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Holy Days and Holidays

One of the first questions you might ask, whether buying a property at home or in Spain, is "Is the area safe?". In the challenging economic conditions of the last decade, which have hit southern Europe harder than most, it is easy to imagine that, given the significant increases in unemployment and poverty, crime figures would be higher than in other places. But, in fact, in Spain, it is exactly the opposite. In a survey conducted by the European Institute for Crime Prevention and Control (affiliated with the United Nations) in 2014, Spain's crime figures were shown, across almost every area, to be lower than those of, for example, the U.K.

In police statistics, from 2007-2011 per 100.000 population, there were on average 2.000 offences in Spain, compared to about 8.000 in England and Wales, and over 11.000 in Scotland.

In terms of the most common offences, Spain is very much the winner. There was a 7% drop in rapes per 100.000 population in Spain, compared to increases of 22%, 18% and 30% in England and Wales, Scotland and Northern Ireland.

For every 900 robberies per 100.000 population in Spain in 2011, there were 3.603 in England and Wales, 2.727 in Scotland and 1.992 in Northern Ireland. And, whereas over the same four-year period, there was not enough data to record the number of burglaries in Spain, per 100.000 population, England and Wales had 990. 

Finally, assault figures suggest that sunshine reduces anger by a factor of over 40: for an average of 35 offences in sunny Spain over four years, there were 1.487 in chillier Scotland.

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High Days and Holidays: August in Andalucia


What goes up must come down, so we’re told, but, in property, it is often the opposite. After a tough decade, the Spanish housing market is recovering, and Andalucía, in particular, is benefitting.

Foreigners constitute a significant proportion of Spanish property buyers, as Spanish Property Insight notes. In the first quarter of 2016, 99.427 houses were sold, an increase of 9.8% on the same period of 2015. And of these 12.856, or 12.9%, were bought by non-Spanish buyers.

Although the Brexit referendum, and a weakened pound, might be considered reasons for stalling, the highest number of foreign property investors are still from the United Kingdom: in the first quarter of 2016, British buyers bought 2.814 properties (22% of all purchases by foreigners), followed by the French, who made 1014 purchases (source: Spanish Property Insight).

The most popular areas, according to a recent Property Registrars’ report are Andalucia, Catalonia, Madrid and Valencia. 

Such a burgeoning market is great news for anyone who wants to make a safe investment. Buyers from all over Europe, as well as the Chinese, are seeing Spain as a good prospect. Obviously, however, the continuing strength of the demand for Spanish property has a downside: property prices have gone up by 6.9% over the last year.

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Spanish Economy Booming?

One of the first things that might have struck you when you first visited Spain was how empty the restaurants were at 1pm, or 8pm, and how people seemed to think nothing of eating breakfast at 11am, or meeting for a drink past 10pm at night. I, for one, remember being laughed at for going for churros y chocolate at 4pm; churros are a classic breakfast/morning or teatime snack, whereas 4pm is the end of lunchtime for Spanish workers and school children, with another four or five hours to go before dinner.

But, as the graphic from El País shows, the Spanish day is very different to those in other countries. The further north you go, to Sweden or Germany for example, the earlier the day starts, perhaps to make the most of the light, perhaps because, unlike Spain, those countries have less need to adjust to extreme heat in the summer, which makes anything other than being in a cool, darkened room, impossible. However, though that might seem to be the reason for such a late-starting, late-finishing day, the real cause is Franco not Fahrenheit.

After World War II, most countries in Europe were forced to modernise what were now seen as long, rigid working hours, established in the Industrial Revolution, but Spain, under Franco, did not. And, with a scarcity of jobs, working men (and they were mostly men) were forced to take two jobs, one in the morning, one after 4pm. The family would wait for his return, past 8pm, to dine and that working and eating structure has stuck.

Such an elongated day needs changing, argues José María Fernández-Crehuet, the economist whose book La conciliación de la vida profesional, familiar y personal. España en el contexto europeo, examines Spain’s anomalous position in Europe. The first step would be to align Spain to its true geographical time zone, GMT+ 0, instead of GMT +1, where it currently sits. Spain’s clocks would then be synchronised with those of Portugal, the United Kingdom and the Canary Islands. Thanks to eating, and sleeping earlier, Spaniards would benefit from improved health, biorhythms and productivity.

 Author: Louise Tucker

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Spanish Property Transactions Soar

On our patio in the Albayzin district of Granada we have a large olive tree. Like the lemon tree on the other side of the patio it is a force of nature. Every second year the crop of black olives is huge. In the past I have tried curing them to rid the bitterness. Without much success. 

The tree grows at such a phenomenal rate that it invades the windows of the house and when the olives ripen they fall onto the terra cotta paving and leave terrible black stains which only agua fuerte will shift.

So… two months ago I decided to kill two birds with one stone: heavily prune the tree when it was still full of olives, abandoning the harvest to the rubbish collectors. I left nine huge bundles of olive branches by the underground refuse bins one Saturday night. On Sunday morning they were gone and I spent the entire day with a pressure washer trying to clean up the patio.

A couple of weeks ago our neighbour María-Luisa bused. The postman had left a parcel with her as we were out. “What have you done with the olive crop this year?” she asked me. I sheepishly admitted that I had thrown it away. “Why?” she was incredulous. “I’ve got some of yours here”, she said disappearing into her house.

She presented me with a shallow plastic dish of gnarled looking black olives. A strong aroma of oregano pervaded the dish. “I made these from one of the branches that hung over my patio” she proudly announced, pushing them on me. “They’re yours,” she said. They tasted delicious.

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Brexit - Cheer Up, It May Never Happen

The huge lemon tree on our patio in the Albayzin district of Granada is, and always has been, ecological and entirely natural. And just as in the human population people are made in all shapes and sizes, so it is with lemons! In the photo there are a few of this year's plentiful crop. Most are round, the shape associated with lemons, but some are elongated and others well, just weird, as the photo shows.

Do they most closely resemble the faces of witches from Shakespeare's Macbeth? Or crab claws? Or were they speaking through open mouths when time froze?

Whatever, they are as wonderful as they are weird. And their juice is heavenly.

Author: Allan Hilder

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The Valley Of Happiness

We had been thinking for many years about retiring to Spain and each year we spent some of our holidays visiting different areas.  Les was born and grew up in the West Indies and wanted to get back to warmer weather than that of England.  Auds is from the Emerald Isle and a sun lover.  We have two children, both with commitments in England so wanted somewhere within easy reach and good options on flights - Spain fitted the bill.

We reached a point in our careers when we had had enough and wanted another way of life. Being too young to retire we decided to invest in a self-catering holiday destination. We set out our search criteria and used the major internet property portals to identify several properties.  We rented a casita in Almería Province and spent several days viewing before settling on a property that provided a main house for us, three rental units and a swimming pool.  We agreed the price, arranged a property survey and put our home on the market.  Unfortunately we had to withdraw from the purchase due to legal issues with the property.  We were now about to become homeless having sold our family home of 23 years!

So back to the drawing board.  More extensive internet searching threw up potential properties and one in particular caught our eye on the borders of Málaga and Cordoba Provinces.  The owner was selling directly so we called him to test the water on price flexibility and also on the legality of the property.  Getting the green light on both counts we flew out for a few days.  We loved the property, agreed a price and arranged a survey.  Once again we had to withdraw from the purchase due to legal and also structural issues!

Returning once again to the internet we broadened our search criteria and identified properties across Andalucía.  By now we had left England and were living with my sister in the French Pyrenees.  At this point we were becoming somewhat sceptical about ever finding a rural place that was legal and structurally sound.  We decided that we should base ourselves in Spain for seven weeks and blitz the market, found a casita to rent, contacted a number of estate agencies and drove from France to restart our search.

The seven weeks flew by and we viewed more than forty properties across Andalucía.  It was towards the end of our stay that we met with Allan Hilder from Another Way of Life.  We had identified several properties on their website that looked interesting.  Allan, and his colleague Paul, arranged viewings on all but one.  That one was in the midst of legal wrangling about ownership so they advised against it.

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City of the Pomegranate - True or False?

On 12 May 2016 a decree enacted in 2012 (Decree 28/2012) comes into force. It has important bearings on people who rent their homes or parts of their property for holiday lets on a daily or weekly basis. This affects many of our clients. Under this decree all persons who let their properties in this way will be required to register the activity.

The Junta’s intention in redacting this decree is ostensibly to ensure that such lets meet certain minimum standards. However, since there has been no clamour from consumers for a raising of standards we can safely assume that the real motives are:

to appease the hotel industry which complains about unfair competition from unregulated businesses to raise taxes from people who currently hide their letting income by, for example, receiving all or part of their income in overseas accounts or in cash.

However, there are some very important exemptions, principal among which are:

the regulations apply only to URBAN properties. Owners of RURAL properties are still required to register their property as Vivienda de Turismo en el Medio Rural but will not be required to meet the minimum standards established by the new regulations.properties let to tenants who stay for two months or longer as these are not considered to be holiday homes.If a person has three or more holiday lets within a one kilometre radius this activity falls under the  regulations governing tourist apartments.

The onus is on the owner of the property to register it before 12 May 2016. Unless this is done and a registration number obtained, which must then be displayed when offering the property for holiday rentals, the owner will no longer be permitted to rent the property.

It is estimated that there are as many as 80.000 properties liable to register but by the 12th May only 3.000 had registered. Failure to do so can result in a fine of up to €150.000.

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Spanish Property Prices To Rise By 6% Per Year


For those who want to buy a property in Spain the important question is whether to go ahead with their investment now or wait until after the vote. And what would happen if the U.K. decided to leave the E.U. after the June referendum.

Most people believe that coming from within the E.U. is beneficial when contemplating buying property in another E.U. country such as Spain and, consequently, if the U.K. was to leave this would somehow impact on their ability to own property in one such country. Actually, this is misleading. You don’t have to be an E.U. national to buy a property in Spain – people from all over the world can, and do so, in significant numbers. There are American, Chinese, Norwegian and Russian property owners in the country to name but a few countries from outside the E.U. 

Even if there was a resounding yes to a Brexit, bilateral agreements would be put in place to make sure that rights of newly non-E.U. residents are protected in the same way that E.U. members are. The simple reason is that the British expat community in Spain contributes a large amount to the economy. If the government suddenly decided that visas and other conditions were required, it could see many selling up and heading back to Britain. 

The Spanish certainly don’t want that. 

It is also important to remember that the traffic is not all one way. According to statistics issued by the government in the last week the U.K. has a net immigration in 2011 of 192.000 from other E.U. countries, principal among which were residents of Spain. A lot of Spanish people have relocated to Britain in search of jobs and both countries benefit greatly from this exchange. It’s in everyone’s interest to make sure that freedom of movement is maintained and that necessarily includes the right to own property. Post-Brexit the position of British residents and property owners might change slightly but it’s more likely that this will have to do with reporting requirements rather than a full blown reversal of the status quo that some in the media have predicted. 

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December Holidays: Día de la Constitucion and La Fiesta de la Inmaculada Concepcíon

In a recent legislative amendment the national government has empowered local authorities to reduce the amount of IBI payable according to the energy efficiency of a property. There is a sliding scale of reductions ranging from 4% for a class E property to 20 % for a class A property. But don’t get too excited. Firstly, of all of the properties we have sold since the requirement for a certificate came into effect in June 2013 only one has achieved a D rating. The remainder have all been F to G. Country properties are likely to remain so. Secondly, the legislation AUTHORISES local authorities to offer this reduction. It does not OBLIGE them to do so. It is entirely discretionary. Given that every local authority is desperate for cash, this move seems like political gesturing.

 

Author: Allan Hilder

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Christmas Traditions in Granada: Los Dulces de Navidad

Last week I met an English resident of rural Andalusia who, around a year ago, went to see his local GP complaining of chest pains. It was diagnosed as bronchitis but, three weeks later, when it hadn't go away he returned to the surgery. A second doctor immediately arranged for him to have tests at a hospital. Guess what?

The result was that he had cancer. Fortunately, it was caught early and with radiotherapy treatment he has been able to clear the cancerous growth. I asked him about the treatment he had received. Exemplary, he said. Couldn't have been better. Right through from the nurses to the consultant specialists. And any time I need an appointment locally, I get it straight away. I've never had to wait more than the next day.

Each time he needed transport to the hospital an ambulance came down the narrow winding track through the olives to his cortijo to collect him. You wouldn't get that in U.K., he said.

This is an expression I have heard before. And I’ve heard even worse said about the health service in the Netherlands.

This man’s experience echoes that of a client of mine. Lawrie was rushed to hospital complaining of chest pains and difficulty in breathing. He ended up spending several weeks in hospital and was operated on for a heart by-pass. A week after the operation, he was back home and active once again.

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A guide to Granada's tapas...

Imagine you are a Spanish home owner unable to meet your monthly mortgage repayments. You have two choices: either sell the property, pay off the loan and pocket whatever difference remains or sit tight and do nothing until the bank eventually obtains an order to evict you.

In countries such as the United Kingdom the lender takes the risk that the security obtained (i.e. a charge on the property) will be sufficient to liquidate the debt in the event of non-payment. At the worst the mortgagee can simply hand over the keys to the property and say "take it, it's yours, do what you will". If there is a shortfall when the property is disposed of, the lender loses.

In Spain however, this system, known here as dacia, is not available to homeowners. And the risk of the shortfall is carried not by the lender but by the borrower. If a homeowner is unable to repay the debt he/she is liable to pay not only the outstanding amount but also punitive interest charges and costs. And, even worse, the value at which the property is taken over into the bank's ownership is largely under the control of the bank itself. In other words the bank can acquire the property at a low price and the outstanding balance, plus interest, remains payable by the borrower. All of his/her other assets can be called upon in order to repay this.

There are loud calls to end this harsh practice but the Rajoy government doesn't want to know. Introducing the dacia would lead to irresponsible borrowing, they say. Good citizens have the responsibility to ensure that they borrow only what they know they can repay, seems to be the logic.

How does this influence the stock of properties available from bank repossessions? Homeowners who find themselves in difficulties will do everything they possibly can to sell their property, even at a loss, because their liability is likely to be far less than if the property is repossessed. So, those properties that reach the banks' portfolios are, basically, pretty unsaleable.

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For Better Or For Worse

Each time a property is transferred from one person (physical or legal) to another, the transaction attracts an Impuesto Sobre Transmisión de Patrimonio (I.T.P.). Or, in English, Tax on the Transfer of Wealth.

This tax is payable by the buyer and is levied by the Autonomous Region level of government. In the case of Andalucia it is the Junta de Andalucia who levies it. On 31st December 2011, when everyone was out celebrating the coming of the New Year, the Junta quietly raised the level of taxation, in particular for more expensive properties. Current rates are shown in the table below:

The tax is levied on the declared purchase price, i.e. the price set out in the escritura (title deed). Here are two examples of the tax payable:

Example One: Cortijo sold at €159.000. Tax at 8% x €159.000 = €12.720.Example Two: Finca sold at €880.000. Tax at 8% x €400.000 + 9% x €300.000 + 10% x €180.000 = €77.000 (an average of 8.75%).

There is a legitimate way to reduce at least some of this tax!

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