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News and Views

5 bed beach side Sotogrande

Now’s the Time to Buy . . .

The Property Market is moving again. The number of mortgages taken out in January this year is up 9.2% on the same month in 2017 and the amount borrowed has gone up by 7.9%. These are the latest figures from the Spanish Statistical Institute (INE) published Thursday 22nd April and they paint a very confident picture. Mortgages for property in Sotogrande tend to be around 70% of the asking price for non-residents and can be as high as 80% for residents. The same is true inland in the villages like Jimena de la Frontera and Gaucin. Prepare yourselves; the best bargains are getting mopped up fast.

Case Studies

We have just sold a property in Jimena which was bought for 70,000€ cash. The lawyer had to tell the Buyer that this was lower than the price the Hacienda calculated as the ‘Real Price’. The Buyer paid the 8% tax on the Title Deed Price and chose to wait until the Tax Authorities calculate the shortfall. (Which they will). This will add another 3,200€ because the government says the property is really worth 110,000€.

Winners and Losers

Bad luck for the Seller, our client, who had cash flow problems and needed to sell, but on this occasion the lucky winner was the Buyer. There was a similar example in Sotogrande Marina, where a 2 bed sold for 280,000€ when the asking price was 315,000€. Plus, a villa in Sotogrande sold for 1.4 million € negotiated down from 1.7 million €

Still A Buyer’s Market . . .

Properties are out there. So, too, are mortgages: fixed rate and variable for long and short to medium term investments. Cash buyers can complete quicker which can give more negotiating ‘clout’, but those buying with mortgages can also put in a ‘cheeky’ offer. In this sense, it is still a buyer’s market. But, to quote Bob Dylan, ‘the times they are a changing’.

It looks like Sellers who can afford to sit and wait a year or 18 months before putting their property up for sale should get a better price. So, our advice? Buy now.

This article appeared in the Euro Weekly News 12-18th April 2018

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Demand for Accommodation Andalusia

Accommodation Makes Money in Andalusia

Demand for Accommodation in Andalusia

Both Residents and non-residents alike enjoy coming to Andalusia with its rich diversity and sunny weather. Be it hotels or privately owned properties in Coastal or Rural areas, statistics from the Spanish Statistics Institute, (INE), show Andalusia is popular all year round.

As you can see from the infographics for February 2018, visits to Andalusia from abroad were up on the same time last year, at 11.08 days. 582,686 tourists spent an average 1,140 euros over their stay.

Demand for Accommodation Andalusia

Profitability of the Hotel Sector

Andalusia has an annual growth rate for the hotel sector of 3.99% compared to 5.44% annually, according to data released in Feb 2018 by the INE. The average daily rack rate is calculated at 65.83 euros, with revenue per room availability at 35.07 euros. This is up by 1.64%. Of this, the highest growth has been in one-star Hotels, (10.74%) and one-star Guesthouses (12.17%). It seems people want to stay longer and for less money. This indicates good returns in under exploited markets such as rural properties inland.

Profitability of the Tourist Apartment Sector

As the infographic illustrates, there were 17,078 apartments, which is up compared year on year to the same month of 2017. As you’d expect the estimated figure for bed places was also up on last year at 65,941. The number of guests was down at 127,913 but the number of nights they were staying showed an increase at 4.2 days on average. Nationally, the largest number of non-resident visitors was the UK, followed by Germany.

Demand for Accommodation Andalusia

Rural Tourism Indicators in Andalusia

Rural Tourism figures were a little down on last year, with 16,377 guests staying on average 2.24 days. Estimated bed places and apartment availability was up. Average cost was 139.63 euros, or approx 33.25 euros per night. This offers very good returns in relation to the buying price of these properties.

It is a legal requirement for establishments to be registered with the Junta de Andalucia Tourism Department. This can be either as a full time business registered with Social Security payments and complying with disabled access requirements – Casa Rurales – or the more flexible category of rural accommodation – Viviendas Rurales –

Registration as Casa Rural means the person registered as owner or manager can offer touristic pursuits – guided tours, cookery classes, etc, whilst the Vivienda Rural can only offer accommodation, not activities as well. And only for a finite number of days, not all year round, unlike the Casa Rurales. Even so, this equates to being able to rent it out almost every weekend. Also, if you get a holiday-maker who wants to stay for longer, you can put them on a different letting contract and this lease does not count as part of the weeks per year.

There are some great rural properties out there, at prices below what they should be. There are also commercial outlets with accommodation that can be turned into very attractive propositions for the holiday maker market. Get in touch with us now and we can organise a no obligation tour of some of the rural areas and visits to various properties that are on the market at terrific value.

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Buy Sell Properties Spain

Buying and Selling homes in Spain

Protect Yourself with those Property Bargains in Spain.

There was a time when properties were sold for two different prices, coyly known as ‘A’ and ‘B’ monies. The ‘A’ price was on the Title Deeds and the ‘B’ was cash in hand counted with spit dampened fingers far from the Notary walls. Even today the Spanish tax office turns a blind eye on a 15 – 20% difference plus or minus from the normal market price. Don’t be tempted though. In general, they don’t trust you and suspect something is afoot if you get too much of a good deal or agree to a bad bargain on your part. A Buyer will end up paying tax on the amount the government thinks the property was really sold for, the imputed amount. The only way to avoid it is to get a property valuation done and take your claim to court. Costly and time consuming if you lose.

For those of you interested, the imputed amount or REAL VALUE is based on coefficients from town halls, the Title Deed Price and the Cadastral Reference – based on sometimes outdated surveys of land boundaries. By or before July 2018 a land law reform is being introduced. Current recommendations by a government commissioned think tank is to change the REAL VALUE to reflect only the Title Deed Price. Another idea being mooted is to start charging a local capital gains tax on rural properties as well as the current policy of applying it to urban properties on gains from selling your property.

As we’ve seen, sales have picked up, still not a high percentage of conveyances, although slowly improving. The years of recession from 2007 hit Spain well below the belt with repossessed properties and ghost towns of brand new housing estates. In the noughties so many people were dependent in one way or another on the construction industry. When it ground to an almost complete halt, so too did the country. Fortunately, people and things evolve; no-one wants to return to those dark days, but the unscrupulous soon left the industry – why would they stay? There were no longer any rich pickings. The agents and agencies that managed to hang on in there during the lean times came through with a limp and a smile. Many, like TMT Spain Real Estate, offer more to Buyer and Seller as a matter of course. We feel we have a duty to explain and inform, both to our clients selling and the applicant looking to buy. Clearly, both form part of the same process. Naturally, we believe we always have done and our team have transferred skills and knowledge accrued in other professions as well.

What is an Agent?

An agent is just that, an entity acting on behalf of another. When it comes to properties the relationship is a tad contrived. The Buyer is usually an interested party whilst our client is almost always the Seller – but both come together in a bargain of offer, acceptance and consideration. The process can be incredibly fast or proceed slowly and cautiously. We don’t mind, we’re there to help however long the journey. Our local knowledge and connections are relied on by Seller and Applicant alike. Whether it be by acting merely as a de facto tourist information service – every Estate Agent recognises that function, or making sure you understand how properties are bought and sold. Our neck of the woods is the autonomous region of Andalusia, Spain.

Be Safe – Learn the Process of Buying & Selling Resale Properties in Andalusia.

There are many more Resale properties on the market than new builds, but you can once more see cranes along the skyline. This is happening because of unfinished promotions being revamped and also due to brand new green field sites being built – both courtesy of new Land Law Legislation for Developers and Promoters to take the plunge and invest in Spain.

If the house you want to buy has had others living there already, a Resale, termed ‘second-hand’ in Spain, you need to check the following documentation:

  • Title Deeds. Make sure the person selling the property really is the owner or authorised to sell. We check this as part of our general due diligence when we list a property.
  • Ownership and status of housing charges. (Simple Note of the Property Registry). For this you need to ask for ‘Datos Registrales’ which give ‘Finca, Tomo, Libro & Inscripción’ stating what the property registration number is and where it is filed – both literally and in which district. This information is on the Title Deeds or a copy of a ‘Nota Simple’
  • Last annual IBI receipt (Council Tax or Urban Tax, Impuestos Bienes Inmuebles).
  • Community of Owners’ receipts proving that the seller is up to date with payments of shared community expenses. (It’s a proprietor owned management company.)
  • Latest receipts of utilities: water, electricity, gas, etc.
  • Completion on Property. If the conveyance follows the normal convention the Seller pays the costs of cancelling his/her mortgage and the bulk of the Notary costs for drafting the new Title Deeds. The Buyer pays for the Title Deed copies, registration fees and, as appropriate, VAT or Property Transfer Tax. However, it is not mandatory to follow that convention although common.

The Buyer should allow approx. 12% – 15% on top for costs. You pay Stamp Duty, Transmission Taxes, Notary Fees and Land Registry Fees. Plus, lawyer’s fees should you decide to instruct one. (It is not obligatory.) In the past, you also had to pay the mortgage lenders’ Notary and Stamp Duty costs for putting the mortgage in place – which with the admin fee added up to about 4% of the amount borrowed. But this practice has been ruled out by the Supreme Court as an unfair contract term and now you only pay an admin fee on taking out the mortgage and any costs that fall directly to you. Those who paid this in the past can claim back these costs providing the mortgage is still in place or was paid up in the last four years. Refunds in Andalusia are on average 4,313 € according to the property portal Idealista and Legal Services Provider, Reclamador. (a ‘crowd complainer’ platform,). The protection available for the consumer does serve to underline how the legislature has acted to inject confidence in the property market once more.

Property Taxes are levied against the price of the property as stated in the Title Deeds. At the time of writing, assuming no special cases, the Seller pays 8% ITP on a property up to 400,000 €, 9% from 400,001 € up to 700,000 € and 10% thereafter.

Garages and Parking Spaces in Underground Garages can either have a separate Property Title Deed or be annexed to the Residence’s Title Deed. For separate Deeds it’s 8% tax up to 30,000 €, 9% to 50,000 € and 10% thereafter for a maximum of 2 garages or parking bays. Make sure you know which parking space belongs to the house or apartment that you are buying, it’s an area that can sometimes be overlooked. The applicable Property Taxes are the same as for properties when sold in the same Deeds.

Property Sellers are responsible for:

  • Certificate of Energy Rating. ‘Calificación Energética’. Drawn up by an architect evaluating the energy consumption of the dwelling. In Andalusia, almost all resale properties rate as Grade E, with Grade A being the highest, it may not be perfect, but it is normal.
  • Town Hall Capital Gains Tax – Incremento del Valor de los Terrenos de Naturaleza Urbana (IVTNU), more commonly known as plusvalía municipal. The clue should be in the name – you have to make a capital gain to pay this. But many local authorities have been exacting payment form Sellers even when they sold at a loss, basing the value on the cadastral reference as well as the old inflated market prices and opting for whichever price was higher. Note, a Supreme Court decision enshrined in law 15th June 2017, has made it illegal for town halls to invoice Sellers for this if they have sold their home at a loss. People who were forced in the past to pay it despite making a loss can now claim this tax back from the Town Hall. It’s an odd remedy called a revocation process (Procedimiento de revocación.) What makes it strange is how the decision to go ahead with the claim lays in the hands of the local authority. (IKR.) Court decisions are now starting to create their own precedent.

Buying Off Plan or New Builds confirm the following:

  • Works Licence in place
  • Bank Guarantee to protect in case developer goes belly up
  • Occupancy Licence issued before completion
  • Building Specifications have been adhered to
  • Stage Payments where appropriate coincide with actual completion of construction stage as described
  • Snagging List done and signed by both parties
  • Utilities supply and connection paperwork formalised
  • Value Added Tax is 10%

Other than that, enjoy your home in the sun, by a pool in summer and a wood burning stove in winter.

There’s never been a better time this decade to move home or shuffle portfolios.

And if you are looking to buy or sell a property in Southern Spain, get in touch with TMT Spain Estate Agents – we’re happy to help.

 

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Mortgage Borrower Pays AJD

Supreme Court Decision Person Taking Out Mortgage Pays AJD

Supreme Court Ruling Mortgage Borrower Pays AJD

The average set-up costs for a mortgage is around 3,000€ to 4,000€ depending on the amount borrowed. This is roughly broken down into a tax on notarised documents (AJD), notary fees, administration fees, land registry fees, stamp duty and copies of the notarised document. Back in December 2015 a leading case paved the way for people with mortgages to claim back the costs that they had been forced to pay. The Court decreed that mortgage lenders do not have the right to decide these should be paid for by the other party. It stated such costs should be shared but did not go on to stipulate percentages. The implication was that it should be an even split at least.

This led to claims against mortgage lenders and the flood gates opened. The Law Courts are always busy, and the last thing needed was additional workloads. Having said which, many judges in Autonomous Communities seemed to champion the little man, striking out clauses they deemed Unfair Terms and forcing the mortgage lenders to pay back what they had charged plus legal expenses of the claimants.

Mortgage Borrower Pays AJD

All has now changed again. On February 28th 2018, the Plenary of the First Chamber of the Supreme Court deliberated and decided two appeals in favour of the mortgage lenders. The Obiter Dictum, or wider generalisation to be taken from this, is that the Transmissions Tax on Documented Legal Acts (AJD) must normally be paid by the client, while the stamp duty on the notarial documents will be paid by both parties. Costs of copies of the mortgage will be borne by the party who requests them. In Andalusia the AJD is 1.5%. this leaves notary fees, administration fees and land registry fees up for grabs.

Mortgage Borrower Pays AJD

The Court’s judgment is based on a Statutory Regulation that says the loanee is the one who pays the tax and as a result the party mortgaging their home, the mortgagor, is liable. The full court decision has yet to be published, but as it stands, without the in-depth analysis of the Court’s findings, the court has used a Regulation to serve as a magic wand to restore order and quell rebellion. But a Regulation has less legislative force than a Statute conferred by Act of Parliament and is not of universal application. It wields the equivalent force of a statutory instrument.

A Supreme Court decision ‘trumps’ that of a lower Court. But, provincial courts in Autonomous Regions have consistently ruled in favour of the mortgagor since the leading case in December 2015. Until there is legal certainty, this political duel looks likely to continue. Let’s see what the Judgment proclaims when it is published in the next few days.

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Spanish Property Sales Up 2017

Spanish Property Sales and Transfers Increase in 2017

Spanish Property Sales and Transfers 2017

Up once more compared to 2016 according to figures published by the Institute for National Statistics  in Spain (INE).

  • December saw 125,263 properties registered at Land Registry, almost 2% more nationwide than in the same month of 2016. This includes all transmissions of property, for example inheritances, easements, resale and new first time sales etc.
  • December Sales showed a 9.2% increase on same month for 2016.
  • 64,135 sales were recorded for December 2017, of which 85% were urban properties and 15% rustic dwellings.
  • Over the twelve months of 2017, property sales increased by a significant 14.6%

Spanish Property Sales Up 2017

Registered housing sales, including government owned accommodation.

  • In December, 89.7% of dwellings sold were those on the free-market and 10.3% were protected housing.
  • In annual terms, the sales of free-market homes increased by 8.4% and protected properties by 16.5%.
  • 17.8% of dwellings transferred by sale in December were new, and 82.2% were Resales.
  • The number of transactions on new properties increased by 11.0%, while that of Resales increased by 8.8% compared to December 2016.Spanish Property Sales Up 2017

What does this mean for Andalusia? Making sense of it all.

December 2017

December 2017 alone saw 20,812 registered property transfers for Andalusia.

This equates to 95 transfers for every 100,000 inhabitants. Third highest in Spain after Valencia and The Balearics.

Of this figure, 6,287 were property conveyances – selling of properties in the open market –

This marks a 10.7% annual increase. Compare this to the Catalan region, down by 5.7% and it is tempting to emphasise how markets need stability. Andalusia with its infrastructure, sunshine and stable political environment is a great place to invest. Make up for dips in your portfolio for Spanish property from 2007 onwards; property purchase always has highs and lows, but now is the time to get those bargains once again.

Property Conveyances Andalusia 2017

  • Andalusia realised 293,538 conveyances for 2017.
  • An annual variation of 5.6% in change of property ownership for the year including inheritances etc.
  • This is an annual variation of 12.6% as a result of home sales on the open market (89,337).
  • It equates to 1,356 per 100,000 inhabitants.
  • 51,878 properties were classified as rustic.
  • 149,995 were urban properties.
  • 14,601 were plots.
  • All other transactions amounted to 77,064.
  • 16,397 conveyances were new builds. The off plan market has started up again.

Spanish Property Sales Up 2017

 

 

 

 

 

 

 

 

We are in the early stages of a new market with properties reduced to lower than their real values by owners who just want to shift them. For those of you who lost money in the downturn of the market, act now to recoup losses. For those of you thinking about investing for the first time, now is the time to commit.

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Housing Sales Rise in Andalusia amidst Buoyant GDP figures for Europe.

Housing Sales Rise in Andalusia.

Andalusia came second in sales increases for November according to the Spanish Institute for National Statistics. INE. This is because house prices are extremely inviting and it is a lovely place to live or come to for holidays. Property prices are still lower than what they should be. Take advantage now.

Winners and Losers

The Autonomous Communities that registered the greatest annual increases in the number of housing sales in November were Aragón (24.7%), Andalusia (24.3%) and Castilla–La Mancha (23.7%). In comparison, Extremadura (–9.7%), País Vasco (–1.3%) and Asturias (3.5%) registered the lowest annual rates in November.

 

 

GDP grew by 2.5% across Europe

In Europe the fourth quarter of 2017 shows GDP up by 0.6% in both the euro area and the EU28 up +2.7% and +2.6% respectively compared with the fourth quarter of 2016.

Seasonally adjusted GDP rose by 0.6% in both the euro area (EA19) and in the EU28 during the fourth quarter of 2017, compared with the previous quarter, according to a preliminary flash estimate published by Eurostat, the statistical office of the European Union.

In the third quarter of 2017, GDP had grown by 0.7% in both zones. Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 2.7% in the euro area and by 2.6% in the EU28 in the fourth quarter of 2017, after +2.8% in both zones in the previous quarter.

Over the whole year 2017, GDP grew by 2.5% in both zones.


GDP and Property Prices Rise

Residential property price indices (RPPIs) directly and indirectly influence economic policy.

From an individual household’s perspective, real estate often represents the single largest investment in their portfolio. It also accounts for the largest share of wealth in most nations’ balance sheets. We do not need to be told how changes in house prices can have far-reaching implications for individuals.

House prices influence home improvement and renovations expenditures and there are property bargains out there to buy and reform. Even some minor reforms can significantly increase the value of the property.

Understanding Supply and Demand

House prices also influence the decision to build new houses (the supply side) as well as the decision to become a homeowner (the demand side). Investors turn to house price indices to measure wealth and to help assess current and future rates of return.

From a broader perspective, analysts, policymakers, and financial institutions follow trends in house prices to expand their understanding of real estate and credit market conditions as well as to monitor the impact on economic activity, and financial stability and soundness. For instance, mortgage lenders will use information on house price inflation to gauge default risk. Central banks often rely on movements in house price indices to monitor households’ borrowing capacity and debt burden and their effects on aggregate consumption.

It is still a buyer’s market in property in Andalusia, but, to quote Bob Dylan,  times they are a changing . . . which is great news for those owners trying to sell their properties.

For those looking to buy, invest now or spend more later.

For those looking to sell, it could be that your property is on the market at a price which undervalues it.

Get in touch with us to arrange a tour of properties or to get a valuation of your property with a view to selling it.

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