The new law should allow for the possibility of a direct execution of an eviction order of less than 15 days and without any other formalities in the case of tenants who do not voluntarily leave the property in the stipulated time.

Several of the more interesting points about the new law:

1. Eviction application reduction

Upon formal request of outstanding payments the landlord now only needs to wait one month (previously two months) before filing an eviction application. Although it should be noted, as with the previously laws, this eviction application can be avoided however if the tenant makes good any outstanding amounts in this time.

2. Rapid execution

A court sentence is now sufficient for the execution of the eviction on the day and at the time stipulated in the sentence.

3. Verbal Court Case

The new law also means that all actions, both the eviction itself as well the claiming of outstanding rent can now be carried out verbally (i.e. without the need for additional documentation). This will allow for the passing of a court sentence in as little as 5 days.

The law always provides that in certain cases the landlord will under certain circumstances no longer be necessarily bound to a minimum contract of 5 years. The landlord will be able to rescind the contract in certain additional cases including the need for the property for personal use and can be extended to cover direct family members. These clauses would have to be expressly written in the contract however. Please note though, if the landlord of family member does not take possession of the property, the landlord would be obliged to return the property to the tenant and to pay of the outstanding expenses incurred in seeking alternative accommodation.

Now that this step has been taken, the Spanish government only needs to improve the tax deductions that landlords can make on a rental property, and the rental market should finally be able to develop properly.

Regards
Andrew Bellés

The data indicates that 17,977 transactions were conducted Andalusia, representing a fall of 34.3 percent from the second quarter of 2010, according to the statistics of real estate transactions compiled by the Ministry of Development, who pointed out that this decline is less pronounced than the national trend, where the number of homes sold during the second quarter stood at 90,746 homes, representing a 40.8 percent less than the same period in 2010.

Compared to the first quarter of 2011, home sales in Andalusia increased by 18.6 percent, while Malaga saw an improvement of 21.8 percent. It should be noted that the 1st quarter of 2011 saw similar decreases compared to 2010.

As for new housing in the second quarter, sales fell by 52.4 per cent to 5882 dwellings, whereas in the case of second-hand housing, there were 12,095 operations, 19.3 percent less than in the second quarter of 2010.

By provinces, Malaga recorded 4602 transactions, 35 percent less than in the second quarter of 2010, Seville reached the 3464 transactions, 34.2 percent less, Granada there were 2256 transactions, a 30.1 percent less than in the second quarter of 2010, in Cadiz 2164 transactions were recorded, 40.1 percent less, in Almería there were 1842 transactions, 38.6 percent less compared to the same quarter last year.

In the other provinces also saw declines, as in Huelva, a decrease of 20.8 per cent to 1446 transactions, were registered in 1192 Córdoba transactions, 38.8 percent less than in the second quarter of 2010; Jaén and 1011 operations were recorded, 27.6 percent less.

There are many theories regarding these decreases, including the impending elections, the property tax breaks that ended at the end of 2010, etc….

Andrew Bellés

This gives buyers an incentive to finalise their purchase within the next four months. On an average property worth 200.000€ the cut means that buyers will save themselves some 8.000€. the majority of the 20.000 unsold brand new homes in the province of Malaga are in the hands of developers or the banks.

This tax deduction is of course welcomed, but if banks are still unwilling to relax their criteria regarding lending, the effects will more than likely be subdued.

So the properties that will benefit the most are those that have developer’s mortgages in place. The questions though, how does this apply to new build properties that have come under the banks control? Are these ‘new builds’ or have they been transmitted once and are thus resale’s? This question has yet to be answered.

Along the Costa del Sol, the areas that should benefit the most from this tax cut are Marbella and Estepona. These areas saw a high concentration of building works in the last few years due to the property boom.

Although this tax cut should not really benefit the property market in the long run, as it will only motivate existing buys to go to completion slightly sooner, it does benefit two groups. The first group will be the developers, who will get to shift some of the stock sooner, second the buyer, who stands to save several thousand euros.

There are also rumours that if the Partido Popular win the next elections, this tax cut might be extended further, but like all political promises, we will just have to wait and see…

Regards
Andrew Bellés

This is the third consecutive month where sales of Spanish properties have decreased year on year with April suffering a drop of 29.7% and 11.9% in March.

These decreases followed a positive start to the year with February registering an increase of 10.5% and a 19.6% in January, which broke the decreases of the last four months of 2010.

On a positive note, sales in May have grown by 27.8% compared to April.

Of the 30 797 residential sales transactions recorded in May, 13.4% were social housing (VPOs).

Regards
Andrew Bellés

According to the Ministry of Housing the accumulated stock of new properties on the market decreased at the end of 2010 by 0.08%, the first decrease seen since 2005. It is hoped there will see further improvements in 2011 but the high level of unemployment and the lack of lending by banks is still handicapping the Spanish property recovery. It also needs to be pointed out that compared to 2010, the first 3 months of this year have seen a decrease of 43.8% in the sale of new builds, not an auspicious start to the year.

Of course we are talking in general and can expect the housing stock to decrease faster in certain areas than in others, with prime locations seeing a higher demand for properties.

It should also be points out that many ‘experts’ have been claiming that it will take between 3 and 5 years for the market to absorb the stock for the last several years.

Regards
Andrew Bellés

ACCUMULATION OF UNSOLD NEW PROPERTIES

The (minor) drop seen in 2010 continues a trend of the last few years which has seen a decreasing amount of new properties coming onto the market. This combined with the increase in Spanish property sales, is what has lead this decrease.

PERCENTAGE CHANGE OF NEW BUILDS ON THE MARKET

The accumulated stock decreased in 12 regions across Spain, notably in Extremadura (-30.17%), Cantabria (-26.08%) and Navarra (- 17.26%).

Currently approximately 50% of all new properties can be found in the 3 regions as of 2010: Valencia (19.35%), Andalusia (16.33%) and Catalonia (15.03%)

TOTAL PROPERTY STOCK BY COMMUNITY

Regards
Andrew Bellés

According to recent data compiled by the Bank of Spain, Foreign investment has not risen above the 1 billion mark since 2008, and has not seen such a strong rise in over 10 years.

Foreign investment in Spanish property has maintained a downward trend since 2003, although in 2007 and 2008 quarterly figures remained above the 1,000 million euros, although the falls were exacerbated in 2009 and 2010.

Meanwhile, the Spanish invested 185 million euros in real estate assets outside of Spain between January and March, a decrease of 25.7% compared with 249 million last year.

Unlike foreign investment in Spain, the Spanish foreign investment continues a downward trend and has not exceeded 600 million since 2007.

Orginal article: www.expansion.com

Some savings banks, such as La Caixa, CAM and Bancaja, are also offering 100% mortgages over 30 or 40 years.

The Bank of Spain figures show that loans exceeding 80% of a home’s value accounted for 11.9% of total loans in 2010, representing a level similar to that of 2008, and around 50,000 of all mortgages granted.

Analysts have interpreted the fact that banks are willing to issue loans they would have trouble selling on as a sign of the pressure some institutions are under to remove direct exposure to homes on their balance sheets.

Families Spend 27.3% of their Income Buying a Home
Spanish families who purchased a home in the first quarter of the year spent 27.3% of their annual gross income on the purchase (counting tax incentives). This figure represents one tenth less than the same period of 2010 and more than seven points less than in 2009, according to latest figures published by the Bank of Spain.

From January 2011, the Government limited tax incentives for the purchase of housing to incomes lower than 17,707.20 euros gross per year and phased them out progressively up to a threshold of 24,107.20 euros gross annually.
However, the Bank of Spain reported that this measure does not affect family aid because, while the average total household income exceeds 24,107.20 euros, estimated respondent income is currently below 17,707.20 euros and it is only when that upper limit is reached that the tax change will have an effect on family aid.

Another interesting fact the Bank of Spain notes is that families who bought a home in the first three months of the year will require 6.5 years of gross income to pay for their apartment or house compared to a peak of 7.6 years which were needed between 2006 and 2007.

Source: kyero.com

Regards
Andrew

Spanish resident taxpayers are moving towards practically total exemption from inheritance and gift tax (IGT) in transfers to descendents and spouses. These improvements may be soon extended to non-residents. Although IGT legislation is regulated by each Autonomous Community, there has been a general trend towards full or almost full exemption in the last years. Taxand Spain explores the IGT exemption and whether it will be extended to all EU residents.

However, exemptions are not applicable to non-residents, who are charged IGT on their Spanish property at progressive rates ranging from 7.65% to 34%. And this basic rate can increase significantly when the beneficiary’s kinship with the deceased is not close and his pre-existing wealth was high.  For example, for a beneficiary whose pre-existing wealth in Spain is in the top bracket, the rate can jump to 40.8 %, even for inheritance from a parent.

This tax burden is one of the reasons why many non-residents have acquired their properties in Spain, for example many coastal residences or operating companies through off-shore vehicles.

However, on 5 May the European Commission issued a reasoned opinion that could bring about a landslide change in the Spanish IGT treatment of non-residents – at least for EU residents. According to the press release published by the Commission, it has asked Spain to amend, within two months, the IGT provisions which impose a higher tax burden on non-residents. The Commission also refers to the less favourable treatment of assets held abroad by Spanish residents as compared to assets held in Spain.

The European Court of Justice declared that the different taxation of capital gains – until 31 December 2006 – for residents and non-residents was contrary to Community Law. Gains obtained by Spanish resident individuals on assets held for more than one year were taxed at a 15% rate, while similar gains obtained by non-residents were subject to a 35% rate. Spain ended this discrimination on 1 January 2007, establishing an 18% tax rate (19% as of 1 January 2010) for all capital gains obtained by individuals, regardless of their residence. This change significantly reduced the Spanish tax burden on non-residents owning property in Spain. Furthermore, the gains will not be taxed when the property is transferred mortis causa. The extension of the inheritance and gift tax exemptions to EU residents would further change the Spanish tax landscape for these individuals.  No Spanish tax would arise on the transfer of Spanish property to the decedent’s spouse or children.

Case C-562/07 may also be seen as a precedent of what the Court’s position might be if the matter now raised by the Commission were taken to the ECJ: the different inheritance tax treatment of resident and non-resident individuals could be considered contrary to EU Law.  A legal change in the IGT provisions applicable to EU residents in respect of their properties in Spain may be forthcoming.

Taxand’s Take

It is quite possible that the exemptions currently available for acquisitions by descendents and spouses may be extended at least to other EU residents. This, together with the recent legal changes regarding the taxation of capital gains, would eliminate Spanish taxes on the mortis causa transfer of Spanish real estate. In this new scenario, it might be advisable to review the structures set up in the past to hold property in Spain as they might not be the most efficient ones from a Spanish tax viewpoint.

For those who have paid inheritance and gift tax in the last four years, they may be entitled to claim a refund of the excess tax paid (as compared to the tax that a resident would have paid, which in many cases would have been nil). It may be advisable to file preventive claims for refund before a final decision is taken by the EU Commission or the ECJ, in order to avoid those claims becoming statute-barred.

Your Taxand contacts for further queries are:

Daniel Armesto

E. Daniel.Armesto@garrigues.com

Eduardo Montejo

E. eduardo.montejo@garrigues.com

Original article: www.taxand.com

The judge has ordered the bank to issue a full refund of both the deposit and the stage payments.

Daren Wallbank, director of ReclaimYourDeposit.com, told OPP that the outcome of the case will be noted in other courts around Spain, adding that “although bank guarantees were seen as the ultimate in security by Spanish property investors, we’ve uncovered many cases where the guarantee has been promised but not delivered and everyone from the bank to the lawyer, notary to the developer has seen fit to relieve themselves of responsibility for the failure.

“This landmark ruling shows that the Spanish legal system is prepared to apportion blame and will not allow property scams to be brushed under the carpet.”

The Cantabria case referred to a client who had paid a deposit on a property that was subsequently never built.

The bank initially tried to brush off the allegations saying that the bank guarantee had expired and therefore they could not be taken to task.
The judge reminded Caja Cantabria of Spanish Property Law 57/1968 which requires protection for the funds paid by the buyer by putting them “into a special account and ensuring they are used solely for the purpose of building the property”. The court further argued that guarantees could not expire whilst the purchaser still had no home to show for their monies.

According to Walbank, “sadly Spanish Law is not based on precedent in the same way as English Law, but undoubtedly other courts in Spain will take the verdict into account when faced with similar cases – of which there are many.

“It also leaves a question mark over the numerous expats who have discovered that their bank guarantees were never issued – it’s still unclear who would be responsible then.

“Nonetheless it does send out a clear message that the Spanish legal system is slowly coming to terms with the terrible treatment of international property purchasers and provides more than a glimmer of hope to those seeking recompense for non-completed property in Spain.”

ReclaimYourDeposit.com works with overseas property clients in Spain on similar claims provided that they “have in their possession the original private purchase contracts, proof of payments made and a contract that has expired without the property reaching completion.”

Source: OPP

At one point, the company was signing around a thousand such mortgage deals each month. The US banks behind the scheme were particularly interested in the profile of CreditServices’ clients because they were in no position to negotiate and accepted higher interest rates than those offered by Spanish banks, or because they were unable to decipher the complex calculations that would see their repayments rise incrementally over the years.

What’s more, the immigrants weren’t about to bolt: they had come to Spain for good, says Javier López, the president of CreditServices. He adds that the company offered other financial products to a range of clients, and that at its peak, CreditServices had almost 600 branches throughout Spain. It now has just 80.

There are few better analogies for Spain’s boom and bust economy than CreditServices. Its rise and spectacular fall has seen it go from mortgage giant – at its peak it had some 50,000 customers a year – to debt collector. “I’m adapting the business to new realities,” says López, adding: “We have come up with some new products, but they aren’t as profitable.” Five years on from the collapse of the Spanish property market, López says that unless Spain’s banks offer refinancing terms, some seven million home owners will end up defaulting in 2011. He should know – many of them will be his subprime customers.

In October 2007, at a conference to announce Banco Santander’s quarterly results, the bank’s number two, Alfredo Sáenz, addressed the issue of subprime mortgages. “Of course there are subprime mortgages in Spain,” he said. “It stands to reason.” He then went on to add: “The criteria by which mortgages are termed subprime in the English-speaking world can be applied to Spain.”

The CEO of Spain’s biggest bank also referred to “vices that we all know about,” meaning the concession of loans way above the 80 percent of a property’s value considered prudent, or the practice of giving mortgages whose repayments would require significantly more than 35 percent of annual income, and “forced” valuations to push up the price of a property.

Sáenz was merely describing the bare bones of the situation. People like Jairo González and Noemí Ramos, an Ecuadorian couple in their mid thirties, can provide a more detailed picture. They bought a property in January of 2007, when the property bubble was fast deflating. The loan was negotiated through an outfit called Central Hipotecaria del Inmigrante, based in the working-class Madrid suburb of Aluche.

“Before they handed over the keys to the property you were buying, you had to sign as the co-owner of another,” says González. Once that was done, there was no way out. The mortgage intermediary charged 17,000 euros in commission, and the sum was not recoverable if he and his wife decided not to go through with the purchase. They only discovered the mess they had gotten themselves into when they sat down in the notary’s office to sign the papers. They knew that they had been tricked, but couldn’t afford to lose 17,000 euros. Noemí Ramos is eight months pregnant with their first child, and the couple expect to be evicted any day, with the property they bought sold off to pay their debts to the bank. The complexity of the operations that enabled people like Noemí Ramos and Jairo González access to mortgages that they were never going to be able to pay back would have many financial experts and accountants scratching their heads.

“On my paperwork it says that one of the co-owners is a 60-year-old lady who was given a 30-year-mortgage. How did that come about? Well, they put down a couple in their mid-twenties on her contract as co-owners, so the repayment period was calculated on the basis of the three,” says González. He adds that the owner of the company that organized the mortgage told him one day that he had earned more thanone million eurosin commission.

The couple is just one of many tens of thousands who are now waking up to the horrible reality of owning a property bought through a subprime mortgage, and who believed the lies they were told about how they could repay loans worth hundreds of thousands of euros on monthly salaries of around 1,000 euros. Needless to say, all of those properties have fallen sharply in value over the last couple of years, so these new homeowners cannot even sell their properties to pay off their debts. And because the properties are bought between a number of co-owners, when one person in the chain is unable to meet their repayments, the bank takes action against the others. In 2009 alone there were more than 90,000 repossessions; the figure for this year is expected to be double that. The hardest hit by the collapse of the subprime scam will inevitably be the most vulnerable: those on the lowest wages – many of whom are now unemployed – and who bought into the dream that they too could become homeowners.

These low-income families from Latin America were prey to unscrupulous operators who had set up a complex system that seemingly allowed them to buy not just one, but two properties, and using the money from the very banks that would have turned them down if they had approached them directly. Lawyer Rafael Mayoral, who works with such families to help them hold on to their homes, describes the scam: “The mortgage company had a list of clients of different ages and in different situations, and would move them around like pieces in a jigsaw puzzle until they fitted into an operation.” He has already brought charges of fraud on behalf of Jairo González and Noemí Ramos against the person who negotiated their loan, along with those behind the loans of four other people who are co-owners of the properties.

The coming months will see many more such lawsuits. Carlos Guerrero, a lawyer at Sofos Consulting in Barcelona is a specialist in repossession cases. He says that the sums that his clients are being expected to repay are so astronomical that he is considering bringing charges against the banks, real estate companies, and valuers involved in the subprime scams as well. “This is fraud on a massive scale,” he says. “There is a clear intention to defraud, and there are people whose lives have been ruined. This is a scam.”

“In 2006, the banks’ lines of finance were cut,” he continues. “But many bank managers were still able to get their hands on money for loans. The mortgage companies knew who they were, and so along with the bank manager and his pal the property valuer, they cut a deal to share out the commission.” Guerrero says the key to these scams was the valuer. “The value of a property was decided in accordance with the amount of money the bank manager knew he could get his hands on,” he says.

Guerrero reads out a deposition he has recently brought before the courts. “We were the victims of a series of frauds carried out by what seemed to be legal means with the aim of eluding the financial risk controls, and that were dependent on the supposed professional credibility of those involved and their apparent legality. We put our interests in these people’s hands believing in their diligence and professionalism, in their good faith, and in the prestige of the entities they worked for.” In this particular case, the mortgages were signed by Caja España, Ibercaja, Caja Madrid and Caja de Ahorros del Mediterráneo.

Another lawyer, Mario Barguño of Equilibrio Financiero, who also works with families struggling to get their finances in order in the face of claims from debtors and banks, says he has even come across cases of forged documents, such as wage slips, so that applicants could meet the requirements for a mortage. “The banks were caught up in a race: whoever wasn’t lending money was losing.”

Needless to say, the mortgage companies see things differently. Germán Navarro is the spokesman for API, the body that represents the country’s 5,500 mortgage brokers. He says that he is all too aware of the legal loopholes that allowed low-income immigrants to borrow money to buy a property.

“The trick with these kinds of operations is to act fast, so as to fly under the radar of the Bank of Spain,” he says. He explains how the country’s central bank updates bank loans every 10 days. If two loans are carried out at the same time, the Bank of Spain is unable to detect whether the person being given the loan is able to repay it or not. The maneuver involves a borrower being the 80-percent owner of one property, and the 20-percent owner of another, or by guaranteeing the loans of others, who in turn guarantee those of other borrowers.

Navarro says that he does not approve of such practices, but he also says that mortgage brokers are not to blame. “Who is tricking whom?” he asks: “The borrower, or the bank? It is up to the banks to decide on how loans are granted and what the requirements are and the procedures to be followed.” He says that his job, and that of any mortgage broker, is to find the bank best disposed to lend money for a mortgage. “For example, a bank branch needs customers. The manager of the branch tells the brokers that he needs to generate a certain number of clients. So he says to you, ‘The other banks won’t look at you, but if you come to me, no problem’.”

Navarro’s position is that the risk factor is not his problem. “The job of the broker is to handle as many operations as possible. The broker is not interested in knowing whether somebody is solvent or not – that is the bank’s problem. You tell the client that they will have to pay – 1,000 a month for the next 25 years. If he accepts that deal, then it’s not up to me to tell him what to do. And if the bank is happy…”

But of course, one important thing has changed in the aftermath of the collapse of the property market. “A decade ago, it didn’t matter how much money you were lending, because the property would double in price by the next day. So it didn’t matter if the borrower couldn’t pay, because the property kept on rising in value. That is the guiding principle here,” says Navarro, laying the blame at the feet of the valuers, whom he dubs “His Master’s Voice.”

“Valuation is a tricky business. Obviously, bank managers had their friends,” he says. In other words, properties were valued according to the needs of the bank manager. “I am sure that in every bank at one time or another somebody must have raised the alarm, and I’m sure that the person would have been demoted to making the tea the next day,” he says.

In any event, even as the property tsunami was about to come crashing down, new ways were being dreamed up to grant loans to people that couldn’t repay them. For example, Josep F. was paying 300 euros a month on his 60,000-euro apartment when in 2008 he decided to take up the offer of a “change your house mortgage” through brokers UCI, linked to Banco Santander. He was going to set up home with his girlfriend, was earning around

1,700 euros a month, and was told that he would have no problem meeting the repayments on a property valued at 330,000 euros. “They sell the whole thing to you in terms of ‘don’t worry, you’ll simply sell the house.’ But they knew that this wasn’t the case.” He and his girlfriend signed a deal whereby they only paid the interest for two years, during which time they would be able to sell his old apartment, which would reduce their total mortgage to 240,000 euros.

But the old apartment remains unsold, and in just three months, the couple will be facing a 2,000-euro-a-month mortgage repayment, which will sink their finances without trace. What’s more, before signing the deal, nobody told him that the full extent of the debt he owes is actually 427,000 euros. “The best clause in the whole contract is the one that says that the notary pledges that you are fully aware of the conditions and terms of the contract that you are signing,” says Josep. “The notary also pledges that you were given the contract to check it over. We had negotiated a 35-year repayment period, but this was changed without our knowledge to 40 years.”

So why have mortgages of this type continued to be granted, even after the collapse of the property market, and when the risks are all too evident? “It was clear by 2007 that unemployment was going to skyrocket,” says Javier López. “But the banks needed the money. Branch managers were given 20-percent-a-year target increases. I remember branch managers telling me that they needed a thousand mortgages before the end of the year or they wouldn’t get their bonus. He says that 90 percent of these mortgages were financed through US banks.

He also rejects any suggestion that the banks, the mortgage brokers, or the valuers acted wrongly. He also denies that borrowers did not know what they were signing. “People don’t like to think about risk, they want to buy. Why do you think we ask for a guarantor? That only happens when we think that there is a risk of non-repayment. The Americans told us that given that the guarantors are putting everything they have up as collateral, then we could go ahead. How can you call a mortgage with three guarantors subprime? These deals are not signed in a bar. The borrower is aware of what they are getting into in 99 percent of cases.”

Nobody knows exactly how many “welcome” or subprime mortgages are out there. In November, the Bank of Spain’s magazine Estabilidad Financiera published a piece pointing out that between them, Spain’s banks and savings banks are exposed to more thanone trillion euros in loans (a sum equivalent to the country’s GDP). Of these, 600 billion euros are for home loans. Of that, 16 percent are for more than 80 percent of the value of the property. At the beginning of December, the Bank of Spain said that banks must publish the details of their exposure, information that had been confidential up until now.

For the moment, until the good times return, mortgage brokers have turned their skills to creating new financial instruments more in keeping with the times. If borrowers are going to be able to continue repaying their loans, then they will need to reduce their monthly repayments, and that means extending the period of time that they can do so, which in some cases means until the borrower is into their nineties.

This may be simply making the problem worse in the long run, but from previous behavior, mortgage brokers and banks haven’t exactly distinguished themselves with their long-term approach. Meanwhile, more families are being evicted and losing their homes. In just one Madrid court alone, there were 970 evictions in 2007; that figure rose to 2,944 last year. Up until June this year the figure stood at 2,000.

Source: El Pais

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.

A spokesman for the British Embassy in Spain said: “The UK government has no authority to interfere in any matters relating to Spanish domestic legislation, whether national, regional or local.

“However, we continue to express concern at the impact these problems are having on the lives of some of our citizens and Spain’s reputation abroad, and we have raised property issues with ministers in Spain and regional governments on numerous occasions.

“We understand the regional government is currently working with town halls in affected municipalities to draw up inventories of illegal properties and to seek solutions.

“We believe that the regularisation of these properties will come through updates and modifications to local town development plans.”

One of the cases being studied by the special overseas advisor is that put forward by the Abusos Urbanisticos Lliber – NO! (AULN) action group, made up of expats who bought 298 family homes in the upmarket, inland village of Lliber on the Costa Blanca more than ten years ago.

The area has been blighted as a consequence of the arrangements made between former town hall officials and builders to build with building licences granted by the town hall but without authority from regional government.

Wholesale construction continued from 1999-2004, by which time an estimated £60 million was handed over to developers by unsuspecting expat families and retired couples.

One of the victims, who wishes to remain anonymous, said: “In 2004 the local environment agency, the college of architects and the guardia civil decided the homes were illegally built so building stopped.

“I took early retirement and with my wife, through an agency in Cheltenham, bought a three bedroom, three bathroom villa with swimming pool and views over the hills but we have no mains water, no electricity and we can’t sell because it is illegally built. We are in limbo. The embassy has been great with advice but their hands are tied. The Spanish just don’t want to know. It is a dirty, dirty business.”

Thanks to the action group and its members’ persistence, 2.4 million euros were recovered last year when police arrested the town hall architect and found the money in a private Andorran bank account.

A further 18 people are currently awaiting trial for corruption and fraud relating to the illegal building of homes in Lliber including the ex-mayor José Mas Avellá, British builder Trevor Bourne and agent Miguel Muntaner who had accumulated 100,000 sq of land in the Marina Alta as well as 16 houses and seven cars.

Only this week the Telegraph reported on the 300 Britons who lost an estimated £34 million after paying deposits on off-the-plan apartments in a proposed development called Estepona Beach and Country Club, 20 miles from Marbella.

In some cases, the prospective owners – many of whom were from Northern Ireland – put down an £85,000 deposit. However, the land still belonged to its original owner and the complex was never built.

As the overseas advisor continues to do her best to advise distraught expats and direct them to competent authorities and organisations which may be of assistance, the question has to be asked: why have scams been so prevalent in Spain?

Charles Svoboda, vice president of the Valencian action group Abusos Urbanisticos – No (AUN), who has been advising distraught British expats year after year, tole Telegraph Expat that it is simply because: “The laws are too lax and full of loopholes that tend to favour the scammers.

“There have been too many unscrupulous promoters, developers, estate agents, lawyers, notaries, town halls, etc involved in the process, whose main aim has been to make as much money as fast as possible.

“Their attitude has no concern about the lack of morality, let alone legality or corruption in all this. The sentiment that buyers are suckers who don’t understand anything here and can’t see past the beaches and bars when they buy is widespread.

“Some expats are naive enough to believe that things should work here as they do in the UK or northern Europe, when that is a pipe dream.

“And finally, the courts are slow and there are very few other recourses or ways to put things right here.”

Source: Telegraph.co.uk

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.

The company was formally dissolved in March last year when investigators and liquidators were brought in to try and recoup some of the losses for its creditors.

No charges have been brought, but the official receiver public interest unit in Manchester has until March 2011 to decide whether or not they will launch a civil case.

It is understood a police investigation was also undertaken, but the decision over whether to pursue criminal charges has yet to be made.

Ian Richardson, from chartered accountants Grant Thornton, was appointed liquidator in June last year and described the amount of money recovered so far as “negligible”.

Antonio Flores, from the Spanish law firm Lawbird in Marbella, is representing a group of victims from Belfast.

Around 100 families, who made payments to Ocean View Properties totalling £6 million, formed an action group to try and claw their money back.

Mr Flores said it was time for other victims to join together in other parts of the UK.

“It is going to be very difficult for them to recover their investment,” he said.

“It is now up to individuals who have lost their money to team up, put names and amounts on a piece of paper, get qualified legal representation and file a suit.

“It is only then that national Governments, with their unlimited resources and power, will be forced to do something and find out where and with whom did each pound paid towards a dream homes end up.”

Mr Flores said the development site was owned by an elderly Spanish man who was promised 200,000 Euros for agreeing to sell his land, without planning permission.

The lawyer said the owner had not been paid.

Mark Mackay is one of the investors who told how he lost his money: “I paid £85,000 advance for an apartment at Sun Beach but when it all started to go wrong, they offered me another in Morocco.”

Mr Flores said the investors should have used their own lawyers, rather than one affiliated to Ocean View Properties.

“If you use the lawyer that represents the interests of the developer you are asking for trouble,” he said.

A group of 14 Britons, who lost an average of £70,000 each, said they were taking joint legal action and were in touch with “many others” also affected.

“We are taking group action against a lawyer who was recommended to us by Ocean View Properties,” said a spokesman.

Source: Telegraph.co.uk

Source: Spanishpropertyinsight

Monthly, annually, whichever way you look at it, the Spanish property market had a good month in August (at least by recent standards).

The Spanish property market grew robustly in August, according to the latest figures from the National Institute of Statistics (INE).

Excluding social housing, there were 39,250 house sales in August, up 1pc on July and 26.6pc on the same month last year.
As you can see from the chart above, the market is clearly recovering from a bottom last year, and the second half of the year could be the best since 2007.
In particular, resale properties had a good month in August, with sale up 34pc compared to last year. New build sales were up by a quarter.

The following table shows sales and rates of change in the year to August over the last 4 years.

Despite growth of 12pc this year, the market is still 24pc smaller by transactions than 2008, and 45pc smaller than 2007.

Assume that prices have fallen 20% since 2007, and that means the market is down 56pc by value compared to 2007. August may have been a good month for sales by recent standards, but the Spanish property market is still worth less than half what it was just 3 years ago. That has big implications for the Spanish economy.

And finally, the following table shows you the change in selected regional markets in the year to date. Barcelona is doing best, up 44pc on the same period last year, and Las Palmas in The Canary Islands is doing worst, down 15pc.

Source: Spanishpropertyinsight.com