Market Overview

As we wrap up 2010, we can take a little time to look back over the past year. The Spanish property market has definitely fought back from 2009, and although it hasn't been a walk in the park, at long last there is movement in the real estate market. A lot of this movement is powered by bargain hunters looking to snap up deals on properties that have been dramatically reduced in price.

So what about the more traditional buyer profile on the Costa del Sol: people looking for a holiday home or an investment property? With over a million web searches a month Spain is the number 1 holiday destination for the UK. Add to it Andalusia's current push for tourism and you can quite clearly see why the market is continuing to recover.

The third quarter statistics show an increase of property sales by 12.9% in comparison to the previous quarter, which completes three consecutive quarters of growth. In terms of year on year comparisons, 2010 shows a modest recovery compared to the record lows of 2009: twenty-seven Spanish provinces showed positive growth figures, with some provinces showing over 30% growth. Most of the coastal provinces, which were especially hard-hit during the downward cycle, also show a moderate recovery in property sales.

Statistics taken from: Real Estate Statistics Register

Marbella to legalise first 1,000 illegal homes in town

Marbella City Council has announced it will legalised around a thousand houses before the end of 2010, in the process of "adjustment through compensation" determined under the new General Urban Plan (PGOU). The plan is for the promotors and builders of these illegal homes to compensate the city, via cash or land, for the "excesses carried out" in constructing the homes without permission. There are almost 17,000 illegal homes being studied for legalisation in the town.

The Town Planning Officer, Pablo Moro (PP), has said in a press conference that before the end of the year the townhall is expected to approve a dozen orders that will legalise a thousand homes and that the process "marks the beginning of the road to compensate the city through the acquisition of land for facilities. "

Source of article: Almeria Property Talk

What's in store for the Euro?

Well the volatility of the currency markets in 2010 has certainly been the cause of a few nervous breakdowns this year. Until the eurozone debt crisis reignited at the start of October, sterling had been rapidly losing ground to a dominant euro, Then in September, when the Bank of England began to make noises about cranking up the printing presses again with more quantitative easing, sterling dropped back from just below €1.24 to levels as low as €1.12.

But recent strong data for the UK economy, (which quashed the threat of more quantitative easing for
now), the Ireland bailout and the fear of Eurozone 'contagion' has seen the pound recover to its current level, even briefly popping its head above the €1.19 parapet.

With less than 12 shopping days remaining until Christmas I don't expect much movement in the rate before the end of the year. I do however; have high aspirations for sterling going in to 2011.

The pound should continue to outperform the Euro next year, and I'm targeting the lofty heights of 1.25/1.30 by year end.

Now I can practically hear all the sharp intakes of breath from the doubting Thomases amongst you who have just read that last sentence and are shaking your heads in disagreement but let us not forget:

· The UK economy is set to grow by around 2.5 % whereas the eurozone will, at its very best, be flat.

· Italy & Spain need to raise a staggering 600 Billion in the bond markets!

· Germany, the economic driver and growth engine of Europe, is set to watch its growth dip to 1.2%

· And above all else, the UK has the ability to set its own monetary policy!

All in all 2011 is looking like it could be critical to the very survival of the euro. I don't doubt for a moment that the Euro will remain intact; but it certainly has some very difficult days ahead.

Source of article: Currency Direct

Statistics

The sample below looks at apartments and villas in the ten most expensive areas based on two factors:

· The average listed sale price

· The average price per square meter

These figures are not sales figures, simply an average of the currently listed properties.

Villas		Apartments
Location Average Listed Price La Zagaleta € 6,285,000 Guadalmina Baja € 4,112,051 The Golden Mile € 4,067,100 Sierra Blanca € 3,715,080 Bahía de Marbella € 3,601,286 Los Monteros € 3,353,146 Los Flamingos € 3,128,321 Las Brisas € 2,613,000 Benahavís € 2,454,050 El Madroñal € 2,404,200		Location Average Listed Price Sierra Blanca € 1,079,004 Puerto Banús € 1,036,542 The Golden Mile € 1,025,469 Los Monteros € 811,402 Sotogrande Marina € 674,552 New Golden Mile € 641,192 Guadalmina Baja € 639,811 Bahia de Marbella € 611,978 Sotogrande Alto € 604,364 Nagüeles € 558,823
Villas		Apartments
Location Average Price per m² Los Monteros € 5,915 La Zagaleta € 5,874 The Golden Mile € 5,804 Puerto Banús € 5,730 Bahía de Marbella € 5,684 Guadalmina Baja € 5,533 Sierra Blanca € 5,241 Las Brisas € 5,171 Los Flamingos € 4,925 La Quinta € 4,899		Location Average Price per m² Puerto Banús € 5,614 Sierra Blanca € 5,269 The Golden Mile € 5,127 Los Monteros € 4,454 New Golden Mile € 4,107 Sotogrande Marina € 4,058 Bahia de Marbella € 4,048 Sotogrande Playa € 3,983 Guadalmina Baja € 3,839 Marbella € 3,834

Source of article: Resales Online

Cheap Spanish Property and Distressed Sales in the Costa del Sol

A window of opportunity has opened up for buyers who want the best property at a reasonable price. That window won’t stay open for ever. There are many affluent Europeans interested in buying at these prices and we are busy with viewings and sales. If the Pound strengthens, as it might next year, British vendors will be under less financial stress and won’t be minded to accept such big discounts. So buyers hoping to take advantage of this window of opportunity need to get their skates on. At the very least, you should be looking around. Prices have plummeted, so is it time to go bargain-hunting with our . . . Distressed sales in Spain

New Taxes On Property

Capital Gains Tax

We are still getting used to the tax changes for 2007 with regards to Capital Gain Tax. In this year, both residents and non-residents paid 18%. Previously non residents paid at 35% and residents paid at 15%. Now we have to get used to some more changes.

On January 1, 2010, Spain raised its capital gains tax from 18% to 19% on profits up to 6.000 Euros made in one year. The rate now jumps to 21% on profits over 6.000 euros.

However, as of June, 2010, the tax increase is frozen at 19% for non-resident property sellers, meaning they pay only 1% extra tax instead of 3%. Most observers feel that this is an error on the part of the lawmakers which will be corrected in the near future.

Property transfer tax rises for properties over 400.000 Euros

Spain's ITP, the tax charged on private re-sales of property between individuals, also rises from 7% to 8% on transactions over 400.000 Euros. This leaves out the majority of private sales in today's property market. This property transfer tax is paid by the buyer.

European Court Extends CGT refund to 1997

It was manifestly unfair that residents paid only 15% capital gains tax while non residents paid 35% up to 2007, especially when the non-resident sellers were EU citizens.European Court of Justice has ruled that non-resident sellers all the way back to 1997 can claim a refund. The ECJ over-ruled Spain's claim to a four-year statute of limitation of the claims.

Visit our website and view a selection of Spanish property bargains and distressed sales in the Costa del Sol www.propertyoverseasgroup.com

Costa del Sol - Market Overview

Is the Costa del Sol property market still falling? Interestingly, figures from Real Estate Registration Statistics show a light at the end of the tunnel, at last!

With everyone having their own opinion on the goings on of the Spanish property market it is difficult to distinguish fact from hearsay. It all depends on whom you are speaking to.

Despite fears that sales would plunge after a hike in VAT on new home sales at the start of July, the Spanish property market had its best month in almost 2 years.

We all know that it hasn’t been a walk in the park, and that it seemed that the Costa del Sol’s bubble had burst with far more properties than purchasers.

However good news does lie ahead, comparing the sales in the last quarter of 2009 to the first quarter of 2010, we can see that re-sales have increased by 16.95% and off-plan sales have increased by 15.66%. This number of property sales is the highest it has been in the last year and a half. However these figures are not reflective of annual percentages as the property market in Spain is seasonal. If we take into consideration the seasonal fluctuations and average it out across the year we can see that the rate of increase of housing purchases amounts to 1.83% in the first quarter of 2010. This may seem like a small increase but this is the first positive growth after 15 quarters of decline.

A direct comparison between the 1st quarters of 2009 and 2010 shows a more favourable annual growth rate of 7.04% - resale properties are the main contributor to this growth rate with an increase of 21.90% of sales, whereas the sale of off-plan properties presents a decline of -3,97%.

Whether this recovery of the real estate market is structural or circumstantial can only be determined once the results of at least one more quarter is published, as both circumstantial factors (e.g. the expected increase in VAT rate) and structural factors (e.g. progressive price reductions) can be identified. The results of coming quarters will allow us to make this determination.

Visit our website and view a selection of Spanish property bargains and distressed sales in the Costa del Sol www.propertyoverseasgroup.com

Process and Costs of Buying Property in Spain

THE BUYING PROCESS – IN BRIEF

Once you have found a property and your offer has been accepted you can secure the sale by placing a holding deposit, normally between 3000€ to 6000€ depending on the purchase price. This deposit would take the property off the market, would be non refundable and would “freeze” the price for a period of a month or two.

In order to exchange contracts, once your lawyer has done all the due diligence on the property of your choice, 10% of the purchase price would have to be paid (minus the amount already paid). This does not mean you can finance the remaining 90% but that there is a binding agreement to sell and purchase.

To obtain finance in Spain banks will give you between 50% and 70% of the purchase price. Finance on rustic land is considerably less, but in all cases will depend on the bank and your own status (income, loans, mortgages and credit references). The balance would have to come from your own funds.

The following costs are attached to any property purchase in Spain.

• Transfer Tax: 7% of the purchase price.
• Legal fees: approx 1% of the purchase price
• Notary and Land Registry fees: approx 1% of purchase price

If purchasing with a mortgage there is to add:

• Stamp duty: 1% of the mortgage amount. Stamp duty on the mortgage it’s not applicable when taking over an existing mortgage.
• Arrangement fee: 1% of the mortgage amount (this may vary from bank to bank)

THE COST OF BUYING - DETAILED

Resale From A Private Individual

Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)

This tax applies if the property is deemed to be a second or posterior transfer. The Transfer Tax is 7% on the price of the purchase in most regions, but as of July 2010 there are plans to put it up to 8% in some regions like Catalonia. The transfer tax is paid by the buyer. If any deposit is paid before completion of the sale it is not subject to the transfer tax. However the full amount of the transfer tax still has to be paid upon completion. In this scenario there is no VAT to pay, and stamp duty is already included in this tax.

Income Tax Provision When Buying From Non-residents

If the seller is not a Spanish resident, the buyer has to withhold 3% of the purchase price and pay it to the tax authorities (application form 211). If this is not done the property will be considered by the tax authorities as the asset backing the capital gains tax liability of the seller. This condition is very unlikely to apply when purchasing from a developer.

New Build From A Developer

VAT & Stamp Duty (IVA & Actos Jurídicos Documentados – AJD)

These taxes apply if the property is being sold for the first time, and the seller is a property developer. The VAT (known as IVA in Spain) is 8% on the price of the purchase in the case of built residential property (villa, apartment, etc), and 18% in the case of plots of land (without built property) and commercial premises. The Stamp duty (known as AJD) is 1% of the price of the purchase, but might go up in some regions, so be sure to check on the latest rate. Both VAT and Stamp Duty are paid by the buyer, and if any deposit is paid before completion of the sale, such deposit will be subject to VAT at the moment of payment of this deposit. In this scenario there is no transfer tax to pay.

COMMON COSTS

Agency Fees

Estate agency fees or commissions are paid by the seller, unless otherwise agreed. Unless the buyer has specifically agreed to pay the agent’s fee this cost will be built into the sale price.

Legal Fees

You are strongly advised to hire a lawyer to help you during the buying process. Your lawyer drafts and reviews contracts on your behalf and can explain all the legal and administrative issues you face. Your lawyer should also carry out any necessary due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required documents to complete the process (property registration, tax payments, etc.).

A lawyer – Abogado in Spanish – will charge you according to the service you require. This will vary according to the complexity of the purchase. Many charge around 1% of the purchase price in legal fees. Be warned that some lawyers charge 1.5% or more of the sale price, which is a rip off. Even 1% can be unreasonably high given the work that is involved in a straightforward purchase of an expensive property with no legal complications. Your best option is to try and find a good lawyer who is prepared to charge on an hourly basis. Legal fees for a purchase without any complications and charged on an hourly basis should be in the region of 1.000 to 2.500 Euros.

Mortgage costs

If you choose to buy with a mortgage then this will incur several additional costs. First there will be the property valuation that the mortgage provider will require before granting the mortgage. This is paid for the by the buyer and can cost around 500 Euros. Then there will be the costs of the mortgage itself. This varies according to the provider, and even according to the particular branch. However there is usually some kind of opening fee of around 1% of the value of the mortgage. Finally a mortgage will increase the Notary expenses.

Notary Expenses

Notary expenses are nearly always paid by the buyer and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate Notary fees as being 1% of the purchase price declared in the deeds of sale. In many cases however Notary fees are more like 0.5% (or less) of the price declared in the deeds.

Property Registry Inscription Fees

Expenses related to inscribing the sale with the land registry are also nearly always paid by the buyer, and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate 1% of the purchase price declared in the deeds, though once again it depends upon the property and the area, and the fee could be considerably lower.

Other Costs

Bear in mind that it may be prudent to carry out a survey of the property and that this will have a cost.

In Summary, allow for up to 10% of the purchase price in taxes and other costs.

If the buyer takes out a mortgage these costs can be somewhat higher due to an additional public deed for the mortgage and the inevitable bank charges involved. In this case transaction costs might reach between 10% and 12% of the value of the property purchased.

Banking Costs

To pay for the property, you will more than likely need to write a banker’s cheque. In order to do that, you will need to open an account in a Spanish bank and transfer money from the bank in your country. The cost of transferring the money can go up to 0,4% of the amount transferred. The Property Overseas Group has a preferred foreign exchange specialist who can secure you the best deal.