Costa del Sol Property Blog

In what we are seeing as quite a positive move, the Spanish government has recently passed a law to help stimulate the property rental market by making the eviction process much easier and simpler for landlords. Until now, the rental market for Spanish property has always been quite anaemic due to the lack of protection afforded to landlords, with one of the main issues being the length and difficulty of removing non-paying tenants. But it appears this is to change.

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The number of homes sold in Malaga in the second quarter of 2011 reached a total of 3,464 transactions, representing a fall of 35% compared to the second quarter of 2010 according to data published by the Ministry of Public Works. The fourth largest fall by province in Andalusia

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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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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%.

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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.

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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

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Investment in Spanish property by foreign buyers has risen in the first trimestre of 2011 to 1.13 billion euros, which represents a surge of 28.7% year on year. This marks a return to foreign investment in the real estate sector, which has not been seen since 2008.

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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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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

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A recent court ruling in Spain has offered a lifeline to overseas property buyers fighting to get back “lost” deposits from the country’s banks.
As investors continue to battle to get back deposits paid on non-existent overseas homes, a Cantabrian judge has ruled that a bank (Caja Cantabria) responsible for protecting a client’s funds, failed in its duty.

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To the rest of the world it became known as the subprime mortgage, but in Spain it is remembered as the “welcome mortgage.” It was specially designed for immigrants in 2005, at the height of the property boom, by Spanish mortgage brokers such as CreditServices. With nothing more than a three-month work record in Spain, these companies offered new arrivals to Spain mortgage loans that covered 120 percent of the value of a property. All the costs, fees and commissions would be covered by the loan, and the buyer would become a Spanish homeowner without having put down so much as a cent. The loans were organized through US companies, none of which had any physical presence in Spain, preferring to use fronts such as CreditServices instead.
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The situation is so severe that the government recently appointed a special overseas property advisor to help deal with it and to better understand the problems of those involved.

As a result, contentious issues such as illegal properties which do not have correct permits, cases where off-plan developments have not been built as specified and the length of time and cost involved in resolving property disputes were recently raised by the British ambassador to Spain with the Andalucian regional government and the Minister for Public Works and Housing.
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Investors bought off-the-plan apartments in a proposed development called Estepona Beach and Country Club, 30km west of Marbella.

In some cases, the prospective owners – many of whom were from Northern Ireland – put down an £85,000 deposit for their Spanish properties.

However, the land still belonged to its original owner and the complex was never built.

An investigation is now ongoing into Ocean View Properties, based in Birmingham, which was the British representative for Sun Golf Desarrollos Immobiliarios SL in Spain.
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