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Property Prices Slowly Rise

Property Prices Slowly Rise in Spain

Andalusia once more posting strong results as property prices continue to rise in Spain.

Good news from the Institute of National Statistics for Spain (INE) – the property market continues to bounce back. House prices continue to rise albeit slowly. Andalusia strong in new builds and climbing steadily in Resales. The first quarter of 2016 is still the highest average figure for sales, notwithstanding, the Real estate Market is moving again. If you are considering buying a property, now is the time to commit, before prices rise even higher. Those of you thinking about selling, the average time for sale of a property is approximately 9 months – beat the trends and list with us!

HPI – SECOND QUARTER 2017

  • Housing prices are up two points over the previous quarter.

Annual evolution of housing prices

  • The annual variation of the Housing Price Index (IPV) in the second quarter of 2017 increased by three tenths and stands at 5.6%.
  • By type of housing, the annual rate of new housing prices is 4.4%, more than one point lower than the previous quarter, with consistent growth in property sales for Andalusia.
  • Meanwhile, the annual variation of Resale housing rose by half a point, to 5.8%.

Property Prices Slowly Rise

Quarterly evolution of housing prices

  • The quarterly variation of the general HPI in the second quarter of 2017 is 2.0%.
  • By type of housing, new housing prices rose 2.6% between the first and second quarters of 2017. Whilst, ‘second hand’ or ‘resale’ home prices rose 1.9%.

Property Prices Slowly Rise

Results by Autonomous Community. Annual variation rates

  • A total of eight autonomous communities increased their annual rate in the second quarter of 2017. The highest increases are recorded in the Balearic Islands, the Basque Country and Cantabria, with increases of 1.9, 1.2 and 1.1 points, respectively.
  • Andalusia is up 0.3 points over the last quarter.
  • In contrast, the greatest decreases of the annual variation occur in Aragon, Principality of Asturias and Castile and Leon, with declines of 2.1, 1.7 and 1.0 points, respectively.

Annual HPI Rates Second Quarter 2017

Property Prices Slowly Rise

Results by Autonomous Community. Quarterly variation rates

  • Most of the Autonomous Communities have positive quarterly rates in the second quarter of 2017.
  • Community of Madrid, Cantabria, Basque Country and Catalonia recorded the highest increases (of 3.4%, 3.2%, 2.9% and 2.9%, respectively).
  • Andalusia once more posted a strong quarterly variation rate of 1.6%
  • For their part, Principado de Asturias (-1.0%) and Extremadura (-0.2%) are the only communities with negative quarterly variations.

Property Prices Slowly Rise

 

These statistics are taken direct from INE’s Press Release dated 8 Sept 2017.

If you are thinking of re-entering the property market in Andalusia as either a Buyer or Seller and are in the provinces of Cadiz or Malaga, get in touch to see how we can help.

Get in Touch!

Related Posts: 2016 Growth    First Quarter 2017   Brexit Initial Response

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Town Hall Tax

Town Hall Tax Abolished for Negative Equity

Town Hall Tax Abolished for Negative Equity

Jerez, famous for sherry, horses, motorbikes . . . and common sense. No gain = no profit = no tax. Right? Wrong.

Anyone who had to pay tax to the Town Hall when selling a property at a loss will be delighted to hear that the local government laws in Spain are changing. It is a shame that it has taken this long, especially when during the leanest years people had no redress. Anyhow, it is good news that the property market has turned the corner and it is safe to say there will never be a better time to buy. Because prices are going up.

Having said which, when the bubble burst the fall out was considerable and cases are still being decided. Thankfully, sellers with negative equity are now being treated fairly. There was a landmark case on Feb 16th of of this year where a national judge determined that a seller with negative equity should not be liable for a tax to the Town Hall which demanded payment just because the property was sold. This case was huge as it partially rewrote the Constitution. Other cases were also decided in the same vein, until a leading Judgment tried to stamp order on proceedings. (Case 59/2017 in May in the Administrative and Constitutional Law Courts of Jerez,) A major Bank foreclosed on a Real Estate Company and the prices adjudicated were 50% of the price the company bought them at. A clear example of negative equity. To add insult to injury, the Estate Agents received an invoice from the Town Hall for Capital Gains. There were not any. So they turned to the Courts for justice. The judge hearing the case declared articles 107.1, 107.2 a) and 110.4 of the Local Authorities Tax Laws were unconstitutional making them null and void in respect to negative equity. The Court also invited the legislature to change the law. The judiciary is bound by legislature, but on this occasion the judicial tail wagged the legislative dog and brought it to heel.

Draft Bill Going Before Legislature

While all of this was happening, a Draft Bill was being prepared to go through parliament; it is now in the final throes, but from May 2017 until the end of July 2017 the courts were deciding on a case by case basis. The lacuna still existed where the tax had to be paid even when selling at a loss. Such instability had to be stemmed and it was. The hapless victims of negative equity can now reclaim what they had to pay.

In July 2017 new legislation passed which amends the Local Authorities Taxation legislation and redacts clauses in the Constitution to enshrine a right in law that no tax is due if no profit has been made. So, in future people selling at less than the purchase price will not have to pay. But those who already have done so despite negative equity can claim it back. It may be subject to four years of Statute of Limitations, at this stage that fact remains unclear. What is certain is that up until the end of July 2017, taxes had to be paid even when no profit accrued.

In theory, all legislation covers everything. Especially taxes. In practice, this is the problem. Tax law is governed largely by the General Taxation Law and Article 57 permits seven different methods to be used independently or in combination with any or all of the others to arrive at a method for any given autonomous region. Phew. In Andalusia, for example, 3 different coefficients are analysed to arrive at the ‘real values’ that are used. (revised cadastral values, market value and variations in market value.)

The old name for this local authority tax is Plusvalía which could be translated as capital gain or ‘above value’ Significantly, the name was changed a few years ago, to Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana (IIVTNU) A tax on the increase of the value of the land. It seems counter intuitive, then, to charge a Seller after they sold at a loss and have negative equity. Even so, the local authorities continued applying a charge on any urban property sale according to their own legislation. They based their figures on calculations arrived at from before the collapse of both the property market and fall of the banks in 2008. Up until this July 2017 a few different methods were used. The most prevalent being a rigid formula which looked at the rate of land assessed by the local authority via the Cadastral Rate – roughly half the title deed price – and then a sliding-scale of coefficients applied. (With 20 years of property ownership as a cut off point.)

Local, autonomous, and federal tax authorities all agree that a clearer blue print is needed for fiscal certainty. The way the Bill currently leans, the title deed price will be preferred to the Cadastral Value in the case of a loss – unless the authorities contest these values.

The Bill still has not become Law, but an interim measure exists in an amended law which allows anyone who paid tax on a property sold at a loss to claim their money back. The date this became law is 15th June 2017, in essence, backdated at the date of the new interim statute. Curiously, it is valid until the end of July 2018. As if not having an expiry date would prevent legislation being passed into law.

It seems people will have four years from 15th June 2017 to claim back monies that were forked out when a loss was made. It is equally unclear how far back people can claim from.

Light at the end of the tunnel

Proposals have been submitted to make the laws more homogenous. A committee of experts has recommended a single method for all autonomous regions to use based on title deed price. This would be applied to urban and rustic property alike.

In order to avoid double taxation, taxpayers would be allowed to deduct the tax paid from the tax base of the other taxes that also tax the capital gains (IRPF). In practice, it is often accepted that if you paid the Town hall tax you don’t pay it again on your IRPF for residents and IRNR for non- residents declaring assets held in Spain.

The recommendation is that the taxable base would no longer be calculated by applying increment coefficients but by calculating the actual increase obtained by comparison between the transmission value and the acquisition value. In order to avoid double taxation, taxpayers would be allowed to deduct the tax paid from the tax base of the other taxes that also tax the capital gains (IRPF)

Good to know.

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Judicial Auction in Spain

Judicial Auction in Spain

What is a Judicial Auction?

It is an auction authorised under Spanish Law and executed by the law courts to sell a property usually burdened with debts. Without this special action, the property cannot be sold because of a mortgage or other charge levied against it which acts to prevent its sale as you cannot buy good title.

Anything that has an economic value can be auctioned: real estate, vehicles, furniture (Jewellery, pictures, machinery, etc.) and any other class of goods or rights.

The asking price is agreed between the creditor and debtor or by reliance upon a Judicial Report and in practice calculates the amount outstanding on the debt plus interest and costs, in an unpaid mortgage for example.

A Judicial Auction can also be used in the case where there are co-owners so that it acts alike a Trust for Sale where the money is divided up and allotted by the courts on a case by case basis.

The auction is presided over by a court clerk, who is also responsible for transmitting and delivering the sale.

Buying Existing Debts

Clearly, you need to know if the item being auctioned is sold subject to or free of debts and third party rights.

In the case of several charges against the property or goods, it is straightforward to know which is the one that gives rise to the auction, because the registrar states with respect to it that “it subsists and is not cancelled.”

By the mere fact of participating in the auction, the bidder acknowledges notice of the charges or third-party rights which appear on the Property Registry Certificate which were lodged prior to the Creditor’s claim that is being realised by the auction.  These rights to property or money lent against the property remain valid. And if you are finally awarded the Property, you agree to place yourself in the place of the previous debtor, so you will have to honour those debts. Make sure you know what remains outstanding prior to entering into the auction.  You are not liable for any charges which accrue after the notice of auction of the property. Should such a situation arise the Court clerk may order the Property Registrar to cancel them. The only thing that you would have to pay is your fees and taxes for that cancellation.

What if No Bids at Auction?

When the auction is held and no-one makes any bids, this fact is declared by the auctioneer. The next stage is where the Creditor who brought the auction requests an adjudication by the courts to arrive at a price for sale.

Certain factors must be taken into consideration:

If it is the main home of the Debtor that has been auctioned, the Creditor cannot ask for an adjudicated selling price of less than 70% of the valuation price. An exception to this is when all of the debts levied against the property are less than 60% of the property valuation.

In the case of a second home or any property that is not the Main Residence, the Creditor cannot ask for an adjudicated price of less than 50% of the valuation unless total debts, as in the above situation, are less.

In the case of Goods/Chattels the Creditor cannot ask for less than 30% of the valued of the Goods.

If the Creditor did not ask for an adjudication, the embargo on the property would be lifted.

Charges Against Property.

The law requires that this certification be available to all interested parties at the Judicial Court where the right is lodged.

In some cases, it may also be available through the internet, in the Portal of Judicial Auctions of the Portal of the Administration of Justice.

Where applicable, the file will also contain information relating to any goods auctioned.

How Much to Bid at Auction.

If the auction is brought because of an unpaid mortgage it’s generally just these debts and costs incurred. If a valuation has been placed on the property by a Valuer and it includes outstanding debts in effect at the time of the request for a Judicial Auction, these subsisting charges must be deducted from the auction price so the bidder knows what is outstanding from the Creditor bringing the action. You would be liable for the other debts itemised in the Property Register as still standing.

Bid Accepted. Now What?

If your bid is the highest you do not know for certain that you have acquired the Property/Goods until the Court Clerk issues a Resolution which is decreed and approved. Until that point, the debtor can claim back rights to the property by payment in full of the debt outstanding. Where you have underbid (less than 70% or 50% respectively,) and been the highest bid at auction the courts can offer the Debtor and the Creditor the right to raise the price and claim the auctioned property or goods.

If your bid has been successful, but you fail to come up with the money in a set time frame, the other bidders have the right to buy at the price settled at auction by your highest bid. (You have 10 working days to pay in the event of Goods/Chattels and 40 working days for property.) If you don’t put the money together in time you lose your initial stake and the auction is deemed ‘bankrupt auction’.

Transmission of Property and Tax Due from Assignment after Adjudication or Highest Bid

The Creditor bringing the Auction can avoid paying the Property taxes in the event that the property will be assigned by the Creditor to a third party via auction or adjudication. This can be done in the event where the Creditor is the sole bidder and also where there are no bids at all.

Buying at Less than Amount Owed

When you succeed at auction and your bid is less than the amount outstanding against the Creditor who brought then action you are not liable for the outstanding amount. The amount you pay is put towards the Debt and the Creditor then has the right to offset this outstanding amount by going after any other assets the Debtor may have.

Property Taxes

There is no pre-requirement of registering ownership in the Land Registry before receiving the property, but you must pay the taxes and it is this that allows the Courts to confirm the purchase and if necessary evict the previous owners. This also allows you to then register the property in your name at the Land Registry.

Queuing Creditors

Always be aware of outstanding Creditors waiting to be paid. That is why they have placed a charge against the property and in so doing have earned the status of Priority Creditor. In the case of a second or third mortgage against the property the Buyer is expected to pay the updated charges including interest. If you consider them to be excessive you can lodge an appeal.

If you think you might like to take part in a Judicial Auction and don’t wish to do it yourself, get in touch to find out more.

Please note this has been based on content redacted and informally translated from Guia nº 5 Subastas Judiciales. TMT Spain has provided no more than an overview and it is not in any way to be relied upon legally.

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Bargain Properties

Property Bargains Less as Market Rises.

Buy Property Bargains Now because Prices are Rising Again.

We are in a new phase of the property market now. We have turned the corner and can embrace a more transparent environment. There are still bargains out there for the Buyer, but Sellers are now starting to price their homes and investment portfolios at prices that are fairer returns for themselves. And why not? After all they rode out the worst part and no longer face an almost obligatory haircut if they wish to sell.  It depends on what their motivation is, those who wish to downsize can realise some equity. On the other side of the equation, Buyers with growing families can invest once more in medium to long term gains and opt for more ambitious properties than during the recession. It pays to take a deep look at what is out there. In Spain, if you sell and buy at prices of ‘La Crisis’ (recession) you stand to gain in the long term. It’s an open market across most of Europe at present. For those of you who make a tidy lump sum, you may well be tempted to choose the Buy to Let market than the vagaries of a savings account. Property Bargains are ideal opportunities for those getting their feet on the property ladder for the first time. Or venturing out again now the time is right.

Here are a couple of Distressed Sales – Bank Repossessions.

Great Prices – Bargains for All

Property BargainsTorreguadiaro Frontline  Property Bargains

Check out the video here:  1 bed 1 bath Torreguadiaro only 68,100 €

Property Bargains 3 bed distressed sale San Roque Club

Check out the video here, 3 bed 3 bath San Roque Club only 285,500 €

Because they are owned by a bank you can get very favourable borrowing terms. Up to 100% of the property purchase price over a 30 year term for residents. (You make a 10% down-payment on the total amount borrowed but lend more than the purchase price.) This can mean 290 € pcm fixed term for the Torreguadiaro apartment and 1,180 pcm fixed term for the 3 bed with huge garden and private pool in San Roque Club.

Non resident mortgages are also available.

These are just a couple of our property bargains, contact us now to learn more.

 

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Cow and Calf Seek Shade in Bolonia

Cow and Calf Seek Shade on Bolonia Beach Costa de la Luz Andalusia

Cow and Calf Seek Shade on Bolonia Beach

This cow took her calf to cool down by the water’s edge in Bolonia and came across a deserted parasol. She hunkered down offering shade to her baby calf , meanwhile surprised onlookers crowded around to take photos. The cow began to feel uneasy with all of the attention and by the time the owner of the parasol came back, about five minutes later or so, the cow and calf had been frightened off. The parasol owner had to catch up on the whole experience via video streams and photos. This was an unforgettable experience for all who witnessed it, adding a touch of the surreal to a hazy, hot day.

Bolonia, on the Costa de la Luz, is about 15 minutes from Tarifa where the Atlantic Ocean meets the Mediterranean. This particular beach is popular with day trippers because of its natural beauty and its oneness with nature. Every once in a while it attracts the local bovines, too. But not usually as boldly as this occurrence on 1st July 2017. It’s not unheard of to see cows on the beach and social media are awash with such images. In general, though, cows roam around the country lanes, and don’t usually venture onto the beach when a lot of humans are there.  This video link was recorded by Pedro Fernandez and syndicated to ABC Andalucía.

Andalusia is a wonderful autonomous region of Spain and it is always popular with holiday makers and locals alike. Unsurprisingly, it draws people from all over Spain and beyond. This breed of cow, pictured here, Retinta, is very common. These dark brown cows can be seen wide and far in the fields and hillsides, from sleepy rural inland villages to remote beach side resorts.

Bolonia is a must see destination with the most complete Roman town ruins yet uncovered in Spain just a short distance away. Do yourself a favour and put it on your ‘to do’ list. The place can be seen in a day if you are on holiday and there is some wonderful accommodation available in many distinct places: Algeciras, Tarifa, Alcaidesa and Sotogrande as well as rural villages like Jimena de la Frontera, San Pablo de Buceite and Gaucin. Bolonia itself has guest houses and hotels which fill up fast in Summer, but with a little planning all is possible. Although you’ll need to be lucky to see a cow and calf seek shade like this.

Baelo Claudia Roman Ruins
Much to see in Bolonia – Baelo Claudia Roman Ruins
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122,787 properties sold between January and March 2017

2017 has started well with 122,787 properties sold between January and March in Spain.  We have to go back to 2008 to beat this, when 159.088 were sold. These figures come from conveyances in notaries in Spain.

The 2017 figure represents a growth of 18.5% year on year over the same quarter in 2016.  In the last twelve months, from April 2016 to March 2017, 476,933 homes were sold in Spain, which is 13.6% more than in the previous 12 months Purchases by foreign residents were 19,805, linking 23 consecutive quarters of year-on-year increases. This is good news for the housing market and applies equally to new builds and resales.

Comparing the first quarter of 2017 with the same period of 2016, all the autonomous communities recorded increases in the number of housing sales, except La Rioja, with a fall of -1.6%. Of note were Aragón (53.5%), Asturias (32.5%), Catalonia (27.6%), Cantabria (26.6%) and Castilla-La Mancha (26.3%). Although the national total in the first quarter was above 2009 levels, several autonomous communities, such as Madrid, Catalonia, and the Balearic Islands, were above levels of 2008 which is very positive for a continued recovery.

Andalusia was up 20.3% compared to the same quarter in 2016. In fact All the autonomous communities, except La Rioja with a fall of 3.2%, were up on last year. The municipalities registering a greater number of sales in the first quarter in Andalusia were Seville (2,007) and Málaga (1,778).
With regard to the open market, transactions during the first quarter of 2017 amounted to 117,477, with council properties totalling 5,310.
As regards resales or new builds, 10,771 transactions corresponded to new housing, which represents 8.8% of the total. Resales amounted to 112,016 operations, accounting, obviously, for 91.2% of total sales.
As regards nationality of the buyer, transactions carried out by foreigners resident in Spain experienced year-on-year growth for the 23rd consecutive quarter up -17.9% compared to the first quarter of 2016, totalling 19,805 sales.
As a whole, sales by foreigners (residents and non-residents) captured 20,593, or 16.8% of the total market.
Málaga once more performed strongly with 2,206 sales. The Costa del Sol proving popular.


Sources:
The Spanish Ministry of Development through data provided by the College of Notaries on property sales formalized in public deed in a notary office.

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