estate agents
• No obligatory public information regarding planning approval
• No record of planning applications at the Land Registry Office
• No coordination between the Catastro and Land Registry Office
• No independent environmental protection

Hmm, that's quite a list of fundamental problems isn't it? They're not limited to Almeria either - this is how the property market operates throughout Spain.

Neither is the list complete - the councillor of Mojacar who made these points conveniently omitted the fact that town councils routinely ignore regional building regulations in order to profit from the taxes they charge on new construction.

Think of Valencia land grabs, Marbella demolitions and, the new-kid on the block, coastal demolitions.

When you combine a 20-year building boom with a broken system for building and registering property - guess what happens?

If you ran your bank account, home or business with such abandon, would you be surprised to find yourself in a mess?

Bad guy No.1: The Spanish government for allowing this to get so bad and looking the other way while they profited from the building boom.

Speaking of the government, in Real Estate Market Must Correct Itself we read the Minister for Tax and Economy, Pedro Solbes saying that he is against doing anything to halt the adjustment of 'the excesses' of the construction industry.

Responding for the construction industry, the President of the Promoters' and Constructors in Spain, APCE, Guillermo Chicote, said that the government is 'fighting pneumonia with cough drops' and that the problem was so acute, it cannot be solved by a little speech.

Bad guy No.2: The constructors for plunging Spain into the current situation of oversupply - and now taking no responsibility for the situation at all.

Solbes thinks that 'normality' will return to the market by 2010 - which sounds about right to me. I just hope that, during the intervening period, they get their act together and fix the broken system of buying a home in Spain.

It's not all doom and gloom though. Back in October last year, I wondered whether there wasn't a socially responsible solution to the problem of new-build oversupply. In particular, I wondered if it made sense to absorb some of these properties into the stock of subsidised housing.

Last week, the Spanish newspaper Expansion, as reported by Idealista ran this article:

"The government is studying whether freehold dwellings in stock can be sold under the state-subsidised scheme. The government could help developers by transforming part of the stock of half a million unsold freehold homes into state-subsidised housing. The reconversion plan could be decisive for absorbing the glut in supply."

Yep, I think that would work to the benefit of all.

I think Solbes is starting off in the right direction by refusing to pour money into subsidising a fundamentally broken system but the next step needs to be to fix the system itself.

If you had a leaky bucket, it would make sense to first stop pouring water into it, and second, to fix the holes or replace it with a new one. I hope that Mr Solbes agrees.

Martin Dell, Kyero.com

Minister for Tax and the Economy, Pedro Solbes, told the Economy and Tax Commission in Congress that he is against intervention to halt the adjustment in the market.

Solbes, has said that he is against doing anything to halt the adjustment of ‘the excesses’ of the construction industry which had been seen over recent years.

Earlier in the week the Minister admitted that the slow-down in the sector had been far quicker than he had expected, but his comments today before the Economy and Tax Commission in Congress show that he thinks the market needs to correct itself, so that investment in residential property ‘can return to normal levels of growth’. He said that the economy would return to growth levels of 3% in the year 2010.

It means Solbes has dismissed a request from the Banks and Savings Banks Associations which had called on the Government to use the Pensions Fund to help finance the real estate and construction crisis. He said that a budgetary deficit would have to be assumed given the economic slowdown.

Solbes also told the Economy and Tax Commission in Congress that the cabinet was going to reorder how the financial system and sector is supervised in Spain. He said that a ‘double control’ model already existed in other countries and that such a system here would see supervision divided between the Bank of Spain and the CNMV, The National Commission for Market Values, with the Bank checking on solvency levels and the CNMV checking on company behaviour.

The PP spokesman on the Commission, Cristóbal Montoro, had said there was ‘nothing new under the son’ from the Minister.

The statement by the Minister for Tax and the Economy, Pedro Solbes, that the construction sector in Spain needs to ride out a needed correction has unsurprisingly not been welcomed by the companies and promoters in the sector. The real estate promoters have called for a better diagnosis as to what is going on and why, and have called on the Minister to make fewer ‘frivolous’ speeches. The President of the Promoters’ and Constructors in Spain, APCE, Guillermo Chicote, has said that the government is ‘fighting pneumonia with cough drops’ and should look out for the bankruptcies which would be arriving ‘like figs in September’. Chicote said the problem was so acute, it cannot be solved by a little speech.

Full story from TypicallySpanish.com

The Canary Islands offer spectacular views thanks to the small size of each island and their volcanic, mountainous terrain.

Imagine the view from the coast of one island – looking out over the sea to another.

Corralejo is on the southernmost tip of Fuerteventura. Two miles north-east lies the tiny island of Isla de Lobos and six miles further on is the island of Lanzarote.

If you lived in Corralejo, you’d see views like this

The Dunas Park development is situated just outside Corralejo and, aside from offering incredible views, might be just as interesting as an investment.

Offering 100% financing, guaranteed rental income for two years, two weeks personal usage each year and free car rental, Dunas Park appeals to the investor as well as the holidaymaker in you.

Dunas Park offers superbly priced lofts, apartments, penthouses, townhouses and semi-detached villas in a privileged location, front-line to the famous dunes national park and just 3 minutes from one of Europe’s´s very finest beaches.

More information from Your Key to Spain

The average price of a flat in London is worth the same as two Spanish villas, according to new figures.

According to A Place in the Sun Live, a typical London apartment costs almost £304,000. This means Londoners may want to consider moving abroad top get more for their money.

For the same amount of money, a property could get two homes in Spain. For example, a three-bedroom, two-bathroom villa on the Costa Blanca, half way between Alicante and Murcia, costs an average of £146,000.

Meanwhile, a one-bedroom apartment in Almeria, to the eats of Marbella and Malaga, can be bought for £163,000. As well as being near the beach, it is also in close proximity to local golf courses.

In addition, both Spanish properties could feature a communal swimming pool.

According to Holiday-Rentals, almost a third of European properties owned by UK-based buyers are in located in Spain.

Story from masainternational.com

Owners of rental accommodation in Spain are set to benefit from the launch of new flights from the UK.

LTE International Airways will begin offering flights to Norwich International Airport from Alicante, Palma and Barcelona in July.

This is a significant development for consumers who live in the Norfolk region, as it means Spain is now far more accessible.

As a result, it is likely that the new destinations will attract an increased number of visitors this year, thereby boosting its rental market.

Commenting on the new flights, Richard Jenner of Norwich Airport said he is "delighted" to welcome LTE to the facility.

Speaking to the Norwich Evening News, he remarked: "Norwich is the only UK airport they are going to be flying from and they want to be the airline for Norwich when it comes to flying to Spain."

This comes after Reuters has cited official figures showing that during the first quarter of the year, Spain attracted 10.6 million holidaymakers.

Full story from propertyshowrooms.com

On the 3rd May last, a meeting to discuss planning abuse problems in Almeria was held at the Best Hotel in Marina de la Torre, Mojacar , which almost 400 people attended.

The meeting was chaired by Lennox Napier of the political party Cuidadanos Europeos de Mojacar, and was organised with their assistance. The head of this political group and Councillor of Mojacar, Mr. Angel Medina, said that Spain should be kept as a favoured destination for foreign investments and was a good place in which to live, despite the problems which had arisen and which should be remedied.

With respect to the problems, Mr Medina mentioned a number of measures which should be taken, including: the establishment of a legal protocol (a set of regulated steps) for conveyancing; estate agents to be registered, supervised and insured; that the publicity and public consultation for plans be made obligatory and this be implemented as soon as possible; that the land registry should be relied upon to show the real estate and planning situation on a particular property; that the catastro should be tied in with the land registry as soon as possible; that a commission should be set up to consider the current planning problems and to make recommendations, of which the administration and associations should be a party; and that there be independent agencies to oversee the protection of the environment and human rights.

Mr & Mrs Prior were invited and spoke. Readers will recall the demolition of their house – before the very eyes of this unfortunate couple, which has had great repercussion with the media outside Spain. They explained that, at the moment, no compensation for them was in sight. Bob Preston, President of Abusos Urbanisticos Almanzora No, an association trying to fight against perceived planning abuse in the Almanzora Valley in Almeria where thousands of homes are under threat also spoke and complained that, despite various indications from the various administrations, few concrete steps had been taken to legalise the homes involved.

During the speeches Mr Svoboda, of Abusos Urbanisticos No in Valencia, who has been fighting against planning abuse for many years, and whose association has thousands of members, urged people to group together to fight for their common interests to prevent planning abuses. Mention was made of a new association which was being set up to cover the Levante Almeriense (the western coastal part of Almeria) which would be linked to Mr Svoboda´s association and would work together with other similar associations, and eventually form part of a national federation of like-minded Associations.

This new, fledgling association is to be called the AULAN (“Abusos Urbanísticos Levante Almeriense No”). Members to be of this association have indicated that the association is to be independent of political parties, though they are grateful for the support the political party Ciudadanos Europeos appears to be currently giving to the aims of the new association.

It has been stated that the purpose of the association can be summed up in one phrase: to strive for the protection of human rights within the ambit of the real-estate and planning fields, preventing abuses.

It has also been stated that the association will seek to inform its members of planning changes – a bit like an early warning system so that its members will know what changes are afoot and are not surprised with the bulldozer turning up on their doorstep. In addition, it is considered that by people grouping together they can press the administration for solutions to current and possible future problems.

Apart from this, concrete steps have already been discussed at political level and with other associations to seek to remedy the problems which have arisen and the members to be are pleased that these ideas appear to have some support.

It is thought that situations like that experienced by Mr & Mrs Prior must not be allowed to happen again, and full backing is expressed for Mr & Mrs Prior by the members to be of the association.

Concern is expressed that the plight of Mr & Mrs Prior has had a wide coverage outside Spain – one of the main reasons the British are reluctant to invest in Spain, due to the perceived lack of legal security - but that the Spanish media at a national level has failed to inform on what has transpired.

A meeting is to be held shortly to formally set up the association, elect members etc. In addition, at this meeting a talk will be given on the planning issues relating to this area. Both English and Spanish living in this part of Almeria are welcome to join. The time and place is to be advised.

Full story at spanishpropertyinsight

Britons are heading for the Spanish island of Lanzarote in record numbers.

Figures released from the Spanish airport operators, AENA and Cabildo de Lanzarote, show that the number of UK visitors to the resort rose by 8.7% during the first three months of the year.

While an early Easter will have bumped up the numbers, tourism from the UK increased 16.7% during the traditionally quieter months of January and February.

According to ASOLAN, the islands leading hoteliers’ association, the influx is benefiting investors in private rental accommodation, with self-catering apartments achieving occupancy levels of 84.19% during the first two months of 2008.

The surge in tourism is firing the island’s property market, with property portal, Lanzarote Guidebook, reporting over 1,000 enquiries regarding property for sale on the island in the first quarter of this year.

However, prospective overseas investors are being cautious with their cash. The majority were seeking low cost studios and apartments in Lanzarote’s main resorts and 83% of enquiries were for properties costing less than €300,000.

The Spanish mortgage market is becoming increasingly attractive to prospective British investors, as the credit crisis has left UK lenders strapped for cash and lending at high rates.

However, anyone taking out a Spanish mortgage needs to be mindful of the fact that funding a mortgage in euros from an income paid in sterling has its drawbacks at the moment, as the euro shows little sign of falling to pre-credit crunch levels against sterling and the US dollar.

Story from www.lanzaroteguidebook.com

Remember last week we reported on an article entitled 40% Discounts in Catalunya?

We made contact with the developers in question but they're swamped with enquiries at the moment - so there's no immediate prospect of those properties appearing on Kyero.com. If you're interested in learning more, these are their contact details - why not send them an email for more info?

Valentín Oliveras - Director General
Associació Corporativa d'Empresaris Immobiliaris
info@acdei.org
+34 933 624 988
www.acdei.org

The reason I mention the Catalunya deal again because it stands in stark contrast to two of our articles this week. In APCE Adopt G14 Tactics, we see yet another group of developers attempting to flex their political muscles.

In effect they're saying to the government: "We'll reduce prices, if you soften the blow for us. And don't forget the impact on the economy if you fail to do so."

Perhaps they themselves have forgotten that they've been making healthy profits for at least a decade in one of the longest property booms in modern Europe? Maybe they suppose the the construction industry has such a squeaky-clean image and reputation that their press releases are received as if straight from the oracle?

In either case, the Spanish government are not playing ball. Unfortunately, I think this is more as a result of stubbornness than any kind of master plan. Their own proposals, outlined in Financial Incentives to Invest in Spain, for the most part smack of too little, too late.

Good news for residents of Catral in Alicante in Costa Blanca to End Building Stress. Elsewhere, however, the government is still pursuing the demolition of properties built too close to the coast - mostly without offering compensation to those affected.

While I applaud them taking some action - this isn't really helping anyone. The constructors and town halls involved have already taken the profit from these properties and aren't being held responsible for their demolition in any way - it's the unsuspecting owners who are suffering.

Just what do the government imagine this will achieve except a lot of suffering and resentment? Hardly the tactics of a long term strategy to revive the Spanish property market.

One of the largest Spanish property portals, Idealista.com is now issuing a weekly news roundup from the Spanish press - translated into English. We'll also feature their most relevant stories but, if you want to see them all, you can subscribe here.

Finally, the notion of an offshore pension seems like a fine idea to me and should please those planning to move to sunnier climes when they retire. Don't forget to check out the new range of articles and guides from Taxcafe on this and other tax-related matters.

Martin Dell, Kyero.com

Catral's town hall states that 1,300 illegal properties in the municipality will no longer be demolished.

The municipality of Catral is one of the most popular places for Brits to own a second home or to relocate to on the Costa Blanca.

However, this fact means it has also attracted the attention of unscrupulous developers over the last few years, and now the area has more than its fair share of illegal buildings. As a result, the local town council have been making plans to resolve the problem. While they are unable to help the owners of homes located within El Hondo Natural Park, those in other parts of the countryside will not be demolished, which is a relief for owners.

Instead, in an interview with Costa Blanca News, mayor Aurelio David Albero and town planning councillor Antonio Bellido revealed that the owners of the illegal properties will be expected to assist with legalising their homes by paying to have it incorporated onto a new town plan that will reclassify their plots from rural land into land for development. This will cost up to €7 for every square metre of land that’s been built on, from the houses themselves to swimming pools.

Groups of properties will then be transformed into urbanisations, with residents contributing towards the costs of providing infrastructure for their homes, as well as street lighting and sewerage, and the builders will also be expected to pay their share.

Dave Jones at Costa Blanca News says, “Once the urbanisations have been consolidated, residents will be able to apply for habitation certificates and contract mains water and electricity services, as well as having their rubbish collected.”

The homeowners will then have all the amenities of a legal urbanisation, and can put the stress of the previous months behind them.

Full story from www.homesworldwide.co.uk

Expats who are as fed up with Britain's pension regime as they are with the weather can now take their funds with them and never have to buy an annuity thanks to new rules on overseas pensions.

Many of the 400,000 Britons who move abroad each year can now pack their pensions too and take their funds as cash within five years. And with research from Scottish Widows showing that two-thirds of higher-rate taxpayers are planning to up sticks to sunnier climes when they retire and this figure is set to grow.

Expats can now say goodbye to compulsory purchase of annuities and high taxes on their pensions by getting on board with what some financial experts are calling the next big thing in retirement savings – offshore pensions.

This month the Isle of Man introduced new rules for its pensions that sound like a wish list for anyone choking on UK restrictions: no obligation to buy an annuity, higher tax-free lump-sums, the freedom to invest in residential property and inheritance tax at less than one-tenth of that here.

The new Manx pensions are the latest dish on a mouth-watering menu of offshore pensions. Financial experts point out that jurisdictions such as Singapore, the Republic of Ireland and Hong Kong are even more liberal in what they will let you do with your pension, allowing you to get your hands on all the cash once you have been out of the UK for five years.

"Anyone planning to retire abroad or move overseas for at least five years should look very closely at offshore pensions as this is a serious opportunity to save a large amount of tax," says Steve Travis, a former member of HM Revenue & Customs' overseas division who now works as a cross-border pension adviser for independent financial adviser The Fry Group.

To make the most of the tax advantages of moving your pension abroad you have to move your fund to a Qualifying Registered Overseas Pension Scheme (QROPS), a form of pension introduced two years ago. Once in a QROPS scheme, your cash is no longer subject to HMRC rules, although the pension provider must report your dealings with it to the Revenue for the next five years.

After that there is no reporting requirement, and if you are still not living in the UK your entire fund can be taken as cash.

Anyone moving abroad needs to make sure it makes sense to switch into a QROPS scheme for the country that is to be their new home. Professional advice is essential because the evaluation is a triangular process involving tax rules in the UK, the country where the QROPS pension scheme is based and the country where you plan to live.

While the QROPS scheme will free you from UK tax, you may be taxed in the country in which it is based and in your new country of residency.

"There are many people who have already moved abroad who have left their pensions in the UK who should revisit their arrangements to see if they are paying too much tax," says Mike Lightfoot, the former marketing executive of the Isle of Man's pension regulator and now managing director of IOMA Horizons, a pension company.

The new Isle of Man rules make their QROPS pensions significantly more flexible than their UK counterparts. Unlike the UK, there is no requirement to buy an annuity at age 75, tax-free cash is set at 30 per cent rather than 25 per cent and funds can invest in residential property, an idea that was floated over here two years ago and then dropped.

What is more, the IHT position is more attractive on funds held over there too. If you die in income drawdown before 75 in the UK' IHT is charged on the fund at 35 per cent in the Isle of Man it is just 7.5 per cent across the board.

"Many people who are in drawdown at the present are in a position where they simply want to hand their funds over to their family. For them there is no comparison between an IHT rate of 35 and the Isle of Man's 7.5 per cent," says Richard Jacobs, director of Richard Jacobs Pension and Trustee Services, an IFA.

Singapore QROPS pensions can be even more attractive, with no IHT at all, and zero local income tax on drawings, although these plans are more expensive, running up to 6 per cent of fund value in some cases.

Isle of Man pensions charge income tax at 18 per cent, which will be taken account of in your country of residence provided it has a double taxation treaty with the Isle of Man – most EU states do. But you also need to consider what the local tax rates are in the country to which you are moving.

France, for example, is not a great place to be taxed on your pension, because tax-free cash is not an option so you will be taxed on your lump sum as income. Taking tax-free cash before you go makes sense if you are retiring to live there.

Local income taxes in Spain and Italy can leave some people worse off, depending on their situation, although the IHT savings and access to cash after five years could make QROPS plans worthwhile in the long run. Portugal has a generally lower rate of income tax while anyone retiring to Cyprus will save thousands as it charges only 5 per cent income tax on pensions.

"For the super-rich or those with several homes it is possible to become a fiscal nomad and not be taxed anywhere," says Travis. "However, the Revenue is making it harder and harder to manage that. But for those that don't, QROPS transfers can still be very exciting."

Full story from www.telegraph.co.uk

The promoters and builders’ association of spain (APCE) showed willingness to make sacrifices and lower housing prices if the government gives them help and adopts their suggestions for reactivating the real estate market.

Among their requests is the creation of a new category of housing somewhere between de-regulated and subsidised, more financial aid for buyers, financing for companies and expansion of the deductions for second homes destined for use as rentals.

They reminded the government that the sale of properties has fallen 60% and that they have about 500,000 homes unsold, which means that if the crisis continues the government will have to be prepared for more unemployed and payment of their compensation.

Original story from Publico.es (in Spanish), translation by Idealista.com

The Spanish Instituto Nacional de Estadistica (INE), or National Statistics Institute, has published the findings of its research into the Spanish property market and revealed that property transfers across the country fell by 14.1% y-o-y in February and 9.1% on January’s figures. In terms of total transactions, or ‘merchanting’ as the report refers to it, they also fell across February by some 20.6%.

A total of 213,538 property transfers by acquisition title took place in March 2008, which breaks down at 123,757 sales, 50,561 ‘others’, 31,182 properties were inherited, 5,681 were donated to friends or family and 2,357 were exchanged.

Of all the property sales in the month of February, 26,923 were for new property (down 11.1% y-o-y) and 28,539 were for resale – down a massive 33.8% y-o-y. The report’s figures also revealed that the gap between resale and new property transactions was closing fast. In February 2007 there was an approximate bias of 12,000 properties in favour of resales compared to just 1,616 in February 2008.

The exchange of property recorded the biggest decline in February (-27.6%), while donations of properties rose 9.38% m-o-m.

Some 88.7%, or 109,712 of all sales transactions were for properties classed as urban, while 11.3% (14,045) were listed as rustic. The number of sales of rustic properties fell 23.2% y-o-y, while sales of urban property also fell 20.3% y-o-y. Under the category of urban property, sales transactions of dwellings fell by 24.4% y-o-y and 10.2% m-o-m.

INE figures revealed that 92.6% or 51,343 of transfers of property by the way of sales in February were for ‘free’ or private housing – a fall of 23.6% y-o-y. Protected or social housing sales transactions accounted for just 4,119 of total transfers in February this year – a sharp fall of 33.7% y-o-y.

The Andalucian region accounted for the biggest number of property transfers and actual sales of properties at 37,025 and 23,724 respectively. Other regions recording large numbers of property transfers were: Valencia (30,450), Cataluna (25,815), Madrid (22,657), Castilla y Leon (17,106) and Castilla-La Mancha (13,668).

In terms of the number of total property transfers per 100,000 inhabitants, the autonomous community of Castilla-La Mancha (873) was the most active in February this year, followed by Rioja (La) (859), Castilla y Leon (820), Aragon (794), Valencia (771), Cantabria (731) and Murcia (670). The least active region across the board was Melilla, with only 69 property transfers in total throughout February 2008.

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