fbpx
Property Search

Since 2012, property sales have been rising steadily in the Balearic Islands of Mallorca, Ibiza, Menorca and Formentera. In 2012 annual sales were just under 8,000 and in 2017 they were just under 16,000. However, 2018 tells a very different story: the year-on-year figures in May were 45% down and another 18% in June. On the other hand, the other parts of Spain popular with overseas buyers have seen an increase in the number of sales, so what has happened in the popular islands?

According to real estate agents operating in this market who spoke with Spanish Property Insight’s Mark Stücklin, the Balearics, which have a particular appeal to upmarket buyers, have enjoyed the longest and strongest recovery in property sales since the Spanish market turned around. However, that couldn’t last forever and it was inevitable that there would be a slow down at some point. One of the causes of this downturn are the restrictions that create a shortage of land to build on, and as they are islands, there really is no place left to go for developers.

Spokespersons from the major real estate agencies, the building contractors and developers all have a view on what is happening in the region.

For example, Marc Pritchard, Sales & Marketing Director of Taylor Wimpey said, “Much of the declining sales rate is actually attributable to a significant shortage of available properties at affordable prices on the islands,” but added, “demand is still strong and Taylor Wimpey has seen reservations go up by 25% in 2018.” His view is that the market is still strong, but looks weaker because of supply problems.”

Lone Schaefer of Kelosa Selected Properties in Ibiza said, “I think it’s probably a blend of factors including a shortage of homes that people want or can afford, the holiday-rental restrictions turning off some buyers, but some segments completely unaffected, such as the large villas and country estates.”

In Mallorca, Alastair Kinloch, RICS surveyor and head of Property Works remarked that “only premium properties are shifting easily and those seen as ‘development opportunities.” He also believes that prices may have risen too steeply in the last couple of years and more competitive pricing is needed.

It would therefore appear that the depressing sales figures for 2018 are not a reflection of demand for this successful Spanish market – supply simply can’t keep up with it in the sectors below the most expensive properties.

Money Corp

A British newspaper has recently published a story about a retired couple who lost their retirement home on Spain’s Costa Blanca and who have had to wait six years for the UK’s Court of Appeal to rule that they will be compensated for the loss of the property and £300,000 they had spent on taking legal action.

The sad story of Stewart and Linda Forrester is a reminder to all buyers looking at properties abroad that independent legal advice is a priority. The couple, who had saved hard to enjoy later life in Spain, bought the property through a Atlas International Property Services, a UK-based agent for developers Tecnologia Urbanista. Atlas, now in liquidation, told buyers it was a ‘one-stop-shop’ that would handle every aspect of the sale, including the services of Spanish lawyer Miguel Angel Aroca Seiquer, who was supposed to ensure they got the title deeds for the apartment.

After nine years of enjoying the apartment near Alicante and spending a significant amount of money on home improvements, the couple returned to the apartment to find the foundations had collapsed causing irreparable damage. The developers offered them another property, which they accepted.

But that wasn’t the end of the story. They discovered from neighbours in the same apartment block that mortgages had been taken out on the properties, even though the Forresters and others had bought the properties outright. The lawyer Seiquer told them not to worry, as they would have the title deeds soon. Instead, they discovered the property could be repossessed at any time. So, they took the decision to voluntarily give the apartment back to the bank.

Their legal battle against the developers, Atlas and the lawyer, in which seven other couples and two other people joined them, started in 2012 and has only finished in 2018 when the Court of Appeal in London upheld that the lawyer had been negligent. Lord Justice David Richards said Seiquer failed in his duty to advise the buyers about the risk of paying final instalments on their flats without ensuring that they would get mortgage-free title to the properties. Seiquer failed to tell buyers that the transactions were not guaranteed by banks, as required by Spanish law. And he neglected to advise them not to part with their cash until the developer could prove it had mortgage-free title to the flats.

The majority of developers, agents and lawyers are reputable, but there will always be some that act unethically. So, if you are buying a home overseas, get your own lawyer rather than one suggested by developers or agents, then you can be sure that your legal representative is taking care of your best interests, not somebody else’s.

Money Corp

Mark Stücklin, the knowledgeable founder of Spanish Property Insight, has highlighted an impending problem for investors buying property in Spain via the vehicle of an international company.

Until now, this has been a normal state of affairs. Wealthy investors set up an international company structure to buy properties in order to avoid tax, but it seems the Spanish tax authorities have plans to look into this and keep an eye on it. As Stücklin says, “it’s a ticking time bomb.”

Tax specialists Del Canto Chambers explained that the typical set up, which proved very popular from the 1970s to the early 2000s, usually consisted of, “International company structures, with some owned by double or triple vehicles involving a Spanish company belonging to a foreign company and, in many cases, a Trust on top.” The firm, which is based in both Madrid and London, believe that there are somewhere in the region of 5,000 properties in Spain, privately owned and using this investment structure.

Of course, it isn’t cheap to set up such a company structure, so the tax gains have to ‘vale la pena’ (worth the pain) as the Spanish say. They have been used to minimise tax payable to Spain and to make it easier to change the details of ownership and avoid inheritance tax. As you might expect, the properties owned under these company structures tend to be valued in the millions rather than a couple of hundred thousand.

Now Spain, like many of its neighbours, is taking a cool look at tax avoidance schemes, especially since its public finances are under pressure, and pensioners are marching in the streets for a better deal. Del Canto thinks that international company structures owning property have got a target on their back, and the taxation specialists are encouraging caution, because in their words, the Spanish are “high-handed and difficult to deal with.”

The report in Spanish Property Insight also suggests that the Costa del Sol is the first place the tax inspectors will go to “shoot first and ask questions later.” It is recommended that if you have a property under a company structure that you get advice about making sure you are tax compliant. Be prepared before the taxman starts asking questions – it is the best route to survival.

Money Corp

Do you like beaches, or lying by a swimming pool? Do you enjoy being surrounded by stunning scenery and historic buildings? Or are you a lover of good wines and fresh food produce? These are all good reasons to consider retiring to Spain and here are eight of the reasons we’d give for choosing Spain as the place to buy a retirement or holiday home.

  1. A lower cost of living
  2. Your money really can go further here. Spain has the lowest cost of living in Western Europe.
  3. Great healthcare
  4. The World Health Organisation puts Spain’s healthcare system in the Top 10 worldwide, plus there are plenty of private clinics in addition to the public hospitals.
  5. It’s a diverse country
  6. Spain is one of the largest countries in Europe in terms of its land mass and that also means that it has a wildly diverse landscape. There is something for everyone here: from the seaside to the mountains to vibrant cities, you’re sure to find a place that strikes a chord with you.

  7. Great travel hub
  8. It’s pretty easy to get anywhere else in Europe, as well as other parts of the world, when you live in Spain, and travelling within the country is simple as well thanks to its great train service and its motorways.
  9. A choice of climates
  10. Like the scenery, Spain also offers a variety of climates. The sun seekers gravitate to the south and the eastern Costas, but if you prefer something a bit cooler, there’s always Spain’s beautiful north.
  11. It’s filled with culture
  12. Spain’s historical past has been well preserved in its architecture and cultural events. It is packed to the brim with places to explore from north to south, including the majestic Alhambra palace, the Camino de Santiago, Toledo and Segovia, just to mention a very small handful of what you will find here.
  13. Great wines
  14. Sadly, Spain has not marketed its wine to the same extent as the French and Italians, therefore many expats have only heard of ‘rioja’. Spain produces an enormous number of wines that can easily compete with those of its nearest neighbours and spending time here will give you an opportunity to discover them.

  15. Great food and friendly people
  16. Spain’s cuisine is not limited to paella; there are many more dishes to try that all use local ingredients. And on top of that, the Spanish people are known for their generous hospitality, friendliness and respect for people from other countries. Which Spanish region would you choose to live in? At Umuzee we cover most Spanish regions and have some spectacular properties for you to look at. Just do a few searches in the various Spanish regions on our site and you’ll see what we mean!

Money Corp

Overseas buyers who placed deposits on off-plan properties in Spain during the boom years of 1998 to 2008 now have an opportunity to recover some of their losses.

Finally, a ruling by the Spanish Supreme Court in 2015 is being acted upon and it means that financial institutions will have to refund deposits made for off-plan properties.

During the years 1995 – 2008, numerous foreign buyers, some 60,000 of them Irish citizens, put down large deposits on off-plan properties. However, as the property market took a dive in 2008, a majority of the developers were declared bankrupt.

When this happened, property developers, or builders, were required under law to place the deposits in a special bank account and provide a bank guarantee to buyers. The ‘special’ bank was supposedly obliged to ensure all this was in place. However, what actually happened was that the bankrupt developers couldn’t return deposits, and the banks declined to return the money as well.

The 60,000 Irish buyers, for example, lost their deposits and never took possession of the properties they had paid deposits on. But, the good news is that overseas buyers are now starting to force the banks to repay the deposits and follow the Supreme Court ruling.

Claims for refunds are being won

A number of Spanish law firms have already successfully won claims, but as yet the numbers are low, perhaps because few foreign buyers are aware that they can file a legal claim to have their deposit refunded. And, although the Courts ruled that deposits should be refunded, there is still no automatic right to reimbursement.

Therefore, legal counsel is required. Foreign buyers who lost deposits when the market went bust should find a Spanish lawyer who is expert in these types of claims, and at the moment, Spanish banks are facing something of  a tsunami of claims, as mortgage holders ask for ‘floor clause’ and mortgage set-up fee refunds.

In the spirit of “nothing ventured, nothing gained”, this could be the moment off-plan buyers of the boom period have been waiting for: they might get their deposits back and be able to reinvest in a market that is booming once again.

Money Corp

Spain’s parador hotels are an invaluable part of its hospitality industry. These are luxury hotels housed in former castles, palaces, convents, monasteries and an intriguing range of other historic buildings. Andalucía is blessed with some of the best examples of paradors and has 16 spread across the region.

The parador concept

The concept of the parador hotel dates back to 1910 when the Spanish government chose the Marquis de la Vega Inclán to devise a Spanish hotel chain that would enhance Spain’s international reputation. The first of the current 93 Spanish paradors was El Parador de Gredos, in the mountains near Avila. This stunning building, surrounded by pine forests and rivers, with panoramic views over the valley, is a prime example of why the Spanish parador became such a successful concept.

During the 1920s and early 1930s the number of paradors increased quite rapidly as the Royal Tourism Commission enthusiastically scoured the country for suitable properties, preferably in areas of natural beauty.

The post-Civil War expansion

The Spanish Civil War halted the venture, but in 1945 one of the most sought-after paradors opened in Andalucía: the San Francisco convent in the grounds of the world famous Alhambra palace. The success of this Granada parador prompted the Tourism Commission to open another in the Gibralfaro of Málaga.

The 1960s saw a great growth spurt in parador openings across Spain and by 1991, the government set up Paradores de Turismo de España S.A. to run them all. It is the only hotel chain to be exclusively owned and run by the Spanish state.

Themed parador routes

Visitors and local residents may be interested to discover that there are themed parador routes lasting between three to seven days. For example, if you’re interested in Moorish culture and Spanish history there is a Culture route that takes you through Andalucía. If you prefer the Nature route you will travel through the Costa de la Luz to the Picos de Europa. Wine lovers can enjoy the paradors of the main wine regions including Rioja, Navarra, Ribera del Duero and Rueda. The spiritually inclined may take the Pilgrimage route that includes the road to Santiago de Compostela and other monasteries or convents.

A trip to Ronda

And if you are in the Marbella area of the Costa del Sol, there is a parador in nearby Ronda, a town that is worth a visit for many other reasons, including its famous bullring. Regardless of the reason you visit this town, don’t miss a visit to the Ronda parador, even if it is just for a drink on the terrace where you can take in the fabulous views across the Tajo gorge.

Money Corp

Open WhatsApp chat
1
Hello, how can we help?
We usually respond very quickly (if not immediately) :)

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close