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Spanish property tax cut for new builds
Last Friday the Spanish government announced a temporary reductions in the value added tax (IVA), lowering it from eight percent to four percent for any purchase of a new property. The government’s aim is to rekindle Spanish property sales and help reduce Spain’s stock of unsold new homes, which amount to approximately 687.000 properties in Spain, and just over 20.000 in the province of Malaga.
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Expat takes on Danske bank over supposedly fraudulent scheme
Tempted by the offer of a salary for life and an inheritance tax reduction for his two daughters, Euan Armstrong, 73, signed up to an equity release plan in 2004 with Denmark’s biggest bank using his €2 million home in Spain as collateral.
Six years on, Mr Armstrong is forced to live with one of his daughters as he prepares to take on the bank that promised so much yet threatens to leave him penniless.
Spanish property market still weak in June
Home sales in June were the lowest since the property crash began, show the latest figures from the Statistics Institute (INE).
There were 24,699 home sales in June (excluding social housing), down 26pc on the same time last year, below even June 2009, when the crash was thought to be at its nadir. The graph above makes it clear that, after a deceptively promising start, 2011 (in red) is turning out to be the worst year yet.
Compared to June 2007, sales were down 60pc – a teeth-jarring fall by any measure.
Year-to-date, transactions are down 11pc compared to last year, 3pc compared to 2009, and 55pc compared to 2007, as illustrated by this table.
On an annualised basis, sales have fallen in 10 of the last 12 months.
Assuming that prices have fallen by an average of 30pc since 2007, then in value terms (Euros) the market has shrunk by 70pc since then. That means 70pc less money around for everyone who lived off the housing market, town halls in particular.
All this helps explain why many town halls are now in the jaws of a financial crisis: They ramped up their spending and overheads during the boom, assuming it would last for ever, but now the money has dried up and they can’t afford to pay their bills. A 70pc fall in revenues from real estate helps explain why.
Why are transactions still falling? Partly because the credit crunch is still in full swing – in Spain at least – and partly because the abolition of mortgage tax relief at the end of last year brought forward sales that might otherwise have taken place in the first half of this year. So the figures might make the market look worse than it actually is. To find out we will have to wait and see if there is a recovery in the second half of the year.
The following table summarises the key transaction data month-by-month for the last 5 years.
Property sales, Spain down 18.3%, Malaga up 7.8%
The sale of Costa del Sol properties saw an increase of 7.8% in May compared to the same month last year according to Spain’s Institute of National Statistics (INE), with monthly sales standing at 1,931 sales (including VPOs).
Spanish property sales decrease 18.3% in May
The sale of Spanish properties decreased by 18.3% in May compared to the same month last year, with monthly sales standing at 30 797 sales (including VPOs). Most of this drop was due to the sharp decline in new build sales in the Month of May which saw a decline of 22.7%.
Costa del Sol property decrease 5.4% in 2010!
After the recent article on the decrease of new properties on the market in 2010, I thought it would be worthwhile to review the statistics for the province of Malaga and the Costa del Sol.
Spain needs 5 years to sell all new builds on market
By the end of 2010, there were 687,523 new properties looking for buyers on the market, only a slight decrease on a year earlier. Based on current trends, fewer new properties coming on the property market combined with healthier sales last year, it is estimated that it could take between 3 and 5 years to absorb this accumulated stock.
Stock of new properties decreases in 2010
By the end of 2010 the stock of new housing stood at 687,523 properties, a drop of only 0.08% compared to the surplus of 2009, according to the according the the Spanish government . This is the first drop in the level of new build on the market since 2005.
ACCUMULATION OF UNSOLD NEW PROPERTIES
Newly built Spanish properties drop 4.7%
The average price of new housing (non-subsidized) fell 4.7% in the first half of 2011 year on year and 2.3% since December 2010, according to a report by “Sociedad de Tasación”. On average, the price of new properties in the provincial capitals of Spain stand at 2419 euros per square meter in June, with the average 90m2 house valuing at 217,710 euros.
4 years for owners of Aifos
The Aifos owner, Jesús Ruiz Casado could face a prison sentence of four years for failing to return funds paid by buyers for properties on a development in Casares that was never built. Approximately 20 buyers, many of them foreign couples, were never refunded the sums of between 50,000 and 70,000 euros they paid towards properties on the Hacienda Casares development. Aifos is expected to have received more than 1.1 million euros in total. Construction was supposed to start in November 2004 but the development never materialised.
Bank chasing you over your mortgage on your property in Spain
Few clients escape legal action by the bank when it comes to mortgage default. Not even property owners who hand over their keys to the bank and return to their home countries, victims of the financial situation in Spain and with no family or social resources here to fall back on. But the banks have all the time in the world and the law does not prevent them from following up a legal judgement in another country.
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Banks offering pre-crisis terms on Spanish properties
According to a recent newspaper article, Spain’s main banks are once again offering mortgage loans on the same terms as they did before the crisis in an effort to shift their backlog of properties, many of which were seized during that period.
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Non-resident Spanish inheritance tax
For any non-resident Spanish property owner, the article below may be of serious interest as it appears that, at the least, all EU residents will be able to take advantage of all the tax breaks that are currently available to Spanish tax residents in the cases of property inheritance. This may even have a retro-active benefit for anyone who has inherited a property since 2006.
Regards
Andrew
Spanish property valuations March 2011
As a slight change, instead of posting the latest information from TINSA (a highly regarded valuation company) I will now be posting the updates on the valuations by Tasamadrid. They appear to concur with the valuations given by TINSA, except that it goes by post code, thus given us a better break-down of the different areas. Please remember these are still averages and should be treated as a guide only.
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