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Spain Property News 2014-2015

Foreign investment in Spanish property rises 28.4%
The Ministry of Public Works in Spain has released data which shows that from January to September 2014 foreign investment in Spanish property increased by 28.4% year-on-year. The total worth of this investment was €6.077 billion and the region which benefited most was the Valencia region.

The majority of the investment was made in resale property with foreigners spending €5.404 billion on re-sales, 33.4% more than during the same period of 2013. Investment in new-build property was down in year-on-year times albeit only very slightly, €672.9 million was invested from January to September 2014 down 1.09% on that period of 2013 (€680.3 million).

Foreign investment was most concentrated in the Valencia region and in particular the province of Alicante which is of course where the Costa Blanca is located. €1.284 billion was invested in Alicante province 85% of the total of €1.507 billion which was invested in the Valencia region and just 10% less than the total for Andalucia (€1.429 billion).

New-build property prices fell by 2.2% in 2014
The Spanish valuations company Sociedad de Tasacion has released its price data for 2014 which reveals that Spanish new-build property became 2.2% cheaper over the course of the year. Their study, which has been published annually since 1985, took as a sample 48,000 individual properties from a total of 3,200 developments across Spain.

The company has recorded a 40.2% decrease in new-build property prices from their peak but their statistics show that price falls are now slowing. In the second half of 2013 prices were down 3%, this had slowed to a 1.8% fall for the first half of 2014 while during the second half prices decreased by just 0.4%.

The statistics are based on properties located in provincial capitals and towns with populations of 25,000 or above. The changes mean that the average price per square metre is now at €1,994 which means that one could expect to pay around €179,400 for a standard 90m2 new-build property located in a Spanish town.

Prices of new-build property dropped in all Spanish regions as well as all of the provincial capitals. The greatest regional decreases were recorded in La Rioja (-3.7%), Aragón (-3.5%) and Asturias (-3.1%) while the most marginal falls were in Navarra (-1.2%), Castilla y Leon and the Canary Islands (both -1.7%) and Galicia (-1.8%).

The Sociedad de Tasación data is in line with what most statistics agencies are currently reporting with property prices still dropping but at an ever slower rate. 2015 should be the year in which the general downward trend in property prices finally comes to an end for both new-build and resale property.

INE: Property sales rise 16% in October
The increase in sales continued in October with 26,468 properties being sold during the month which is a 16% year-on-year rise. The increase was higher than the 13.7% year-on-year rise recorded for September and further backs up the claims being made that the crisis in the Spanish real estate sector is over.

The October statistics put 2014 on track to beat the total number of sales in 2013, in the first 10 months there have been 0.1% more sales than in the same period last year. When the October data is compared with September’s it shows a decrease of 2.1% as there were 556 fewer sales completed in October than there were in September (27,024).

Resales continued to outperform new-builds with the number of resales up by 42.1% year-on-year to 18,341 while new-build sales dropped 17.9% to a total of 8,127 for the month. Resales therefore made up 69.3% of all sales in October, new-builds accounted for the remaining 30.7%.

Sales of urban land on the rise in Spain
Sales of urban land in Spain rose by 21% year-on-year in the third quarter of 2014 according to statistics provided by the Ministry of Public Works. There were a total of 4,293 sales of land completed in Q3 which also represented an increase of 13.2% on Q2 in which 3,548 land sales were carried out.

However, land prices appear to still be falling and the average price paid for the land was down 3.3% year-on-year to €142.6/m2, this figure was also down on Q2 by 2.6%. Prices fell even more sharply in municipalities of 50,000 people or more and were down 19.2% year-on-year to just €208.6/m2.

The lowest prices per metre squared in municipalities with populations of over 50,000 were found in Badajoz (€67.5/m2), Murcia (€68.3/m2) and Burgos (€121.9/m2). At the other end of the scale the three municipalities in which land cost the most during Q3 were Barcelona (€539.1/m2), Guipuzcoa (€415.6/m2) and the Balearic Islands (€412. 8/m2).

The increase in sales is clearly positive news for the Spanish real estate sector as a whole and shows that confidence is rising with development activity also on the increase. Spanish banks will be especially pleased as they have large swathes of repossessed land which has been so far very difficult to offload but may soon find buyers if the upwards trend continues.

Permission granted to republish. Data supplied by Fuster & Associates

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Posted by on 01/12/2015 08:48:00

Creating a garden in Spain

When you buy a property in Spain,
once the interior is developed to your satisfaction, you’ll want a garden that
looks as good and is appropriate for an outside lifestyle. There are many ways
to approach this and I’d just like to pass on some ideas I have come across.

Most plots here are not flat, so
it’s surely a good idea to create steps, pathways and terraces that utilise
natural slopes. Many Moraira villas have terraced gardens of various
sizes that give either shade or sunshine according to the time of day.
Comfortable cushioned chairs and a small table make an excellent seating area
for reading or relaxing with a cup of coffee. Then there are interesting
materials that can be used on these terraces to make them really attractive,
like


natural stone in an informal crazy
paving style – running this same stone through all steps and paths.


Then coloured pots can be positioned
to add interest to the terraces, perhaps planted with colourful sweet smelling
geraniums. On the other hand, if there’s a terrace where you enjoy an evening
glass of wine or two, be sure to place a plant called "Galan de Noche” nearby.
In English it’s called “Lady of the Night” and that’s because its little white
flowers release their intoxicating scent at night.


”MsoNormal">Planting shrubs at an early stage of
garden development is a good idea to quickly create shade and wind protection.
The evergreen Oliander is a good choice for this purpose. It’s hardy and
drought tolerant and will grow into a large tree-like shrub. Flowers can be
white, pink or red. One slight negative is that it’s poisonous, if the nectar
is sucked or the leaves are chewed, so even if you’re hungry, don’t do
that!  Another evergreen shrub that will
look good is Callistemon or Bottlebrush. As the name implies, the red flowers
are bristly like a brush for cleaning bottles. It will grow to a couple of
meters in height, and will look very impressive. That’s also true of sun loving
Hibiscus plants, and here it’s the range of flower colours that’s impressive


Bignonia Campsis is a favourite
since it flowers in early spring and lasts all summer. It blooms in clusters
and each tubular shaped flower on the cluster is some 8cm long in a beautiful
deep fiery orange colour. Ideally for Spain, it doesn’t want to be
over-watered, and will cover a wall, a fence or a pergola in no time at all,
giving welcome shade to the spot


Another plant that will grow and
cover speedily, is the trusty.Bougainvillea. Its flower colour range is
excellent, the most common being a gorgeous magenta – but crimson, deep maroon,
orange, pink and white are also readily available.


Another “must have” range of plants,
especially for seating areas and the entrance to the property, are those with
perfume. Here you are urged to consider jasmines, roses, lavenders, gardenias,
mock oranges, stephanotis and the fast growing frangipani vine, along with
freesias and lilies.


”MsoNormal">There are lots of centres around
that produce and sell statues in a variety of shapes and forms – from small
animals, elves (I hesitate to call then gnomes) and toadstalls to elegant toga
clad ladies holding urns or playing an instrument. We opted for this latter
category.


If your garden site is indeed
sloping, then it’s a good idea to build a few retaining walls, especially
around your terrace areas, then back-filling them with topsoil will give you
useful planting areas, with rocks forming attractive compartments for pretty
trailing evergreen plants with remarkable and colourful flowers.


Of course, flowers are an essential
ingredient of your garden, but don’t forget the architectural types of plants –
like aloes and cordylines. They can be as stunning as any bed of flowers.


We have, with some reluctance,
decided against ponds or water features in our garden. The fear of providing
breeding facilities for mosquitos outweighed our love of the sound of trickling
water around our reading
locations.

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Posted by on 12/04/2013 19:59:00

Spainish Property Update Nov 2013

Statistics released by the Central Government Public Works on property purchase during the second quarter indicate a resurgence of interest in buying property in Spain. Figures demonstrated an increase in sales in five of Spain’s 18 autonomous regions. The province of Alicante saw a total of 3,543 properties purchased making it the most popular province.

Interestingly, 54% of buyers in the province of Alicante came from abroad compared to a national average of 17% across Spain. The British are the principal buyers, mainly retirees, followed by Belgian, French and Russian purchasers. Furthermore, according to figures from the National Council of Notaries up to June 2013, 70% of the homes purchased in Spain were paid for without mortgages, whereas, prior to the economic crisis only 37% of Spanish homes were bought with no loan. One reason for this adjustment can be attributed to the lower prices of property since the economic crisis. Indeed, a study conducted by the Pompeu Fabra University revealed some areas of Spain have seen price reductions of up to 50%. These price corrections have stimulated investors to consider property as a viable option when planning their financial future. You will see that this graph clearly indicates what has been happening since the property crisis in Spain. Spanish Property Sales graph 2006-2012

There has been a change in the financial tide and as the banks lose both trust and credibility, investors are beginning to modify their attitude and behavior towards their investments. In addition, the precarious state of stocks and shares has left investors facing the challenge to find the foundation for a more resilient investment. Furthermore, the ridiculously low interest rates currently offered to savers leaves no doubt that a more constructive approach to investment is required. In short, the lost rapport, damaged trust and jaded attitude towards traditional avenues of saving and investing has resulted in a revolution as individuals search for a healthier return on their money.

The emerging savvy investor is recognising the value of a tangible investment. For example, in Moraira and Javea you can purchase a stunning 5-6 bedroom villa in a prime rental location for around 483,000 to 647,000 euros including the 12.5% purchase cost. The historical income of a property of this nature is around 40,000-50,000 euros gross, per annum. Or perhaps you could consider a property with four bedrooms offering an income of 25,000-30,000 euros annually for a purchase price of circa 400,000 euros.

The highly desirable areas of Moraira and Javea offer unspoilt resorts with beautiful coastline backed by spectacular mountain ranges. The wealth of charm and tradition is maintained by strict conservation rules ensuring the area remains unblemished. Attracted by the sun-soaked, fun-filled promises of the Northern Costa Blanca area visitors are also treated to surprisingly stunning countryside with dramatic landscapes, green vineyards, almond groves and orange orchards. A short drive from the coastal towns leads you to between craggy mountains dotted with traditional white-washed villages. Follow the narrow mountain passes and head high to be rewarded with breath-taking views. As you ascend you may be lucky enough to discover, nestling on the mountain side, traditional family run restaurants offering simple delicious food and wine menus to satisfy the hungry traveller. These unique experiences along with one of the best climates in the world offering 300 days of sunshine each year ensure visitors repeatedly return to the unspoilt area of North Costa Blanca.

In order to maintain a healthy return on your investment you will need to consider how to manage the property. Some owners choose to hire a property management company who offer a complete package acting as the lynchpin between property owners and rental guests. They take responsibility for advertising, bookings, maintenance, cleaning and pool care. A reputable company will offer good service resulting in repeat bookings. A letting agent of this nature typically charge 30-40% for their service. On a property costing 438,000 as mentioned above, this offers you an income of around 24,000-28,000 euros, a return on investment of 5-6%. Alternatively, you could maximise your return on investment, increasing it to 7-8% by choosing to orchestrate bookings and advertising yourself. There are many small businesses in the area that you could arrange to take care of the changeover and pool care.

The chances of capital growth in the highly desirable Javea and Moraira area is very realistic. Prices have now stabilised and inflation alone will guarantee growth in your investment. Furthermore, vendors are pricing their properties realistically and are willing to negotiate. Javea, Moraira and the Bennisa Coast have sustained reasonable property sales throughout the crisis. The outlook is positive for this beautiful area of the Northern Costa Blanca.

If you are considering a purchase there are a number of elements to consider. For example, a north facing villa may rent well but if in the future you wish to sell it, you risk excluding Northern European buyers as they crave sunshine all year round. Engaging the services of a professional property investment advisor will ensure all gems of information are brought to light. By covering the complete market of properties available they will be able offer you the much needed insight and reveal the excellent opportunities available.

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Posted by on 11/16/2013 18:51:00

Rental Income targeted by UK Taxman

Worldwide tax authorities are trying
to increase tax revenue and income from renting is coming under close scrutiny.
If you are the owner of a property that is rented out, whether the property is
in Spain, the UK or somewhere else, you need to ensure that tax is being
correctly calculated and paid.

It’s not hard to make mistakes,
especially if the property is located in one country and you reside in another.

In the UK, HM Revenue and Customs
(HMRC) reckons that some £500 million is lost each year through tax
underpayment on rental income. It has launched a "Let Property Campaign” to
encourage landlords to put their declarations in order, whether errors have
been made genuinely or income has not been declared deliberately. The campaign
covers UK resident landlords, and includes holiday lettings abroad in countries
like Spain.

In a recent press release, HMRC
declared "HMRC will use information it holds about property rental in the UK
and abroad, along with information already held on HMRC’s digital intelligence
system Connect, to identify people who have not paid what they owe. For those
that fail to come forward, higher penalties – or even criminal prosecution –
could follow”. Well, there seems little doubt about HMRC’s attitudes there.

Undoubtedly, there is an
ever-increasing exchange of information, so you can expect UK authorities to
find out about Spanish property and vice versa. Certainly, co-operation with
tax collection will occur between UK and Spanish tax authorities.

So what are your tax obligations if
you are a UK resident who owns a Spanish property?
As a UK taxpayer, you
need to declare Spanish property rent on your annual UK tax return. Expenses
can be deducted. Any gains on sale need to be declared and taxed in the UK.
Overseas property must also be declared as part of your estate for UK
inheritance tax purposes.

In Spain, rental income from
property owned by non-residents is taxed at 24.75% (on net income after
allowable expenses for EU residents).

If you do not rent out the property,
or when it is un-let, a notional income is deemed to arise and tax is due on
this. When you sell the property, you will pay tax on the capital gain under
the savings income regime, at rates of between 21% and 27%.

The net equity value of the property
is currently liable to wealth tax if valued at over 700000 euros for
individuals and 1400000 euros for couples owning in joint names. A mortgage can
reduce its taxable value.

The property will be subject to
succession tax, and that can be expensive for non-residents in Spain.

UK and Spain apply their own tax
rules so the taxable amount is different in each country. You do not have to
pay tax twice, however. You can offset the Spanish tax paid, against the UK
liability, to avoid double taxation. If the UK tax is higher, further tax will
be due in the UK. If the UK tax is lower, you do not get a refund for the
difference.

This has looked at Spanish rental
income and gains for UK residents, but there will be similar tax considerations
if you are resident in Spain and own a UK property. If that is the case, you
are urged to take advice from an expert who specializes in both Spanish and UK
taxation.

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Posted by on 11/15/2013 10:30:00

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 04/24/2013 15:24:00