A Spanish Hot Properties Testimonial October 2012


Marbella Property in 2012

Below is an email we received from a happy client

Hi Nick
I hope you had a wonderful trip to Paris.  As you will be aware the deal completed so we now own 32.1.8 Los Lagos De Santa Maria Golf, Elviria.  Your help was much appreciated, and your expertise and knowledge of the market and area is first rate.  Thank you too for fulfilling my need for a good outside space, the terrace was spectacular last week in pefect weather conditions and the terrace size really makes the property.  You were right about the sea views.
Also Maria Rubino did a very good job on the legal side, thorough, good communication, and willing – thank you for introducing Maria to us we will be using her in the future as and when we have any legal requirement.
 Phil, Nicky’s husband has been booked to do some work for us.  The furniture is all ordered.  A keyholder has been appointed.  So all in all things are moving forward.
I hope they give you a good commission as you certainly earnt it.  I look forward to the gift back towards our inspection trip expenses which will be going towards the building and aircon costs.
If things progress well and we avoid too much “manana” then I hope we can invite you for a mojito on the terrace at Xmas.
Thank you for your help Nick.
Kind Regards


Being an International real estate agent in Spain can sometimes be a thankless task but its moments and emails like this that make it all worthwhile and why I set up the business in the first place which was to help people buy safely and securely in Spain and also make a living at the same time. So Just like in the move Jerry McGuire its very nice when we have an agent to client relationship that others agent will very rarely have.

Our feelings about Celia and her husband David is just positive wonderful clients who we were really happy to help.

Just looking forward to our mojitos at Christmas now.

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IBI Spanish Property Tax Rise, How will it Effect You?


Mallorca Luxury Villas

Villas in Spain

IBI the property tax in Spanish is an annual tax on property that the owners of any type of property, whether it be residential properties, garages, business premises etc, are obliged to pay, and constitutes one of the main sources of revenue for town councils. For this reason many town councils have already announced that that they are going to increase property tax in order to increase revenues. However, since many taxpayers still find it difficult to understand how the tax is calculated so we will try and answer the major issues concerning the tax. this is just one of the very few examples why the Spanish property market is so complex

At this time of the year the dreaded property tax notice is being sent to millions of property owners. This is a tax that is almost universally disliked by taxpayers, and a tax that virtually no-one understands.

Who has to pay property tax?

Almost all property owners are obliged to pay this tax, although there are some exceptions as, by law, some types of real estate are exempt. One of the best-known exemptions is property that belongs to the Catholic Church, a topic that has been the subject of hot debate in the media recently. However, church property is not the only kind of property that is exempt, as there are other property owners who do not have to pay this tax. These include:

– Property owned by the state, the regions, or local entities which is directly related to public safety or educational services (police stations, prisons, and schools).
– State-owned property dedicated to national defence.
– Property owned by the Red Cross.
– The diplomatic offices of other countries.
– Registered heritage buildings of historical importance.
– Old buildings in big cities or buildings owned by legally recognised non-catholic religious associations.

How is the property tax calculated?

The town council of each municipality establishes, within certain limits, how much tax has to be paid for all the properties in the municipality. In the case of urban properties, this is done by taking the assed value – a value which reflects the value of the land and also the building on it -and applying a coefficient that ranges from between 0.4% to 1.3% to it. For example, the tax due on a residential property in the capital city of Madrid (where the tax rate is 0.581% for 2012) with an assessed (not real) value of 79.215 euros is 460 euros.
You can find out what the assessed value of a home is by asking at the Cadastre. It also appears in the property tax notice sent to all property owners each year.

The property tax can differ widely across municipalities, depending on whether a property is located in the capital of a province, used for the provision of public services by the council etc.

How the assessed value of a residential property is determined

The assessed value, to which the town council applies the percentage established, is calculated by the Cadastre in accordance with a set of criteria. The most important of these include:

– the location of a property
– the market value of each property
– the cost of the labour and material used to build a property
– the taxes that the building is liable to, and the quality
– the age of the building, among others

The resulting value is significantly lower than the property’s market price, usually about half the market price. Every 10 years town councils have to review the assessed values of all the properties in their municipality. The values are usually revised upwards, which means that the amount of tax to be paid increases.

Are there any discounts applied to the payment of this tax?

There are several general discounts which can be applied to the property tax, such as a discount for state-subsidised housing (VPO) – which has a 50% reduction for the first three years – or for the agricultural assets of agricultural cooperatives – which are entitled to a 95% discount.

In addition, each town council can establish additional discounts in its municipal regulations, as Madrid Town Hall has done for large families.

Some town councils also offer a discount to taxpayers who pay the property tax by direct debit through their bank. An example of this is Madrid Town Hall, which offers taxpayers who pay by direct debit a 5% discount on the amount to be paid. In the case of Barcelona, taxpayers who pay in this way will save 2%.

Property tax increases: Why?

Every 10 years town councils have to review the assessed value of the properties in their municipality. It is estimated that a total of 4.2 million properties will be subject to an assessed value review in 2012, and that as a result millions of property owners will have to pay a higher property tax.

In order to soften the effects of this increase, after the assessed values have been reviewed some town councils, such as Madrid, apply a reduction coefficient to the new assessed values. This reduction coefficient is reduced each year, and as a result the amount of tax to be paid increases every year. Thanks to this system, the “impact” of the tax is not so punitive. Instead the amount to be paid steadily increases over the ten years following the review.

What is more, it is also necessary to take into account a change in the law which will result in many property owners having to pay more tax. At the end of last year the government of Mariano Rajoy announced that, as a temporary measure, the tax rate for property tax would be raised during 2012 and 2013 in order to help town councils collect more revenue , around 918 million additional euros. This change allows municipalities that have not carried out a review of assessed values since 2006 to increase the tax due for properties with a higher value by up to 10%, depending on the year in which the council last reviewed assessed values.

It must be remembered that many town councils have not reviewed the assessed values of the properties in their municipality in over a decade, despite the fact that ten years is the recommended assessment period. In fact, of the 7,591 municipalities that exist in Spain, almost half have not updated land values in 18 years, which means that they can now charge 10% more, thanks to this new government measure. This increase will be followed by another, much more dramatic, tax hike which will take place when town councils finally review the values of the properties in their municipality. By that time the assessed values will have risen so much since the last review that the amount of tax to be paid by residents will increase significantly.

When a property is sold does the buyer or purchaser pay the property tax?

The property tax for each year should be paid by the person who is the owner of the property on 1 January. If, during the year, a property is sold, the tax due should be paid by the person who owned the property on the first day of the year.

If the property is rented, should the tenant or the landlord pay the tax?

The town council will send the notice of payment to the homeowner, but they can get the tenant to pay the tax if this has been established in the terms of the rental agreement.

So if your looking to buy a villa for sale in Spain we hope this information will be useful to  you.


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UK Spanish property Buyers Still the Biggest in Spain But for How Long?

Mallorca Luxury Villas

Villas in Spain

Well I suppose it will come as no surprise to you that UK Spanish property buyers still make up the largest percentage of an increasing international property buyers’ market in Spain. However on closer inspection the trend is considerably downwards with UK citizens currently missing out on huge opportunities.
Official figures published recently for 2011 show the British bought more property in Spain than any other foreign buyers. However those looking to buy Spanish property now cover a much more wide ranging area.
Of the 22,260 overseas purchases in 2011, only 18% were British. The number of foreign buyers was up from 4.45% of all property sales in 2010 to 6% in 2011.
Below is a selection by number of Spanish properties purchased in 2011 by nationality of the buyer
British          4007
France        1972
Germany     1702
Russia        1645
Italy              1187
Sweden       1176
Norway        1049
Belgium       1031
A close inspection of these figures makes very interesting reading. In 2008 the amount of UK buyers made up 60% of the international market with obviously the number of properties sold being much higher. Whichever way you cut it a drop from 60% to 18% is huge and a good indication why you shouldn’t rely on one particular country or sector for your business.
The issues that have affected the UK market especially is the exchange rate that from a high of 1.60€ in 2002 to a low of 1.07€ in 2008/2009 are now less of a problem with the current exchange rate as of 25 July 2012 being 127.67€ and property prices in some areas now below 2000 levels. However there is still a lack of confidence from UK buyers with the reality that other nationalities picking up the best property deals.
If one starts to look at the figures of other nationalities one can see some really interesting movements. If you add Norway, Sweden and Denmark together as one block they are the second largest block with over 12% of the overall market. Interestingly unlike the UK these buyers are increasing year on year. The same goes for the Benelux countries i.e. Holland, Belgium and Luxemburg making up some 9% of the market. Add Scandinavia and Benelux together and they are the biggest group of Spanish property buyers in 2011.
Another interesting stat is the Russian figures because in 2011 Russians became the largest single buyers in the Alicante Province. Costa Blanca having used to be the second resort for UK buyers. The other factor is these figures are by properties sold rather than the amount they were sold for so Russian buyers would figure as a higher percentage if it was based on the value of the property sales.
What this tells us and what we are very aware of at Spanish Hot properties is that the market has completely changed and an international real estate company can no longer survive on just English speaking clients alone and why we speak all the major European languages as well as Russian and most importantly have natives from those countries working within our group.
The other major fact that comes from these figures is that there was only 22260 property sales i.e. only 1855 sales per month for the whole of Spain. When you think how many international real estate companies are based in Costa del Sol, Canary Islands, Balearic Islands and Costa Blanca it’s pretty clear there isn’t a sustainable living market place for them all and at least half will have fall by the wayside or continue to struggle for a living.
If you are looking to buy Spanish property in the near future and want some advice about the market place why not visit http://www.spanishhotproperties.co.uk/  for the most up to date information or alternatively contact me directly.

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Germany Saves the Euro and the Spanish Property Market



So finally after lurching from one crisis to another Europe which in all reality is Germany has finally agreed to the measures that are required to bring an end to all the uncertainty of the Euro and especially Spain’s participation in it.
In reality we all know Spain was never going to leave the Euro but it was up to Germany to agree to the changes that would see individual countries being able to go to the markets and buy bonds at a similar rate to that of Germany and with the new changes this will now happen.
Even before this happens bond rates for Spain and Italy have already dropped and in Spain well below the 7% rate that commentators deemed unsustainable.
So why has Germany saved the Spanish property market? In simple terms especially for UK investors it takes away the uncertainty and the concerns that Spain would leave the Euro thus devaluing and returning to the Peseta. The reality is there has never been a better time to buy Spanish property especially UK buyers with the lowest prices since last century as well as the best exchange rate for several years. All the factors point out this is the time to buy. However you wouldn’t want to buy and suddenly see a 20% devaluation in your asset. Now that is not the case people can invest in Spanish property knowing that they will be getting the best value possible.
One word of caution for all you UK citizens is to ask yourself what the long term future is for the Euro Sterling exchange rate as right now the current rate is a big positive for those who are buying.
So hats off to Germany for finally doing what they had to do and Europe and especially Spain can now go from strength to strength

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Spanish Property Bargains Location or Property?

Capanes del Golf

For those of you deciding on the best Spanish property investment you will no doubt be faced with the age old problem of property V location and what is right for you.

I am sure you have seen all those TV programs like “A Place In The Sun” where the would be property buyer is given the choice between Location or the quality of the property and where the buyer in the majority of cases picks location as the criteria. However as the show unfolds it is nearly always the quality of the property that win over location. So why is this and is this the experience of Spanish Hot Properties on the ground here in Marbella and Costa del Sol.

Yep the truth is our experience very much reflects those TV programs where buyers end up choosing the property over location and the reason is the majority of the buyers just want to make their budget stretch further rather than accepting what their budget will buy in a prime location area.

Also these buyers looking at investment property in Spain actually are not basing their judgment on sound investment fundamentals of the head when it comes to buying Spanish property. The reality it’s the dream of the heart that takes over.  There is absolutely nothing wrong with this as long as you understand the reasons you are buying your property. I.e. if it is your property to live in or you want an extended home then the house you live in should be something that your 100% sure about from a living in point of view. However if it’s really for investment purposes then Location Location Location needs to enter the head and rule your decision but invariably doesn’t.

In relation to Spanish Hot Properties experiences with our average sale being around 300,000 Euros its clear those clients have a difficult choice to make but once you can look to spend more than 400.000 Euros it’s much easier to make that call as it’s possible to find good prime location property and then it has more to do with the size of the property.

So what should you do here in Costa del Sol? Well as stated above I would suggest you ask yourselves the following questions

1                    What is the property for i.e. holiday home or property investment?

2                    Do you want to receive rental income from the property or is it just for you?

3                    Do you require finance?

4                    How often will you use the property?

Your answers to these questions should allow you to make a reasoned judgment call as to whether you should be looking at investment property in Spain or buying a Spanish holiday home.

If you would like some advice or more information on the process of buying or investing in Spanish property why not contact us at Spanish Hot Properties.


Spanish Property Market Coming to Terms with NIE Number Rule Changes

Puerto Portals Mallorca

So for those who are looking at Spanish property investment or just buying a holiday home in Spain in 2012 a rule change will that almost went unnoticed could well change your plans for the buying in Spain this year.

The rule change I refer to is the fact that you now have to appear in person to obtain your NIE number which you must have before you can buy a property here in Spain. You can do this by either attending a police station in person or if you are not in Spain by visiting the Spanish Consulate. This is a major change as before January 2012 you could give power of attorney to you Lawyer who would go and get your NIE number for you just as I did back in 2012. However you can still give power of attorney to your Lawyers to complete the purchase for you without you having to be here in person

So how does this rule change effect overseas property buyers in Spain? The reality is that for most people it just adds some extra time which in a lot of cases is an extra day. We have put a system in place with our recommended lawyers that cuts it down to half a day but obviously for those buyers who just want to fly in view the property put a deposit down and leave it’s an inconvenience they could do without which means they will need to stay an extra day. Also it causes a problem where someone views at the weekend.

We recently had clients who made a decision to buy and returned to Australia not realizing they needed to get their NIE numbers but now they will have to either come back or make a trek to the Australian consulate or pull out of the purchase. Its cases like this that highlights the problem that this simple rule change could have on the property market in Spain.

So if you’re looking at investment property in Spain or a Spanish holiday home please bear in mind to allow that extra time in your schedule.

If you want any further information on NIE numbers in Spain please feel free to contact me

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