Finance, insurance and legal advice on the Costa Blanca
Banking, investments, insurance, taxes, pensions, mortgages - who do you go to for the best advice?
In Spain, the undertakings of lawyers (abogados), accountants (gestors) and financial advisors often cross over. In fact, the lines between each are very grey, as some lawyers also undertake accounts, some gestors also undertake conveyancing and some banks undertake both. Obviously, for more delicate matters of law, you need a lawyer who is specialised in that area. For anything else, refer to the web site of each of the companies listed to find out just how far their remit goes.
Since the introduction of the euro, many parts of Europe have experienced inflation and economic problems, the re-unification of Germany adding to the country's' already stretched resources, has meant a recent downturn of German investment in the Spanish property market. Nevertheless, property prices here continue to rise. A two bedroom villa, for example, with pool will set you back in the region of 300,000 euros (approx. £220,000), almost double the price you would have paid four years ago.
The building industry here is booming, with cranes dominating the skyline in many places, especially in Torrevieja (southern Costa Blanca) where prices are a little cheaper. Whereas, six months ago the big money buyers were the Germans, now the British have taken over the lead, which is completely irrelevant to the developers who will continue to build as long as there are buyers to sell to.
One would think that the bubble will soon burst and property prices will fall, but many prospective buyers have found that their funds have quickly become insufficient for their needs when the home of their dreams increases in value far quicker than the interest rates on their savings. The bubble shows no sign of bursting in the near future with predicted increase in values currently standing at 18%p.a.
Obviously, for those fortunate enough to be able to afford it, a second home on the Mediterranean is a sound investment. Many people rent out their properties whilst they are not being used which then covers the cost of their mortgage, using one of the many property management companies to handle to contracts, collect the rent, pay the bills and generally keep an eye on the upkeep of the property whilst the owner is away.
Before investing your hard earned savings in any property, make sure you do your homework. Unfortunately, the increase of foreigners willing to part with large sums of money, has inevitably drawn the con men willing to accept it. GET YOURSELF A GOOD LAWYER - and preferably not one recommended by the salesman. This cannot be stressed enough. Many a gullible individual has left their brains at the airport whilst they happily hand over thousands of pounds to a 'very nice' salesman who claims that he needs a deposit from you to seal the deal on a property that turns out a) to belong to someone entirely different who has no intension of selling, b) to have an embargo on it due to unsettled bills, c) has had its building license revoked due to it being built illegally, or d) has been 'sold' several times over to other gullible chumps. Unfortunately, the heart broken individual is left with the only contact to his 'nice salesman' a mobile phone number on a business card with a false address. Added to which, not many of the members of the police force speak English or German and are none too patient with foreigners who appear to have more money than sense - you have been warned.
You may also notice that one particular property may be advertised at a variety of estate agents with vastly differing price tags. The reason being that estate agents commission rates differ greatly from 2-20% which equates to as much as 20-40,000€ being added to the vendors required sale price in some cases. Shop around. If you're feeling confident enough, check out the private sales - again you need to make sure that your lawyer checks everything out, but you could save yourself thousands by cutting out estate agents' commission.
The same rule applies to purchasing land with a view to building a new home - a popular alternative here to the sometimes impersonal housing estates. Recently, corrupt members of the local town council in Lliber (a small town just outside Jalon) granted several building licenses to individuals on plots of land each only 5,000sqm in size, when the legally required plot size in the area to build a property in the countryside is a minimum of 10,000sqm. With payments made 'under the table' in order to officially alter the escritura (deeds) to include a fictitious ruin, they were able to exploit a loophole in the law which encourages the renovation of older properties. This all seemed well and good at the time, especially as 5,000sqm of land is a darn sight cheaper than 10,000sqm. Unfortunately, there was a local election, the mayor and architect involved in the scam found themselves out of office - and the individuals with dodgy building licenses found themselves on the wrong side of the law and are now being prosecuted by the new administration. Scary stuff.
10,000sqm seems a lot, and indeed it is, but the Spanish government do not want the countryside to be taken over by housing estates - and this is their way of trying to preserve its beauty. This is not to say that there are not a lot of housing estates - there certainly are. Torrevieja, in the south has expanded in mammoth proportions over the previous 10 years and is now one enormous housing estate with little in the way of open countryside between the old villages. The planning authorities in the northern Costa Blanca are a little stricter, and much of the open countryside remains as it always has done.
On the whole, building a property from scratch does work out cheaper if you have the money to fund it. But you do need to be in a position to be able to use your own financial resources as the banks do not lend more than 50% on the purchase of land, and the builder will require some money in advance. See our article Building your own Home for help and advice.
The other option is to buy off-plan from many of the property developers in the area. Normally, you will be buying a new build on a housing estate (urbanisation), which you will choose from a selection of artists impressions. Bear in mind that swimming pools, garden fencing, landscaping, driveways etc, although shown in the impression, are not always included in your price but may still be required under the terms of the community rules and therefore will need to budgeted for as an extra.
Of course, there is always the resale market. A term not used in the UK but refers to a standard house sale, as in the UK, of a property already finished and occupied for a given period of time - sometimes referred to here as second-hand properties. On initial inspection, this seems the more expensive option, as resales do tend to command higher prices, but when you take into consideration that the current owner may already have added a swimming pool, terracing, landscaping and all the other extras - it may well turn out to be the option of choice.
Remember, do not take the estate agents word with regard to details about the property, check it out independently using a lawyer of you own choosing. Find out whether it has debts attached to it, as any credit or loan taken out in Spain is guaranteed against the property and not the individual, if you buy the property you will be liable for the debts. Check whether any infrastructure changes are planned in the area, many individuals have found that soon after buying a property, they loose half of their garden due to a compulsory purchase by the local authority to build a new road (see our article on the land grab act L.R.A.U). Finally, choose your area carefully, it may seem romantic to live in a quaint town house surrounded by culture and traditions, but it may not seem so idyllic during the summer fiestas which last all night long and you can't get to sleep.
Many people sail through their property purchase and have no further problems, but it pays to know the possible pitfalls as well. Remember you are buying a property in a foreign country which has different rules and regulations. If you do not know the language you can easily misunderstand a situation and end up with something you did not want. GET PROFESSIONAL HELP.
CAVEAT EMPTOR - let the buyer beware.