On a happy note the Costa del Sol real estate sector is gradually starting to rid itself of its unsold stock that has been dampening the local property market.

While reviewing the information from the Ministry of Development, in 2010, the homes left without a buyer was reduced by 5.4%. This is the first fall since the beginning of the current crisis and contrasts quite dramatically with 2009, when there was an increase of 7.5% properties without buyers.

Leaving aside percentages for a moment, by December 31st 2010, there were still 21,443 unsold properties on the market. The equivalent of 3.12% of all unsold properties in Spain. This ranks it about 10th in Spain for the province with the most unsold properties. But only make up 2.03% of all properties in the province, below the national average of 2.7%

In fact Malaga has performed substantially better that the national figure (0.08% decrease) and far better than the figure for Andalucía (1.18% decrease). The rate of construction has been steadily declining with the 2010 figures being similar to the 2009, but the sales of new property are recovering and although this year has not started as positively as the last, we at least have seen a definite pick up since April and expect that this will be reflected in the end of years statistics.

Regards
Andrew Bellés

The bosses behind the double golf course scheme took online magazine el Observador to court over a series of articles on the case over the last few years.

Company JM Legion Espanola claimed that the environmental website and its owner Juan Area deliberately wrote defamatory and damaging articles about the 800-home scheme, that sits in Unesco-protected virgin woodland, near Ronda.

But the judge at Malaga’s court number four threw out the case for the second time, saying that the website had no case to answer for.

The developers had previously sued up to a dozen opponents to the scheme, including three expatriates for seven million euros each for daring to speak out against the scheme.

In a string of cases they accused the campaigners of “slander, coercion, intimidation and threats.”

One of those sued, writer Alastair Boyd, aka Lord Kilmarnock, who died last year, merely told the Olive Press that he believed that golf courses were “not sustainable”.

All of the cases have been thrown out of court or archived.

Source: Olive Press

It should be noted that although there are signs of improvement, the market is still 19.5% down year on year when 24,000 new properties were sold in September 2008.

According to the general secretary of the G-14 this improvement has been made possible due to the efforts being made by developers to reduce sales prices and by banks offering better mortgage deals and these reduced prices.

If this pattern continues over the coming months and important corner will be turned in the property market as the stock of new homes will start to decrease. I’m sure many developers will sigh with relief at this prospect.

Source: El Mundo

Regards
Andrew Belles

Sounds great doesn’t it? You’d never guess from this glowing description that the Banana Beach development was built illegally and has been condemned to demolition. Despite this, the properties are being advertised on websites targeting UK buyers.

Banana Beach is one of three holiday home schemes excluded from an initiative to stop a decade-long dispute over the legality of many developments in Marbella. This spring the town’s new mayor, Angeles Muñoz – who has vowed to end years of actual or alleged corruption involving former Marbella council chiefs and developers – announced that 18,000 “illegal” homes in the area would be given retrospective building licences, making them legal. But she said three schemes, including Banana Beach, would not be retrospectively licensed and would have to be demolished, probably next year.

Yet spanishpropertyworld.com, the website quoted above, still advertises flats at Banana Beach from €259,888 (£243,300). The website – which does not publish its telephone number – makes no reference to the demolition threat and has not answered Cash’s repeated emails on the subject.

A property portal, esmoz.com, is advertising all sizes of apartments at Banana Beach for sale, but has also failed to answer enquiries about the scheme. It describes Banana Beach as “a beautiful, luxury development of apartments right on the beach-front in Marbella. There are extensive leisure facilities and, of course, spectacular sea views”.

The agency Interealty, which is selling Banana Beach flats through esmoz.com, has also declined to respond to telephone and email enquiries about the ads.

A spokesman for the Marbella authorities says the mayor wanted to license retrospectively all illegal homes but this has been prevented by regional and national governments. One reason may be that, unlike most other schemes, Banana Beach, built in 1998, is only 100 metres from the sea and breaks an earlier development law that prevents homes being constructed so close to the coast.

Hundreds of existing owners at Banana Beach, many of them Britons, face their homes being demolished, with no compensation offered.

Russell Ellis and his wife, Lynn, from Sidmouth in Devon, own a two-bedroom apartment in the scheme. They paid €117,000 for it in 2003 as a retirement haven; they used an independent Spanish lawyer and saw for themselves documents issued by Marbella council apparently confirming the legality of the land and building work. “We knew of risks buying in Spain so we were taking no chances,” says Russell, a businessman.

After enjoying two summers in their holiday home they were told in 2005 that the entire Banana Beach complex was built illegally. The documents they had seen were part of a deal by corrupt council officials, some of whom are now in jail. Similar bad news was given to almost 20,000 owners in other schemes.

“For four years I’ve been writing to solicitors, councillors and officials in Marbella and Madrid. No one replies. No one puts anything in writing. It’s as if everything and everyone is corrupt and no one wants to commit to doing anything,” says Russell.

Although 20,000 homeowners have been left in limbo, the Marbella mayor’s attempts to re-plan the town and draw a line beneath the illegal building controversy are lauded by many property industry specialists.

“The investigations into corruption should serve the town well,” says Rhona Hutchinson, of Integrated Relocation Spain, a buying agency. “No longer will [building] licences be so easy to obtain. Lawyers, notaries and mortgage providers will no doubt make it their business to dig deep when conducting searches.”

All this has taken its toll on property prices in Marbella. Villas for the super-rich remain expensive but more modest homes have fared particularly badly.

“The worst affected sector is that of apartments and townhouses under €600,000, of which there’s a vast over-supply,” Hutchinson says. “Prices have dropped by up to 30%, with isolated sales at even greater reductions.”

Barbara Wood, of The Property Finders, another buying agency, says: “The planning mess has been hugely damaging to the market in Marbella. If a cash buyer can find a serious seller, then there’s every possibility of securing a purchase at 30% to 40% less than it would have been at 2007 prices.”

Both Wood and Hutchinson believe the mayor is sincere in her attempt to end corruption in the local council. That is little consolation to Russell and Lynn Ellis, who have not visited their Banana Beach flat for two years and have no desire to return before it is demolished, which they say might happen next year.

“You hear of so many scams and illegal events in the Spanish property market,” says Russell. “The EU has criticised Spain for its ‘land grabs’, buyers get stung by developers who do not build their homes and fail to return deposits, and developments like ours are declared illegal after we buy them. Yet no one in authority in Spain appears to do anything to end these activities.

“We don’t want to go back there again. We’ve had enough.”

Have you been affected by the judgment on “illegal” homes in Marbella? Email cash@observer.co.uk or write to Cash, The Observer, Kings Place, 90 York Way, London N1 9GU
Origina article: Observer.co.uk

At the end of all this track of tears, the bankruptcy proceeding is requiring more money and the perspective to recover something seems each time more unlikely. Is it worth getting involved in the Bankruptcy?

First problem appears to be a new Legal Fee from your Lawyer. When approaching your lawyer your first question will be: Do I have any chance to get back my money? It is more than natural to ask it, but it is a tricky question for the lawyer. The lawyer will have to face a double dilemma:

If he tells you that nothing can be done and that the best option is to give up, he will be responsible if other creditors,, that would have filed the credit, recover any monies. If he tells you that the perspectives are good he would lie. What do they do? They recommend you to file the credit in spite of the fact there is little hope of getting back a Euro.

It seems nonsense but at this point nobody knows if it is worth the action to file the credit. The unique information that the lawyers have are those news telling that there is a debt of more than 1000M Euros, being the assets of the company less than a fourth of the said monies. They also know how difficult it is to search for Aifos’ goods. On the other hand if the number of creditors giving up their credits is high, the chance for those who will file the credit will become higher.

Lawyers in Spain follow the Official Legal Bar Fee’s. According to these fees a bankruptcy proceeding is charged as a standard proceeding, therefore a percentage around 8-9% is applied over the monies at stake. In this case credit against the debtor. These fees are official but for guidance only, if there is an express agreement stating otherwise, lawyers are allowed to reduce their fees.

Do you really need a lawyer to file the credit? Formally you do not. The filing of the credit does not require by law the representation of a lawyer and a court agent. In fact, the law it is quite vague about its content. The communication should state; name of the creditor, amount of the credit, alleged qualification for the credit, and the original documents justifying its origin. The bankrupted had to communicate a list of creditors to the court while applying for the bankruptcy. Putting together this list with the credits that had been communicated by the creditors, the judicial administrators will issue a creditor’s list.

The filing of the credit and the formal appearance in front of the court represented by a lawyer and a court agent will have to be done in two separate documents and are independent actions. The filing of the credit is limited to the 30th of September, later you will be able to communicate your credit but it will be qualified as subordinate credit, the end of the queue. On the other hand you can designate a lawyer and a court agent to participate at the process whenever you want.

Therefore, what is the aim of using a lawyer? The filing of the credit is more difficult than it seems. You have to argue a qualification for your credit, you have to keep clear that you have a credit; (it is not the same to be pending to complete a purchase than to be involved in a judicial procedure against the developer for the refund of the monies, or to hold a promissory note against AIFOS).

It is recommendable that a lawyer will check the nature of your credit, its amount, interests and the documents to be attached. But it is one thing to communicate the credit and another to participate in the bankruptcy process. To do so, you need to be represented by a lawyer and a court agent, otherwise you will not have any communication from the court regarding the running of the process, you will not receive the judicial administrators report, you will not be able to chase any judicial decision about your credit or your contract and you will probably get lost at the creditor’s meeting at the end of the process.

The bankruptcy process is a very long process, usually years, very complex, and with a enormous amount of documentation to be analyzed, received and sent. If the process finishes with an agreement to pay, it will include a reduction and a deferred of the debt. A survey for years will be needed. Also the liquidation of the assets of the company and its distribution will require attending more creditor’s meetings as well as lots of working hours.

Moreover the Bankruptcy Act is relatively new, and there are a lot of uncertainties still pending to be solved by the High Court. Therefore it is not a “cushy” job for the lawyer. Even in the case that your lawyer will make the effort to reduce his fees, court agents do not usually bargain their official fees.

Finally to decide whether you should intervene actively in the process or whether you should give up. The main point is to analyze your credit from a financial point of view. It is recommended to participate, if you are in one of the following categories:

1º If you have a bank guarantee even if it has expired.

2º If you are pending to complete a property bought years ago and almost finished and the price is still attractive.

3º If you have a court resolution in your favor or you are already involved in a judicial process.

Antonio García
Senior Lawyer
Abogado
ELS International Lawyers

Tel: (+34) 952 663 638
Fax: (+34) 952 477 953
Mob: (+34) 670 226 961
Email: antoniog@elslegal.com
Web: ELS Lawyers

Edificio Astigi I,
Bajo, Local 2 y 3,
C/Alberto Morgenstern,
29640 Fuengirola,
MALAGA. España.

First of all, what evidence is there the market has touched bottom?

1. Spanish property prices are bottoming out, suggesting that the market is approaching a corner, according to the latest report from Tinsa, an appraisal company. The problem is, do you believe this data? It smells fishy.

2. According to Pedro Pérez, president of the G-14 group of Spain’s biggest developers, new sales contracts (pre-sales) stabilised in the second quarter, after 2 years of continuous falls.

Pre-sales “could have touched bottom” says Pérez, but he also concedes that sales are still feeble.

That said Metrovacesa, one of Spain’s biggest developers, and a member of the G-14, reports pre-sales up 82% in the first 6 months of this year compared to the same period last year. Good news? Yes, but in revenue terms results were almost the same as last year’s low, thanks to declining prices.

Other developers in the G14 report that sales are being made (which, in itself, is a big improvement on last year), mainly thanks to discounting.

3. The collapse in Spanish property sales appears to be running out of steam, according to the latest monthly sales figures from the National Institute of Statistics (INE). There were 33,694 home sales in July (not including social housing), the biggest monthly sales figure this year, and only 19.6% lower than the same time last year.

And according to figures from the Ministry of Housing, home sales in the second quarter were 8% higher than in the first, as the market display signs of life. “The impression we have of the property market is one of paralysis, but in the last 12 months almost half a million homes have been sold,” Corredor is quoted as saying.

Corredor also argues that, thanks to lower property prices and lower interest rates, housing affordability has improved dramatically in the last year, meaning that people can now go ahead and buy “tranquilamente”, which I would translate as “with no worries”. Housing affordability has improved from 40% of gross household income in the second quarter of last year to 31% now, according to figures from the Bank of Spain, reported in the Spanish press. “With low interest rates and mortgages that allow them to live comfortably, without stress at the end of the month, families can now go ahead and buy a home without any worries,” was how Corredor put it (my translation).

Premature optimism

But The Spanish Mortgage Association (AHE) says it’s “still too soon to talk of a recovery” in a new report just released.

Whilst noting a recent upturn in sales, which it attributes to improving housing affordability driven by lower interest rates , the report worries that the improvement in affordability may run out of steam, as interest rates are now almost as low as they can go. That means, looking forward, greater housing affordability will have to come from a “prolongation in the adjustment in prices” and an economic recovery that creates jobs and lifts consumer confidence.

But right now, Spain’s economic recovery is still just a twinkle in Prime Minister Zapatero’s eye.

Original article

As is typical with most socialists this system will work on a sliding scale and will of course penalise those that earn more. From 2011 if you earn 17,000 or less a year you will be entitled to mortgage relief. Over 17,000€ it will be on a sliding scale and once you reach 24,000€, no relief for you!

But why implement this in 2011, instead of now? Like other nations? Well the reasoning seems to be that by implementing it in 2011, it will motivate buyers of primary residence to maybe not wait to see if the market drops further, but instead purchase now. If it works the idea is to help clear up the new/unsold property, estimated at nearly 1 million properties, found throughout Spain.

And in the short term this might even work. My issue with this though, is that it will be hitting the Spain’s main engine of growth, the middle classes. The rich, will not be affected and the working classes will not benefit as unless the household earns approximately 17,000€ or more, they will not be able to afford to purchase a property anyway!
So who else wins or loses under this scheme? Well banks are definitely going to benefit, as they will be giving out the mortgages. Developers in the short term will also benefit as they will be able to shift a lot of their unsold/new stock. Although with the increasing amount of properties that developers have been handing over to the banks to clear their debts until recently, the banks will also be winning via the sale of properties. And in the long term developers could possibly lose out from all those who are buying their main residences. But let us be honest, developers are going to lose out in the future regardless as their current business model for the residential market (mass building) is dead and buried.

In the governments defence though, they claim this is a ‘progressive’ policy and in a way it is. Via a range of studies it has been shown that home owner improves a child’s performance at school. Home ownership also makes you a ‘stakeholder’ in the community. The idea being you as a property owner will take a more active interest in your surroundings. But as with most studies, the methodology and results are open to interpretation.
In either case, many here in Spain feel that Zapatero has chosen political expediency over long term economic performance. Either way the main opposition party (partido Popular) have confirmed that they will reverse this plan if they are elected.

Regards
Andrew Belles

First let us have a look at planning approvals. According to the statistics, planning approval is 58.1% with only 252,916 approvals in 2008. Still a high figure by most standards, but believe it or not, this is Spain’s biggest fall on record, not surprising considering the last property boom was the largest in Spanish history, with the largest building boom, etc…
On a positive note for those involved or reliant on the residential building sector, VPOs (subsidised housing) rose by 3.6%.

Now let us review property sales. According to the information I’ve managed to find, the Spanish property market shrank 29% in 2008. What that means in is that there were 561,500 property sales in 2008 compared to 788,500 properties in 2007.

Of the 561,000 property sales, 296,500 were for newly built properties (a 13% drop) while 265,000 were for resales (41% drop).

Over the last quarter of 2008 there were a total of 113,300 sales, with new builds at 64,500 and resales at 48,800.

Now although the figures are not good, how can a shrinking market be good? What I do see as a good sign, is that even with the financial crisis last year and all the turmoil surrounding it, properties were still being bought and sold.

What is interesting from the statistics is that looking figures for 2008, newly properties made up over 50% of all the sales. Believe it or not this is not surprising. Many of these sales would have been on properties that had been purchase in 2007/6/5 that are now only going to completion. This year we should start to see newly built properties make up a lower percentage of the total.

So obviously properties have been sold in Spain in the last year, but as you can imagine at reduced prices. Although of course unique properties or those that cannot be easily reproduced (location, quality, etc…) are holding their prices a lot better than many of the mass built properties found in some areas.

Regards
Andrew Belles

Unlike the previous one regarding bank guarantees this petition is aimed at a larger range of grievances regarding off-plan purchases, such as no habitation licence/LFO, No bank guarantee, no build, court appeal, lawyers holding on to funds after being ‘fired’ , developer double-selling property, etc…

Also unlike the previous petition, this one is to be presented to the British Government in the hope that they will, as part of the EU, defend the rights of their citizens.

So if you have a complaint against the development where you purchased or maybe the lawyer that was recommended by said developer, please click on the link below.

SPANISH PROPERTY SCANDAL PETITION

Regards
Andrew Belles

It appears that 2 suppliers who are owed just under 400,000 Euros by Aifos, asked the courts in Malaga to put the company into administration, and the court has agreed to start proceedings.

If the courts decide to put Aifos into administration, people that have bought Aifos off-plan properties that still have to complete will have to the growing list of creditors trying to get their money back from Aifos.
In a previous article (How the mighty have fallen) Gestión de Obras y Reformas started proceedings against Aifos, but did not supply enough evidence to the courts

If you have bought an Aifos property, contact you lawyer now. As an unsolicited creditor you will not be given priority in regards to returning of funds, so the sooner you start, the better you chances will be in at least getting you original investment back.

On a more positive note to you creditors, Aifos owns several hotels in Marbella, these assets would be sold to help pay all outstanding debts.

If anyone who reads this is has bought an Aifos off-plan and is trying to get their money back please leave a comment to help others in a similar situation.

Good Luck
Andrew Belles

UPDATE ARTICLE: Taking AIFOS to court

It appears that Gestión de Obras y Reformas SL, one of the developer’s suppliers and creditors, started bankruptcy proceedings against Aifos within the last few days in a court in Malaga. Considering the timing, I would guess that the bankruptcy proceedings have started due to the recent failure of the Spanish developer Tremon.

To date, the company is reported to have 850 million Euros of debt, of which Banco Popular is its largest creditor, reportedly owed 200 million Euros, followed closely by Banco Pastor at 150 million Euros.

This could not have happened to a nicer developer. Based in Marbella, Aifos is notorious for illegal building projects, many of which still have not been resolved, and has been repeatedly accused of unethical conduct by many of its clients.
The owner of Aifos, Jesus Ruiz Casado and his MD were arrested in 2006 over the suspicions of bribing municipal authorities.

Many of its clients have also been kept in financial limbo. Buyers are still waiting on properties up to 7 years after they made stage payment and have little to show for it. These are the people that need help now, and with luck it is hoped that there will be a way for them to recover the monies they put down so long ago. If you have bought/buying an Aifos property, contact your lawyer and get them to keep track of proceedings as there will only be a limited period to make the claim.

Regards
Andrew Bellés