IMPORTANT: New Regulations affecting off-plan property buyers in Spain

THE QUESTION

 Is it safe to buy off-plan property in Spain after 1st January 2016?

Background

In the recent past, one of the most important elements of the huge property bubble consisted in all the new complexes, urbanizations and buildings of apartments which were sold off-plans by the developers to individual buyers.

Normally, the buyer paid a certain amount of money in advance to the developers in accordance to the different stages of the construction which were certified by the Architect. Those payments were made before the house/apartment was completed and the corresponding licenses obtained.

In many cases, the first payment was made when the developer did not even have the building license and there was only a plot waiting for building permission. This was particularly a common practice when the developer was a cooperative and used the money coming from different buyers to buy the land to be constructed.

More than ten reasons to buy Spanish property NOW

Good reasons for buying property in Spain right NOW

Background:

The number of house sales in Spain increased 15.5% in February 2015  compared with the same month in 2014 – the largest rise in recent months – according to data released by the National Statistics Institute (INE) early this year

Property sales have now increased for six consecutive months as the market gradually begins to recover from the huge crash that hit when Spain’s housing bubble burst at the end of 2007. The rise can be attributed exclusively to a 50.4% increase in sales of existing homes – 21,613 of the 29,714 transactions carried out in February were of this sort.

The figures correspond to sales entered into property registries relating to contracts signed in previous months.

In terms of the number of sales per 100,000 inhabitants, the biggest rises in February were seen in the regions of Valencia (105) and Madrid (96), while Andalusia continues to lead the way in total sales with 6,149 transactions, followed by Madrid (4,834), Catalonia (4,558) and Valencia (4,132).

Source: National Statisctics Institute (INE)

The number of properties sold by 31st August 2015 continues to recover. During the second quarter of 2015, the price of properties increased 5.1% in comparison with last year, according to the data published by the Spanish Land Registry college.

According to the same source, the raise of property prices happened together with the increase of number of houses sold with  11%. Between April and June 2015, the land registries registered a total of 87.187 property transactions

The ranking is as follows: Andalucía, 17.751 properties sold,,followed by Cataluña (13.228)  and Valencia community (12.760)

Source: the land registrar Association

What will happen with the Spanish real estate market during 2015 and 2017?

According to the Agency Standard and Poor’s (S&P), the Price of Spanish houses will rise around 2.5% this year and it will continue to rise up to 4% in 2017, affected by the economy improvement and the low interest rates from Banks.

If this evolution is confirmed, the property prices in Spain will start to rise again after years of descending generated by the great economic recession in 2007.

According to the same source, many of the property transactions, specially in Andalucia and Valencia Community, generating the continue recovering of prices were caused by foreign buyers, specially from Uk.

Source: 5 días (Economy newspaper)

Spanish house prices have risen at the fastest rate since the start of the country’s financial crisis, fuelled by a broader economic recovery and increased availability of credit.The housing price index rose 1.8 per cent in the fourth quarter of 2014 compared with a year earlier — the sharpest quarterly rise since the first three months of 2008, according to Spain’s National Statistics Institute.  

Source: Financial Times

Spanish house prices have increased at their fastest rate since the downturn, up 5.12% in the 12 months to the end of June, the latest index report shows.

It points out that sellers and buyers are adjusting their expectations accordingly. In more and more areas buyers who have been adopting a wait and see attitude whilst prices fell are now entering the market.

Registrars are not expecting prices to surge but the report does suggest the recovery is well underway, supported by factors such as low interest rates, improved housing affordability, better mortgage conditions, and a sustained foreign demand for property in Spain.

They expect moderate price growth and the report points out that a sudden surge would be unhealthy for the market. 'Now more than ever rational decision making is needed to avoid the errors of the past, which came at such a high cost to the economy and society,' the report says.

The regional aspects of the market can also be seen in the latest price data from real estate portal Hogaria which shows that overall prices on its lists increased by 0.15% in July compared to June but year on year prices were down 4%.

But 29 provinces saw prices increase which suggests that the recovery is there and the market is more stable than it has been. The provinces where prices dropped most in July were Toledo with a fall of 1%, Guadalajara down 0.9%, Lugo down 0.8%, Ciudad Real down 0.7% and Almeri down 0.6%.

Cuenca led the growth with a price rise of 1.2%, followed by Sta. Cruz de Tenerife at 1%, Valencia also at 1%, Madrid at 0.9% and Cádiz also at 0.9%.

We could make more references to many articles and may statistics sources. You may google the same subject in some other financial papers, not only printed in Spain but also internationally. They will confirm the above information.

Apart from the above information, let’s talk about the reasons why buying Spanish property NOW.

1.There are still thousands opportunities to purchase properties at a low price, with a reduction of 50% from the original price when they were in the market during the property boom, before 2007.

2. Banks are back in the property market scenario with an aggressive and attractive offer for mortgages: better interest rates and flexible and improved mortgage conditions. They are also forced to sell their own properties acquired from debtors during the great recession.
According to many official sources i.e. the Spanish Statistics Institute, the land registries association and data provided by the Spanish regional communities, the prices of houses will continue rising due to various facts, i.e. the international market demand, the improvement of mortgages conditions and the general recover of the European economy as well as the demand from citizens from other countries outside the Euro zone.

3.Another important reason is the location. Some years ago, we know that there was a massive construction of holiday’s homes in other countries, including Syria, Greece, Turkey, Egypt and so on.They were not only acceptable places to invest but also destinations for European tourists. Spain was seriously competing with many other destinations. You could see this when you walked into the properties exhibitions, so popular about a decade ago.However, all the international conflicts together with the economy crash affecting also those countries as well as Spain and the lack of security in many ways have brought the consequence to leave Spain as one of the preferred destination for the tourism back again.

4. Malaga Airport (AGP) has shown a record of visitors this year, after its extension and improvement carried out over the last few years, becoming the 3rd International Airport in Spain and 22^nd within the EU.

We cannot forget the fact that number of flights from different airports in Europe and out of Europe is also increasing with daily flights from all over the world, including the Emirates with two daily flights to Madrid and Barcelona.

6. From our point of view is also relevant the fact that Spain is closer in many ways. If you live in London,  you may come to Spain just for the weekend and it would take the same timeto drive to the country side within the UK territor in many occasions. Should you have a place in Dubai or…other fashionable country, would you go there for a weekend?

7.The weather!!! No comments are necessary about this subject. If you are familiar with Spain, especially Andalucia, you will know exactly what we are talking about. Even when we consider a few days a year as “not nice”, people coming from North Europe are thrilled about our climate, including months like November, December, January, February…. Probably this is the reason why our location is known as “Costa del Sol”. It is also the base for our property industry.

8. The variety of things to do all over the year. It is not only an escape to the beach or to the country. Spain offers many other possibilities and opportunities. Let’s think about the Costa del Sol again. If you come during the winter, you can be skiing in just two hours driving, come back in the same day and enjoy a beautiful and warm evening.

You can visit many places just for the day, i.e. Seville, Granada, Córdoba, Ronda… if you like our History with our past, including all our visitors who left such a legacy, including the great inheritance from the Arabs who stayed officiall here y from 711 to 1492.

9. If you are thinking about living in Spain permanently you may also be interested to know how many English and International Schools are based here, with many years of experience and good results for kids, with access to Universities all over the world.

9. If you like sports, in how many places you can play golf, tennis, perform any sport activity, train yourself in the outside or just going for a walk along the beach during all the seasons?

10. Another reason that it is important to many of us is Health. Public and private health in Spain is considered to be one of the best on an international basis. The demand of Spanish doctors is increasing due to the level of knowledge and experience. For example, Marbella has also become well known for the plastic surgery expertise.

11. As an investment or more. It is also important to know that the demand for renting houses is incresing for those who are thinking about an investment. Really relevant, if you would like to obain a GOLDEN VISA via buying a property. We will dedicate an article about this subject.

12 Ultimately, we should highlight the importance of the lifestyle in Spain:How important the light is in our livesThe living costs are still lower than in the rest of north European countriesThe friendly welcome to our international community. This is something that will be impossible to change and it goes naturally with most people from South Spain.

The quality of drinks and food still good and relatively cheap. Please watch Jaime Oliver show in Southern Spain.

 We do hope that you enjoyed this article. Please leave comments or contact us

Thanks for your interest in Spain

Buying Spanish property, the last step

You have now purchased your home in Spain. You have a “place in the sun” Congratulations !!!

We want you to make the most of it!!

Welcome to Spain!

The following are the relevant aspects that you must take into account for the last step of your Spanish adventure.

1. NIE. Fiscal identification number for foreigners

This is the previous step that you must legally take during your purchasing process. It must be applied to the local Police Station or through the Spanish consulate or Embassy in your home country, when possible. Your lawyer can apply for the NIE in your behalf and this will prevent you from a waste of time, long queues and a headache with the Spanish administration.

You will need it for any administrative transaction and even to buy a car.

In our “SERVICES”  section you will find more information about this.

2. Open a bank account with a local bank.

We recommend that you have some information about the costs for all banking transactions in advance, including when you transfer money from abroad. Banks in Spain are NOT CHEAP!

We work with companies for exchange currencies and we will be talking about them in another article, explaining the reasons why this would be more advantageous for you, when you order a transfer from your bank at home, even if the transfer is made in Euros.

Most of your utilities, like electricity, water, telephone and periodic payments as Community fees as well as municipal taxes and so on should be paid by direct debit and you should receive immediate information from your bank.

When you are on the process to buy, as said in our previous article, you should know the approximate costs for everything that you will need and use, annually, monthly and quarterly. Therefore, you will know how much you will need to send and when in order to keep all the bills up to date.

To open a bank account in Spain is getting a little complicated nowadays. Your legal advisor will guide you with all the documents that you will need. Please note that you will go through a due diligence as legal requirement for banks (also for law firms and estate agents)  due to Money Laundering regulations.

You will open a “non resident” bank account if you do not have any intention to become fiscal and legal resident in our territory or if you have not applied for residence yet.

3. The land registry and taxes

Once you have signed the public deed of purchase with a Spanish notary or your lawyer has completed the transaction on your behalf, the title deed will be taken to the Andalucian tax office to pay the transfer tax.

The transfer tax varies from one Community to another within Spain. In Andalucia, there is a scale that goes from 8% to 10%, depending on the price. We will be writing an article about this so as to explain how it works.

Immediately after paying the transfer tax (or stamp duty if you bought a new property from a developer), the public deed will be taken to the land registry. The registrar will check and review all the documents presented with the deed. After a few days, or weeks, depending on the specific land registry, the public deed will be returned to the buyer or the legal advisor, and the new ownership will be registered as a public record.

4. Municipal authorities, the Town Hall

It is important that a specific form is submitted to the Town Hall in order to change the records from the seller to the new owner as well as the address for notifications and bank account where the taxes will be paid by direct debit.

The Town hall issues the property tax and garbage tax every year, normally in August. It is important to keep the payments up to date to avoid charge fines and interest if they are if they are not settled when due.

For this reason it is recommended that you use a different postal address for your correspondence, i.e. your law firm if they provide an administration service for you, especially if you do not come frequently, your property is difficult to find or there is no a reception service.

5. The utilities

All the suppliers’ contracts must be changed into the buyer’s name with the new bank account details. Electricity, water, telephone if needed, alarm and so on must be checked and changed.

6. Home Insurance

We recommend that you take insurance from a reputable company. We also recommend an insurance broker that you can always call in case of emergency and speaks your language.

7. Refurbishing or decorating your home

Please note that you should always have proper invoices for all your expenses in Spain, even though many of those expenses cannot be written off against your eventual Capital Gains Tax when selling.

However, in case that you are planning to make a major change in your home, including building or construction work, as long as you follow all the legal requirements, you will be able to deduct all the expenses, as long as they are invoiced properly, from your eventual profit in your final Capital Gains tax bill.

And for now on, ENJOY YOUR SPANISH HOME

 Information provided by Premier law 

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Buying property in Spain, Part IV, Completing at the notary and the land registry

In our last post we wrote about the private contract and the steps that should be taken before.

We are now focused on the completion of the purchase which, for safety and security purposes should conclude with a public deed of sale/purchase with a Notary public in Spain.

A notarial deed is a public doument authorised and stamped by a Notary. 

Buying property in Spain Part III, The private agreement

We are pleased to continue with our posts dedicated to buying property in Spain safely. In this article, we will focus on the private contract of sale/purchase.

In our property industry, it is normal that a private agreement is signed by the parties, seller and buyer, few days or weeks after the reservation deposit was signed and before the public deed of sale is granted with a Notary public in Spain.

Buying Spanish property Part 2 Reserving the propetry

The initial deposit

Now you have seen a property that you really like. You know the place, the location, the facilities, area, the community and as many other items which you consider to be relevant in your investment. This is the house that you would like to buy.

Your agent may request you that you pay a small deposit just to show your intention and to “take the property out of the market”. This is quite a normal practice and the right time that you may consider to engage an independent lawyer or solicitor who will make sure that everything is, at this first stage, in accordance to the different regulations.

Buying Spanish property safely Part 1

Many articles and posts have been published about Spanish property. Our intention is to offer a dinamic and practical guide to make the most of your investment in Spain as well as to advice you to plan in advance for your future as from the beginning of the transaction.

The information contained herein has been provided by Premier law Spain. Details will be shown at the end of this informative article.

COSTS FOR YOUR SPANISH PROPERTY

If you already have a property in Spain or you are in the process to buy one, you would like to know the annual costs, including taxes and how they work.
This should be one of the most important steps in your process to buy a property in Spain or something to verify when you already purchased one.

When you buy your Spanish home, you normally open a bank account with a local bank and you request your access to your bank statements through internet or/and the ordinary post.However, you probably do not know what bills are paid by direct debit and which ones you pay directly to the office, by transfer or credit card.

Hello and welcome to our blog about living in Spain

Whether you already have a home in Spain or... you are tempted to buy one or just booking your next holidays here, this blog might be of your interest.

Our intention is to share many things with you, always connected to Spanish matters, issues, problems or recipes, recommended places, properties or special vists.

We will post videos, comments, articles and many more things that you may follow.

Our aim is to share with your our own experience with our life in Spain and we really hope that you enjoy our blog and come with us along this way.

We may start by recommending a place to visit in Andalucia: the orchid garden in Estepona, the largest in Europe: