The Spanish government estimates there are 700,000 unsold new-build houses across the country currently on the market thanks to a massive oversupply of houses. So does this mean that property investors will be able to pick up a Spanish property investment bargain?
Spain has long been a popular destination for British expats who have looked to the country for their retirement years. The strong demand for housing led to a buoyant Spanish property market.
Many property investors are put off by buying property in Spain because of the problems with some properties in recent years and the large, crowded expat community. However there are still some hidden property gems in Spain and the country should not be overlooked.
Many overseas property investors have traditionally looked to Southern Spain when investing in Spanish property. However Northern Spain is starting to gain in popularity because it is a world away from the built-up, owercrowded areas in the South and is full of spectacular scenery, a laidback, friendly culture and fantastic food.
Expats who paid out too much tax on their Spanish property sale may be entitled to a rebate amounting to thousands of euros, according to leading foreign exchange firm Currencies Direct.
The potential capital gains windfall for British expats who sold property in Spain before 2007 comes after the scrapping of a discriminatory Spanish tax law.
Now with the pound weak against the euro, and the clock ticking on securing refunds, all claims must be filed by 21st November this year. The Currencies Direct experts say there is no time like the present for expats to get their refund and repatriate the money.
The saga of British expats being threatened with having their homes bulldozed continues after police turned up on the doorstep of around a dozen homes just before Christmas to serve them with demolition notices. The properties have been set for demolition in early spring unless a last ditch appeal succeeds.
The pair of Spanish homes in question are near Albox in Almeria in south-east Spain. The local town hall had initially issued building licenses for the properties however court action by a higher regional government led to the licenses being nullified.
With prices of of property plummeting in Spain, many overseas property investors started to rent out their Spanish property investments. Unfortunately, the downturn in the economy has now started to see greater numbers of renters defaulting on their rent, with some sources claiming that defaulting tenants and evictions have tripled in the last two years.
Naturally, the problem of defaulting tenants is not one that is unique to Spanish property investors – Spanish landlords are also seeing the same issue. However many expats moved to Spain for a better lifestyle and were then bitten by the recession bug. Without wanting to lose a fortune on their new Spanish properties, they turned to the rental market in a bid to keep their property until prices started to rise again.
According to recent reports, Spain is heading for a recession with unemployment reaching levels that haven’t been seen since the 1930s. The slide is predicted to be so bad that it will take at least a decade for the country to recover. So what does this mean for Spain’s property market?
The Madrid research group RR de Acuña & Asociados has said the collapse of Spain’s building industry will cause the economy to contract for the next three years, with a peak to trough loss of over 11pc of GDP. The number of properties unsold still on the Spanish property market are said to be over 1.6 million, dwarfing the annual Spanish home demand of just 218,000. If no properties are built in the next few years, this means that it will take around seven years before the excess number of properties are sold.
When buying a property abroad, the language barrier is often one of the toughest parts of the property buying deal.
If you are buying a new Spanish property, before you complete at the Notary’s office, you will need to inspect the property and drag up a snagging list. This snagging list can then be given to a reputable builder and to your solicitor and written acknowledgement can then be drawn up to ensure that the snags are dealt with within a reasonable time frame.