April 2013 Archive

Energy Performance Certificate In Spain

As from the 1st June 2013 every domestic property for sale in Spain will require an energy performance certificate (EPC) which is regulated by the EC directive 2002/91/EC.  In Spain it is known as the Certificado de Eficiencia Energetica (CEE) and is valid for ten years. The EPC has its roots in the Kyoto Protocol which was a worldwide initiative started in 1997 to address the issue of Greenhouse gases and forms part of the 'Energy Performance of Buildings Directive' (EPBD)

The EPC provides information on how to make your home more energy efficient to reduce carbon dioxide emissions. The test measures the efficiency of the property as a whole and all energy consuming elements that are integrated within it. The ratings are scaled from A to G, 'A' being the most efficient and  'G' being the least.

The report will advise on how to improve the energy efficiency of the property in at lest two ways. Improvements are voluntary not mandatory but could save you substantial cost in the longer term. Insulating your home for example would keep you warmer in the winter and cooler in the summer thus saving fuel cost.

Property for sale

If you intend to sell your property you will need an EPC before it is advertised. For properties already for sale, you will have seven days after the 1st June 2013 to prove that you have applied for the certificate and then you are given a 21 day extended period to obtain the EPC.  You can of course obtain one beforehand. All estate agents are required to show the EPC rating on their details. Failure to obtain the EPC could result in a fine for both the vendor and estate agent, ranging from 3000 - 600,000 euros!   If a sale is agreed without the EPC, your sales contract could be declared void and your purchaser can demand compensation for not being informed about the properties energy efficiency, especially if lawyers have been engaged.

Notaries are also obliged to request the certificate when signing over the property.

If your property has been insulated and double glazed, once tested, it should have an excellent energy efficiency rating. This will be attractive to prospective purchasers. On the other hand, if you have a poor rating, it could work against you.

Rental property

This new law also affects properties for rent. A certificate will be required for any let that consumes at least 25% of the annual energy consumption. This applies to short term holiday lets as well! This short term letting is obviously very difficult to police and many will choose to ignore the requirement. If you advertise for longer term lets

(min 4 months) the certificate will be required. If you already have a tenanted property, you do not require a certificate unless you get a new tenant. The laws says that new tenants have the right to know the energy consumption of the property they rent. Failure to provide the EPC means you can be fined 3.000 to 600.000 Euros by the Spanish government, your rental contract declared void and your tenant can demand compensation for not being informed about the properties energy efficiency.

If you rent out your property through an agent, either you or your agent will need to get a certificate for your property. An agent will not be legally allowed to offer your

property for rent or sale without a certificate. The law assumes that most holiday lets that are being commercially advertised will consume more than 25% of the annual energy used.

How do I obtain an EPC

Only a qualified official energy efficiency certifier can perform an EPC test.

The building inspector will collect data from the building as follows:

1.Measurement of walls and windows and orientation, North, West, East , South.

2.Composition of walls, cavity wall, insulation, materials. Composition of windows, doors, double or single glazing.

3.Composition of roof, floors and foundations in contact with the ground.

4.Solar control devices, porches. awnings, overhangs or shadows that can affect the building excluding trees.

5. Installations, boiler, air conditioning, heating system, solar panels etc..

The time it takes to collect all the information depends on many factors. One hour for a simple one level property of a small size but longer for a larger property on more than one level.

Other considerations also include, when the original property was built, if it has been extended over recent years. This data is then in-putted into a special program, which can then provide an energy efficiency / carbon emissions rating. This is a quick process but may take several hours subject to the complexity and amount of data being processed, after which a certificate should be issued promptly.

If you make changes to your property that help improve your rating, you can have your property re assessed at any time during the period your certificate is valid.

This article has been written by Anthony Bloom and may be used with permission only.

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Posted by on Wednesday 24th April 2013

The Spanish Property Crisis 2013

During the final boom year of 2006, over one million properties were sold in Spain which on reflection, was quiet remarkable. Those were the days of easy lending, which fuelled demand and inflated property prices.

Since the end of 2007 to 2011 the property market had suffered a price correction, which has resulted in a 25 - 30% price reduction across the board. Many properties were sold during that period regardless and 2011 was a very good year for property sales by comparison to the previous four.  2012 was slightly down on 2011 but there were still three hundred and twenty thousand properties sold in Spain during 2012.  It may be a third from the heights of 2006 but still far from dead, which the media would have you believe.

In contrast to the doom & gloom reports, the region of Valencia has seen excellent property sales for 2012 and Javea/Moraira in particular has continued to attract many northern Europeans.  Property sales so far in 2013 have been exceptional as more people seem to be reducing their financial exposure to the banks as well as other non performing financial institutions. It will be interesting to see the official figures at the end of the year but the message we hear daily from prospective purchasers, is loud and clear, they all have a mistrust of the banking system, especially when the EU can request a nation like Cyprus to rob from personal savings. That is a very unsettling thought for savers, regardless of where you live in Europe.

Throughout the crisis, we have seen an annual reduction in property prices and this reduction varies significantly subject to location. For example in Torrevieja Costa Blanca South, we have seen prices fall by as much as 70% on some of the mass developments built for a given price but the more bespoke properties in that area have not suffered anything like this, circa 40% at most.

Many of those mass developments still remain empty, even though you can buy a relatively new three bed villa for 65,000 euros and less.  This dire situation basically makes news headlines and by association gives the property market, for the whole of Spain, the doom & gloom people read about.

Many of the "new unsold" properties you get to read about which the government/banks are trying to off load are in  areas like this, all the way down to the Costa del Sol. This kind of news, drives uncertainty and fear into any prospective buyer. Consequently today's buyers are cautious because property is evidently not the investment it used to be. This whole mind set takes time to come to terms with as most of us have historically been conditioned to the contrary. The fact is, we all have to adjust and mange our expectations better. Ultimately this means big reductions if you want to sell now. It's no different for me writing this stuff and it's a bitter pill to swallow.

Not too bad if you buy again in Spain but if you are going back to the UK, most have to scale down considerably from their Spanish villa in the sun.

The northern Costa Blanca, specifically Moraira & Javea has suffered a 25-30% correction in prices since the boom year of 2006. This has meant some excellent bargains for the buyers living within the euro zone.

For the Brits, whom have historically been the major buyers of Spanish property, they have not really seen a significant price reduction in real terms, due to the loss of value in GBP Vs Euro.

GBP has lost circa 30% since 2006 against the Euro. Consequently the demand from the other euro zone nations has increased dramatically. Regardless of the price corrections, euro zone buyers still want substantial price reductions, especially on anything that needs updating, which is common place.

Providing the accommodation, location, orientation and plot is desirable, quality is still in demand and sells quickly. Like most property agents in Moraira & Javea, we are inundated with buyers looking for quality property for sale in Javea  and properties for sale in moraira at a reasonable price, unfortunately properties like that are few and far between. Consequently, property that is dated tends to either hang around for months or vendors eventually decide to accept a low offer to sell it, usually on a reluctant "needs must basis."  In many cases this price erosion process takes three years or more. During which time  fair offers often get rejected only to be reduced even lower than this a year later but still behind the reality of price reductions as other sellers have also become more realistic with pricing relative to the actual demand.

Moraira & Javea Villas for sale.

For the majority of buyers around, regardless of nationality, their expectations often exceed the available property stock within their budget range. In many cases, middle ground can be found but this means compromises for both buyer & seller. The properties that are realistically priced amongst all others keep selling and are always in big demand.    Good affordable property stock is very hard to find, as most of the properties for sale are still vastly overpriced for the condition and location they are in.

In our experience a lot of villas priced at 295-395,000 euros tend to be 50 - 100,000 over priced compared to some of the better quality ones available at this price level. So unless a property has been completely renovated to a high standard and situated in a good location, many are still too expensive for today's prudent buyer. Many have had price reductions but unfortunately do not reflect what's happened to the market.

The price reality gap between buyer and seller is still significant but not as bad as it has been in the past for this area.  That said, prices still need to come down on many properties for them to stand a chance of selling. For those that really want to sell its easy to find buyers, providing they have a desirable property that falls within the affordability band of up to say 300,000 euros and are seriously prepared to negotiate subject to the condition, location etc... Above this, what would seem to be a "falling price band," buyers get significantly fewer. Speaking with many agents, they report that circa 90% of buyers are within this 300k euro price band. If you add on the 11% purchase cost it's still too much for most.

Regardless of price reductions there are those properties that can be very difficult to sell.

For example, if you have too many steps to get in and out of your property, it's getting very difficult to find buyers that will compromise because the average buying age has risen to 50 years of age and is creeping even higher.  This age group and beyond have basically accrued some wealth over the years and have "real money"  which is just as well because banks don't want the risk any more, other than for dumping their own unsold poor quality repossessed stock.

For the moment the Moraira & Javea property market is busy with many buyers looking for a deal. So if you have a property for sale and it's not selling, there is usually good reason as there are many buyers around and villas being sold. The longer you leave it and hope a buyer will come along, the higher the risk you have in not getting the bottom line price you have in mind. If you really must sell, speak with your estate agent and get them to give you a realistic price that will make it desirable to the buyers around today.

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Posted by on Thursday 11th April 2013