British property buyers prefer Spain

According to a study just published by Barclays Bank, the number of UK residents buying property abroad is set to double, and a third of potential property buyers named Spain as their preferred overseas destination.

According to the results of Barclay's study, five percent of UK residents (2.2 million people) already own a property overseas, and another 2 million definitely intend to buy one. And a very high 37 percent of those surveyed for the study said they are considering the possibility of buying a property abroad at some time in the future.

Spain remains the firm favourite among British overseas property buyers, with the US coming second and France third.

Not surprisingly, the main things putting UK citizens off the idea of buying property abroad are legal and tax complications, the possibility of being misled or deceived by local property sellers, and the difficulty of adapting to a new language and culture.

Related:
Reasons for living in Spain
Property taxes in Spain
Spanish lawyers
Advice on buying a house in Spain

Lessons from one unhappy experience of buying a house in Spain

It is an unfortunate fact that the legal system in Spain is at times desperately slow. Anyone considering buying a house in Spain is advised to find a good Spanish lawyer before signing anything at all and before parting with any money.

David Wright has just started a new blog to share his unfortunate experience of buying property in Spain with other people. See the first entry below.

Users interested in following his story as the final part unravels (and as, we hope, justice is finally done and the Wrights win the home and compensation they deserve) should check out his blog: Slow legal system where he intends to keep people updated with events as and when they happen.

Considering tourism and housing investment bring considerable amounts of wealth to Spain, the Spanish law system is appalling slow and expensive.
At the begginning of 2000 we enetred into a contract to buy a house, paid the 10% deposit and arranged a date with the notary and respective lawyers to complete. The seeler did not turn up and decided not to sell. THE BIG SURPRISE... he also would not repay the 10 % deposit never mind the penalty of 10%. Our only alternative was litigation. As we were not living in Spain at the time we left a deposit with a lawyer who told us that it would be a straightforward case.
Well our case was finally heard in the local courts some 18 months later and we "won" including costs. However, the seller chose to appeal on what I understand to be very flimsy grounds. Some 2 years later the case was reheard in the Regional courts of Malaga where the original decision was upheald. ie we "won" again. However, the seller again decided with his lawyer that an appeal was in order and so we have been waiting almost 2 years for the case to come before a judge in MAdrid's high court!!! We still do not have a date nor can the system give us an estimated date as to when the case will be heard.!!!
WHAT CAN fellow EURORESIDENTES learn from this? I believe the following:
1: Entering litigation is very expensive - even though we have "won" twice, we have still had to pay our lawyers fees and costs even though the costs were awarded in our favour. The amount equates roughly to 17% of the purchase/contract price!!!! per hearing. At this point we have paid almost 50% of the orginal house contract price, (deposit plus fees)
2: The seller continues to live in the property and with no penalty or change.
3: We have no idea of timescale as to when the High court can hold the hearing.
4: The so called filtering process that was supposed to be implemented to stop people using the appeal process to delay matters as a tactic does not function.
5: The seller is not obliged to pay the costs awarded against them IF they choose to appeal....SO APPEALING is a good tactic to frustrate.
6: So having a contract from a good lawyer and within the letter of the law, still does not really protect your rights in a timely manner. WHAT then is the point of a contract? it is only worth something to the lawyers in preperation for litigation!!!
7: Perhaps the law will one day help us to retrieve our deposit and costs or even the holiday home we wanted to live in and enjoy in the future. However in the meantime, it has only benefited the lawyers and the vendor.
8: So the law can still be seen as having no "teeth" and benefits the unscrupulous property owner/seller. TAKE GREAT CARE.
Finally, if anyone has any suggestions as to what can be done to improve the law or indeed speed up the process then let me know

High-quality Spanish houses to be marketed in the UK

Undaunted by recent data published by the Bank of Spain showing that the number of non-resident house-buyers in Spain fell by 17 percent in the first semester of this year, the international real estate services provider Richard Ellis has just announced the signing of an agreement with Hamptons International. The agreement will enable Richard Ellis to offer Spanish mansions and villas directly to the UK market through Hamptons International.

According to Richard Ellis, the new alliance between these two major real estate companies represents an important added value for Spanish building promotors who work with Richard Ellis, because almost half of all foreign investment in the Spanish housing market comes from British buyers.

The emphasis of the agreement lies with the middle to upper end of the Spanish housing market, such as newly constructed villas or recently-reformed mansions and fincas with special charm.

Major Spanish promoters will now be able to offer their projects to the Spanish and British markets at the same time.

This is the press release as it appears on the website of Hamptons:

Hamptons International and CB Richard Ellis have formed an alliance to market Spanish residential developments. This will combine Hamptons’ experience in marketing overseas property to UK buyers and CB Richard Ellis’ established presence in the country through their offices in Madrid, Barcelona, Valencia, Malaga, Marbella and Palma de Mallorca. The Spanish agreement is a result of the proven success of Hamptons’ joint venture with CB Richard Ellis in the UK.

The Hamptons International and CB Richard Ellis relationship in Spain is part of a new focus for Hamptons’ overseas operations. This will concentrate primarily on new and refurbished residential developments worldwide, as opposed to resales. The company has an experienced team specialising in residential development and investment in the UK whose resources will be used in international markets.

Hamptons and CB Richard Ellis will work together to choose developments which fall within the middle to upper price range and which offer the buyer a second home with a difference whether this be in design, location or the lifestyle it offers.

Jonathan Seal, CEO Hamptons Residential Development and Investment said: “Spain is a natural progression from our residential development activities in the UK as it continues to be the most popular destination for the British buying second homes abroad whether for holiday homes, retirement or investment. We shall continue to look in other countries for similar strategic alliances where we can work with property professionals that are embedded in the national marketplace and which can offer more diverse and interesting development opportunities to our British target market.”

Buying rural property in Spain

Last week we received the following enquiry from someone buying property in Spain:

Question: We have paid a deposit on an ‘old’ property in Almeria. We later found out that the property has no Escritura and our estate agent and Spanish solicitor have both said this is not a problem – that the Escritura can be applied for and will be issued in our names and a Spanish mortgage granted. English banks will not provide a mortgage based on a newly issued Escritura as they say their policy is to wait two years to guarantee ownership and to ensure the property is not claimed back i.e. by a family member or a neighbour. My concern is not necessarily raising the money or getting a mortgage but the possibility of the property being taken away from us after we’ve paid for it, therefore loosing our money and the property.

Answer: Buying a rural house in Spain is a complicated process which can be full of problems if you do not look into all of them. The title deed (escritura) should be signed at the same time as when all the money is paid. The alternative is to pay first a reservation deposit and sign a private purchase/sale contract with the vendors or with the legal representatives (always get your lawyer to check the documentation presented by them to make sure they have legal rights to represent the real owners of the land and property).

Another very important piece of advice. The present owners of the plot of land where the house is must notify the owners of the land adjacent to the boundaries of your plot before selling to you because they actually have preference of purchase over you. By law the vendors should send formal letters to all of them offering them first refusal of the land and property you are going to buy. If within the legal period established, no (affirmative) reply is received, you are free to buy the land without any risk.

If you don't make sure the above is properly carried out, you could become another innocent victim of what can go terribly wrong when buying rural properties in Spain. Furthermore, if, as is often the case in Spain, you have agreed at the vendor's request to pay some of the purchase price in cash (so that the declared price in the deeds differs from the real rice you have paid), and if the owners of the adjacent land have not been notified and given the time established by Spanish law to answer, then they could take advantage of the lower "declared" price as stated on the title deeds, deposit the same amount with the Spanish courts and take over ownership of your property. You will be paid the money deposited with the courts, but you will have lost the cash payment as well as your new property.

Getting a NIE in Britain

Non-resident property buyers in Spain can apply for a NIE (foreigner's identification number) in any of the Spanish consulates in Britain which could save them having to come to Spain a few days early and endure long queues in an often badly-managed (to put it politely) and over-crowded Oficina de Extranjeros in a Spanish police station.

Anyone intending to sell or buy property in Spain (or indeed anything else which involves paying tax to the Spanish inland revenue) needs a NIE by Spanish law for tax purposes. Applying at your nearest consulate is more expensive than getting a NIE in Spain but it still may be an advantage for alot of non-resident property-buyers.

If you do decide to apply while still in the UK, then you need to get together all necessary documentation and then go to the consulate where you will be asked to sign the NIE application forminfront of a consulate employee. Your signature will then be given an official validation stamp (which is where the fee comes in - £22).

You will need the following documents:

- A stamped (also at the consulate) photocopy of your passport
- 2 recent passport size photos. The background must be plain, and people who wear glasses and/or earrings must take them off for the photo
- An original copy + photocopy of a document which explains why you need your NIE. This may be the private sales contract you have signed with the estate agent, promotor or private vendor, if you are going to work in Spain, the job offer... We suggest ringing the consulate beforehand to find out what to take depending on your personal circumstances
- A self-addressed envelope
- An envelope big enough to contain all the above + NIE application form addressed to the central police HQ in Madrid: Comisaría General de Extranjería y Documentación, Dirección General de Policia, C/ General Pardiñas, 90, 28006 Madrid, Spain:

One the NIE application form with your signature and passport have been stamped, the consulate will send the envelope containing all the above to Madrid. Then you will have to wait to receive your NIE.

The consulate will not be able to provide you with an application form, so get someone to get one from their local police station in Spain and post it to you or simply download a NIE application form . This form is provided by the Spanish Interior Ministry. Scroll down to the bottom of the page and click on the yellow IMPRIMIR button to print it out (Imprimir means Print).

There are 3 Spanish consulates in the UK.

If you live in:-
Northern Ireland, Cheshire, Cleveland, Clwyd, Cumbria, Derbyshire, Durham, Manchester, Gwynedd, Humberside, Lancashire, Lincolnshire, the Isle of Man, Merseyside, Northumberland, Nottinghamshire, Shropshire, Staffordshire, Tyne & Wear or Yorkshire, please apply to:
The Spanish Consulate General, 1 Brooks House, 70 Spring Gardens, Manchester, M2 2BQ. Tel: 0161 236 1233

Scotland or the Scottish Islands, please apply to:
The Spanish Consulate General, 63 North Castle Street, Edinburgh, EH2 3LJ. Tel: 0131 220 1843

And if you live anywhere else within the UK apply to the London office: 20 Draycott Place, London SW3 2RZ, Tel: 020 7589 8989, Fax: 020 7581 7888

The Spanish Consulate in Britain's website gives no indication just how long it takes for the NIE to arrive from Madrid, so check with staff either by phone beforehand or while you are there to get an idea of how long you should expect to wait.