Earlier in the day, the Minister visited four British families in Albox whose homes have been threatened with a demolition order as, according to the Junta de Andalucía, they were built illegally. “There are eight British households in that area but probably around 500 homes are affected by this. They are not all British either. Many other Northern European nationalities have been caught up in this problem and, of course, Spanish families too.”
During his visit, Bryant went to the home of John and Muriel Burns. “It is these kinds of people we’re trying to help – the people who dotted the I’s and crossed the T’s when they were buying and went through all the correct channels as they were told to do. The local government had issued licences and then the regional government stepped in, following a court order and said that they should never have done so, thereby making the homes effectively illegal. It is extremely distressing for these families. John and Muriel are in their eighties and they’re worried they will lose everything. It is heart-breaking, really.”

Whilst in Albox, the Minister met with the Mayor, José Navarro García, who towards the end of last year described the proposed demolition of the eight British owned homes as “barbaric.” He said in December: “I believe the Junta de Andalucía has leaned heavily on the Supreme Court to obtain this decision and I cannot understand why. Demolition is a barbaric solution and I do not know who would benefit from it. We will explore every legal possibility to stop this barbarity.”

Bryant says he is now hopeful that the homes of the eight famililes in Albox will be safe but that the problem is widespread. “These are just the tip of the iceberg. But I think the Spanish regional and national governments are now more focused on having these issues resolved,” he said.

Economy
Chris Bryant told SUR in English that finding “real solutions” to property issues, like the ones affecting John and Muriel Burns, would help improve the Spanish economic situation.

“The economy of Spain will not be resuscitated until we have these kinds of things sorted. The Spanish economy is dependent upon tourism and people buying properties. Images of bulldozers going in and demolishing family homes is not going to help,” he said. “There is a lot of work to be done in the housing market here.” Bryant also noted the decline in the number of British tourists to visit Spain, going from 17 million in 2008 to around 11 million in 2009. “We need a combined approach between the local, regional and national authorities to avoid any further problems. We’re hopeful that the appointment of these new people in our consulates in Malaga and Alicante will help coordinate the various governing bodies.”

At a press conference in Malaga, Bryant was joined by the Spanish Secretary of State, Gaspar Zarrías, and Juan Cejas, leader of the Junta de Andalucía’s Housing and Town Planning Department where he said “legal experts would ensure the real estate interests of Brits.”

Zarrías, meanwhile, stressed that the agreement should be viewed as “a preventive information service” to avoid problems as “once these cases enter into the judicial machinery it is more difficult to reach solutions.” The Junta de Andalucía will provide and pay for the extra staff although the British Embassy will be responsible for the material costs.

Communication and votes
Having spent part of his childhood in Madrid and Bilbao, Chris Bryant describes himself as “a Brit who loves Spain” and says he understands why so many British people choose to live in the country. Being able to speak Spanish has also been advantageous. “I think speaking fluent Spanish helps in these kinds of situations too. It helps break down some of the barriers. It just helps everyone reach an understanding more effectively,” he adds. “This is why the civil servants coming to help us in a couple of weeks will be a great help: they speak the language, know the rules and rights and know the system at every level.”

The Minister said that he had heard many opinions and views from British people who reside in Spain during his brief visit and that he and his team “would work hard to make sure things get done.” He was also keen to point out that it is the “obligation of British expats to register themselves at their local Town Hall” and that they should “exercise their right to vote.”

G.P
Chris Bryant MP is the Minister of State for Europe and Parliamentary Under-Secretary of State for Foreign Affairs at the Foreign and Commonwealth Office. He has been the Member of Parliament for Rhondda since 2001 and is the Deputy Leader of the House of Commons.

Chris spent his childhood in Madrid, Bilbao, Cardiff and Cheltenham. He speaks fluent Spanish and describes himself as “a Brit who loves Spain.”

Source: Sur in English

Regards
Andrew Belles

Do you think there are any good investment opportunities in Spanish real estate today?

I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.

So you think there are opportunities in a residential sector because the adjustment has already taken place?

There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.

Has the price of housing and land touched bottom?

House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%. We work with close to 28 property companies that have been restructured, and you see that valuations are down 30% in 2 years, and then banks buy those assets with discounts of 10-15% off valuations.

What’s wrong with the official statistics?

They are based on valuations. One has to look at real property transactions and a survey of developers to see not only their asking prices but how far they are prepared to drop prices to sell.

Do you think there is any residential property that will never sell?

What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrials, parts of Almeria, Murcia and Alicante. There is an overdose of land that will lie in the warehouses of banks for many years. On the other hand, the stock of finished property will be absorbed sooner.

Is there any real demand for housing at the moment?

Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.

How does one get the Spanish property sector to recover?

The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.

Source: Spanish Property Insight

Euribor has now fallen for 13 consecutive months, and is 76% lower than it was a year ago. The graph above illustrates how dramatic the fall in Euribor has been.

Monthly repayments on a typical annually-resetting mortgage (150,000 Euros, 25 years) will drop by around 300 Euros a month, or 4,000Euros a year, to 640 Euros/month.

Significantly lower monthly mortgage repayments have given many borrowers financial breathing space they did not have when Euribor stood at 5.26% in October last year. Estate agents report this is taking some pressure of the property market, by reducing the number of forced sellers. Many more borrowers can now afford to take their homes of the market in the hope of selling when the market recovers.

The average value of new residential mortgages signed in August fell 19% to 11,753 Euros compared to the same time last year. The number of new mortgages signed by 6.6% to 52,482. Fewer, cheaper mortgages put downward pressure on property prices.

The average interest rate on new mortgages in August was 4.3%. Interest rates from banks (4.15%) were better than savings banks or cajas (4.46%).

Many analysts expect Euribor to continue falling until the early part of 2010, further reducing the cost of money to Spanish mortgage borrowers.

Source: Spanish Property Insight

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

I have highlighted a few points that I thought should be clarified and/or corrected below

“Right now there’s clearly some ‘statistical noise’ in the housing market. After a sharp fall, prices stabilise for a while, which can give the impression there’s a pick up underway. But anyone feeling like buying a house right now should take a look at what’s happening in Spain…Why? On the surface, the Spanish property scene doesn’t look too bad. Ministry of Housing figures show just an 8.5% drop over the last 12 months from the mid-2008 peak.”

2 points worth noting on these figures. First, unfortunately the Ministry of Housing statistics have been repeatedly called into question by the Spanish press for its less than reliable figures, as there is a lot of anecdotal information showing a drop higher that 8.5%.

But again this is down to interpretation. The statistics are based on actual completed property transactions. So first you have to take into account the percentage of ‘off-plan’ sales that have been going to completion this year. These properties having been bought (stage payments, etc…) during the ‘boom’ years would have been at higher prices than might be available now. So this is one way how the existing figures have been distorted.

Further more, in many areas of Spain, there has been a ‘tradition’ of under-declaring the sales price to pay less taxes to the Spanish government. But thankfully the Spanish government has been cracking down on this practice over the last few years. But from a statistical point of view it further distorts the figures. For example, you buy a property in 2007 for 200,000€ but at notary it is declared you are buying for 170,000€, with the remainder 30,000€ paid under the table. Now in 2009 you sell for 20% less than you officially bought for. So officially you sell now for 160,000€. When you property is added to the statistics, you have only dropped 5.9%. But the reality is a different matter.

“The independent house price index compiler TINSA reckons average prices are 13% off the top and down 18% on the coast. But the word from developers and estate agents is of falls of up to 30%.”

Yes this is also correct. Except this is the drop of 18% is since 2007 not 2008 as would be assumed from how the article is written. With a drop of 6.2% from 2007 to 2008 and 10.9% from 2008 to 2009 for July year on year.
Now it is worth noting TINSA valuations are generally well regarded, and are even seen by some as pessimistic. In most cases included my own, I expected the valuation to be higher than the agreed upon sales price as I was requesting a mortgage from my bank. But this was not the case for many. And little thought was given to TINSA’s evaluations. Furthermore in the past many other evaluation companies were considered more ‘optimistic’ in their valuations. Case in point at its highest point the value per square metre in 2007 was 2542€. In most cases the price per square metre was selling for closer to 3000€. Of course this is not a general rule, but then the average price for the whole Mediterranean is never going to give a clear figure.

There are other points made in the article that I could pull to pieces, statements not backed up by sources or statements taken out of context. But I think have covered the most salient points for anyone looking or researching property in Spain

For those that want to see the original article: Money Week

Regards
Andrew Belles

Let me just be clear, the new terminal will be open next Easter, construction should be finished at the end of this year, and during January and February of next year a trial will be carried out so that on opening day everything will work ‘perfectly’. This will be followed by the new terminal which should be ready a several months after the Easter opening.

This expansion will almost triple its capacity and will bring its competitiveness into line with other European airports, with enough capacity for the next fifty years and will solidify its position as a major airport in Spain and Europe. The expansion should also allow for access by the new ‘super’ planes developed for those long haul flights making it a connection centre.

The new terminal will be joined to the current ones, generating a total area of 385,000m² (more than double the current 135,000m²) with the capacity to attend to 9,000 passengers per hour, that’s around 30 million travellers a year (again doubling current capacity)with 179 check-in desks and 48 boarding gates, with 7,500 pieces of luggage processed every hour.

The new runway, on completion, will allow the capacity of flights per hour to almost double, from 37 to 72.

Of course, they are not improving only the airport itself, but the surrounding infrastructure with a modern transport interchange with access to buses, taxis, private and rental vehicles and the new railway station for the Malaga-Fuengirola. Additionally two new road links will be added: the south, by way of the A-7 motorway, and the north, by way of the future ring road, which will be joined to the national MA-21 road. Furthermore, two car parks will be opened with space for 3,700 vehicles.

This vast project will not only keep Malaga competitive as a transportation and commercial area, it will also benefit tourism and property prices throughout the Costa del Sol. The Junta de Andalucía has in recent years become quite dependent on British tourists which have made up a sizable percentage of the foreign tourists flying to the Costa del Sol. They seem to have realised this and have over the last year been trying to promote the destination around the world. The new airport should allow for direct flights from most parts of the world, making it easier for Chinese, Russian, etc… tourists to visit.
Furthermore by allowing more direct flights from further a field, the average time its takes people to get to the Costa del Sol should decrease, which will allow more people to benefit (as many British, Irish, etc.. have) of shorter travelling times, thus making a second/holiday home in the sun a more convenient possibility.

News source: Sur in english

Regards
Andrew Belles

Although I will of course keep on blogging, the news section, it is hoped, will become a resource for all news articles being published by reputable sources.

The news section has been up and running for a while, but had required some fine tuning. I intend to link to all articles of interest with a brief summary of what the article is about.

I have also added a link in the Useful Sites section.

Hope you find it useful.

Regards
Andrew Belles

What you probably don’t know is that the latest bill is probably not from the reading of the meter but is an estimate. So you are probably over paying! The government has said that this is not acceptable! If the electricity company is going to send out the bills every month, the metre will need to be read every month!

So if you have already paid, contact Sevillana and complain (reclamacion), and once they read the metre any additional payment you made will be refunded.

Sevilla-Endesa (costa del sol contact)
Tel.:
952 800 792
952 794 845

Regards
Andrew Bellés

First of before we go any further most of you might remember that is was the time.online that told countless brits what a great investment property in Spain was and called out such experts as Ocean Estates, Mac Anthony Realty, etc… to show how you could only make money and you would be a fool to not invest. Of course with all that lovely advertising on the side. And when the Costa del Sol fell out of favour, Dubai, Bulgaria, etc… became the new property hotspots.
Anyway the article starts with the wonderful intro “Ten years ago a new-build apartment near Puerto Banus would have sold in a heartbeat. Now agents struggle to shift them even after hefty reductions”. No, you don’t say??? I’ve spoken to people who bought properties back then for 120.000 Euros (the equivalent anyway as it was pesetas at the time). If they tried to sell that same property now at 290.000 they would have their arm ripped off! And that’s a 10% annual profit (incl. costs)
Buying on the Costa del Sol back then would be like buying in Morocco now, although there won’t be the property boom there as they missed the boat.
The article then refers to developers that had speculated in the market through the building of unaffordable holiday homes, with little infrastructure in the area, and how they are having to slash prices. Again considering how overpriced these properties were and the fact that many of these developers were relying on high commissions to estate agents to sell their stock, is it any wonder that they are having to ‘heavily discount’ now? Or better said they have had to price the properties more realistically now as the easy credit has dried up.
And then you get example of how you can now pick up properties near Marbella and Puerto Banus for 250.000 Euros. A quick search on my website 2 properties within walking distance of Puerto Banus.
Puerto Banus aparmtent 250.000 euros
Puerto Banus Penthouse 225.000 euros
Please note this are simply 2 examples based on a very quick search and they would be open to offers!

Then the article talks about the danger of banks not honouring bank guarantees before mentioning one of their regular advertisers… Looking beyond the blatant advertising, it is worth noting that some buyers have had issues in regards to getting banks to honour their guarantees. Spain’s central bank has recently been enforcing these rules and the vast majority of cases are being sorted out. Unfortunately quite a few buyers are now trying to pull out due to lack of funds for completion, which is not something covered by the bank guarantee. Also what many people did was wait until the completion dates was given on a project and then decide to pull out.

At the end of the day buying a property has not changed. You have a budget, and have an idea of what you want. It’s for us or which ever agency you use to find it, or the next best thing.

Regards
Andrew Belles