A British couple who were forced to live in their garage when the Spanish government knocked their £600,000 Spanish villa over supposed building irregularities have been told the demolition was illegal. Len and Helen Prior, who retired to southern Spain from Berkshire six years ago, became the first British expatriates to have their home flattened by bulldozers in a clamp down by regional authorities concerned with widespread flouting of planning laws. The Priors, both 65, have always insisted they had the correct planning permission as issued by the town hall in Vera, Almeria province , on the southern coast of Andalusia and watched aghast as the bulldozers moved in on Jan 9 last year. Last week, Spain’s Constitutional Court ruled in their favour and said the demolition had been carried out illegally because the Priors were not made aware of a crucial court case in which the building’s fate was decided. The Priors, who for 15 months have been living in a garage on the site of their former home without access to mains electricity or water, will now use the ruling to support their claim for compensation. Mrs Prior said: “We’ve been fighting our corner ever since the demolition and this is a major victory for us. “The Constitutional Court has ruled the authorities acted illegally when they knocked down our home. We still haven’t had a penny in compensation but we are now in a stronger position to claim,” she said. The couple, who have already spent more than £25,000 on legal fees, are demanding compensation and plan to sue the Ministry of Justice and the regional Andalusian government which issued the demolition order, claiming the property was built on protected land. The bulldozing of the Priors’ home shocked expatriate communities in Spain, where as many as one million Britons are thought to own property. Hundreds of homes bought in good faith have been declared illegal on 480 miles of Mediterranean coastline and are under threat of demolition. Story from The Telegraph

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Property Demolition in Almeria Illegal

I suppose I should have expected a bumper news week following the UK Budget announcements on the 22nd. The only direct change potentially affecting property owners in Spain is that landlords may lose the ability to offset their UK tax bill . Following the budget, Moneycorp’s predictions of Sterling struggling seemed to have been realised. Even so, predicting what will happen to the Euro / Pound exchange rate is a tricky business. One currency trader told me: “Should the downward revisions to growth fall below market consensus, we could see the Euro strengthen back towards 0.9 GBP. Due to better than expected employment and high public borrowing, it is still difficult to forecast the relative strength of the UK economy. It is not expected at this time that the ECB will announce non-traditional policy tools at its May 9th meeting. Short term expectations are towards a strengthening EUR, however, longer term it appears that Sterling is undervalued and due for a correction - especially if the UK begins to shows signs that their aggressive monetary easing is affecting country’s economic recovery.” No, I don’t know either - but it looks like we should expect fairly significant movements in the exchange rate in the near future. If you plan to be exchanging currency, it would probably be a good idea to read up about placing a forward currency order and locking in an exchange rate. Almost in response to the UK’s ‘austerity budget’, other countries turned their attention to their own financial situation - and those of their neighbours. In Ireland & Spain: Property Boom Cousins , we read that Spain is far less exposed to the vagaries of its property market than was Ireland - something which surprised me given how completely exposed Spain is. However, this extra financial latitude, apparently enjoyed by Spain, is the cause for some concern. BNP economist Dominic Bryant said: “If they (Spain) don’t get the right policies over a number of years, they’ll get themselves into quite a mess over public finances”. Of course Spain is not unique in being in that position. In Europe Must Try Harder , the IMF ‘encourages’ European nations to make more of a coordinated effort at bolstering their own and their collective economies. In Spain to Curb Spending & Support Banking , the IMF focuses on what Spain needs to do to avoid dragging its European neighbours down - a sentiment echoed by Spain’s economic minister: “We shall start a process of restructuring our credit institutions to strengthen the system”. My ’silver-lining’ award this week goes to the Reuters article: Spanish Property Still Moving - Slowly . In it, an estate agent in Benalmadena says: “British sellers are successfully selling homes along the high-rise beachfront because they have been willing to slash prices by up to 30 percent this year, compensated by gains on changing their euros into the weak pound.” Back in January , I suggested that this would be happening and concluded “Spanish property owners looking for a quick sale, and wishing to take the proceeds to the UK, now have an ace up their sleeves. The sliding value of Sterling against the Euro means they can price their properties to sell - and minimise the impact of that price reduction.” Martin Dell, Kyero.com

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Spanish Impact of UK Budget

The International Monetary Fund fired off the latest round of criticism, lamenting in a report that coordination between EU countries on the financial crisis had been “far from optimal.” Seven months into the worst financial crisis in generations, Europe is still coming under fire both from at home and internationally for failing to mount a tougher and more coordinated response. “Stanching the much broader problems that are building in Europe’s financial systems - notably those related to deteriorating prospects for loan books, particularly for exposures to emerging Europe - requires a far more forceful and coordinated financial policy response to the crisis,” it said. Forecasting that the eurozone economy would contract 4.2 percent this year, the IMF warned that the situation could turn out even worse, especially if big cross-border banks ran into serious trouble, triggering more sector-wide turmoil. It also urged the EU to beef up emergency lending measures available to countries that become incapable of meeting their foreign financial obligations in order to ensure they do not “drag down others.” EU governments have already had to double an emergency lending fund twice over the last few months to 50 billion euros, as the credit line proved inadequate to support several struggling countries at the same time. Looking further ahead, the IMF said that Europe needed more coordination and integration between the various regulatory bodies overseeing the financial sector, welcoming tentative steps under way. “Ultimately, what is needed is an institutional structure for regulation and supervision that is firmly grounded on the principle of joint responsibility and accountability for financial stability, including the sharing of crisis-related financial burdens,” the IMF said. “Otherwise, deleterious national reflexes will continue to prevail during crises,” it added. Europe appeared to be caught largely off guard after the global credit crunch took a turn for the worse in September following the dramatic collapse of US investment bank Lehman Brothers. While seeking a leading global role against the crisis, EU governments scrambled in October and November to cobble together a range of measures to calm markets such as hiking bank deposit guarantees and underwriting interbank lending. However, much of the measures were hastily agreed among big EU countries, with smaller countries left playing second fiddle much to the irritation of countries such as Belgium. “The crisis has exposed Europe’s weakness. We were waiting for a energetic response and more leadership, but that did not happen. On the contrary, Europe has faltered,” Belgian Foreign Minister Karel De Gucht said on Monday. Meanwhile, the European Commission has repeatedly come under fire for holding up approval of various national plans to help struggling banks. In rare public criticism, the head of the German central bank accused the commission of ordering European banks to scale back their operations to their home markets as a condition for receiving state aid, which Brussels rebuffed sharply. “For a European bank, foreign subsidiaries are non-EU subsidiaries,” said Bundesbank president Axel Weber in an interview with the Financial Times. “I find it surprising - to say the least - that European institutions view cross-border operations within the EU as foreign operations. For me, the euro area is the domestic economy,” he added. Commission spokesman Jonathan Todd fired back that “it is not helpful for people to make misguided public comments concerning the commission’s approach for state aid to banks without first discussing the matter with the European Commission. “If Axel Weber had done so he would have known that the commission is actively defending the single market and working to ensure a recovery from the crisis,” he added. Story from Expatica

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IMF Comment: Europe Must Try Harder

Summer has arrived, and I´m loving living in Spain again. Isn´t it amazing how we are so easily influenced by the climate. We´ve just had the worst winter in Spain for 30 years, and it looks like Spring has completely passed us by. I remember this from previous years here on the Costa del Sol – lousy winter, but as soon as easter has come and gone, summer starts. Today, it´s 21 degrees, clear blue skies – perfect. It´s that lovely quiet time for all residents of the Costa del Sol – all the Spaniards who traditionally holiday in Marbella during the easter vacation have since gone home, and we now have a lovely spell of 8-10 weeks where the weather on the Costa del Sol is usually glorious, and the mass tourism is yet to beset us. I woudn´t want tot anywhere else. (Just wish I had a home!) Related Posts 20% Fewer Brits Coming to Spain Easyjet - my love affair is over Should you sell your Property in Spain?

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Falling in Love with Spain…again!

Summer has arrived, and I´m loving living in Spain again. Isn´t it amazing how we are so easily influenced by the climate. We´ve just had the worst winter in Spain for 30 years, and it looks like Spring has completely passed us by. I remember this from previous years here on the Costa del Sol – lousy winter, but as soon as easter has come and gone, summer starts. Today, it´s 21 degrees, clear blue skies – perfect. It´s that lovely quiet time for all residents of the Costa del Sol – all the Spaniards who traditionally holiday in Marbella during the easter vacation have since gone home, and we now have a lovely spell of 8-10 weeks where the weather on the Costa del Sol is usually glorious, and the mass tourism is yet to beset us. I woudn´t want tot anywhere else. (Just wish I had a home!) Related Posts 20% Fewer Brits Coming to Spain Easyjet - my love affair is over Should you sell your Property in Spain?

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Falling in Love with Spain…again!

Spain could be sliding towards harsh budget cuts like those forced on another former euro zone high-flyer Ireland. Concern about Ireland’s deficit and exposure to bank losses pressured its government to slash spending and hike taxes this month to reassure investors of its long-term solvency. Although Spain has just launched a bank restructuring plan, it has nothing like Ireland’s exposure to bank liabilities nor its dependence on housing-related revenues. This relatively favourable position means bond markets are giving Spain more freedom to spend — but therein could lie its greatest risk. Spain’s Socialist government may be given enough fiscal room to double its debt level and build a double-digit deficit, then be unable to correct imbalances as growth fails to rebound. In such a scenario, rating agencies could turn on Spain and impose the same kind of downgrades that have hit Dublin, which launched what critics dubbed “the budget from hell”. “You can think of Spain as a slow-burn situation. If they don’t get the right policies over a number of years, they’ll get themselves into quite a mess over public finances,” said BNP economist Dominic Bryant. Spain is the only one of the world’s eight largest economies that will suffer two consecutive years of contraction in 2009 and 2010 after the collapse of its domestic housing boom coincided with the global crisis, according to Fitch Ratings. Unemployment in Spain is rising faster than in any other developed country and is widely expected to top 20 percent, or 4.5 million, in 2010. On the eve of the global crisis, Spain and Ireland seemed in good fiscal shape with balanced budgets and low public debt after running the euro zone’s two biggest ever property booms. In the space of 18 months, the Spanish and Irish governments have had to take responsibility for the collapse of housing and credit bubbles funded by their private banks. Spain launched one of Europe’s biggest fiscal stimulus packages, paid for by public borrowing, and Ireland could see a massive jump in national debt due to its efforts to cleanse banks of tens of billions of euros in risky assets. Most analysts say Ireland’s government has been forced to punish its economy to save banks, a situation Spain must avoid. “I am angry and disillusioned at the price we all have to pay for the failures to manage the economy,” wrote Jim Power of financial services firm Friends First after Ireland’s emergency budget was unveiled. Spanish Prime Minister Jose Luis Rodriguez Zapatero has made no secret of his aim to keep up discretionary spending and compensate for a collapse in construction, tourism, and car sectors that formerly drove half of Spanish growth. He fired Economy Minister Pedro Solbes this month after he said Spain had to respect EU deficit limits and appointed his public administration chief to speed up fiscal stimulus equivalent to nearly 5 percent of gross domestic product. Spain’s government accuses Bank of Spain Governor Miguel Angel Ordonez of alarmism for warning the social security system could enter deficit and Spain must launch structural reforms, the need for which the IMF also emphasised on Wednesday. In the case of Ireland, pressure from the European Commission and markets helped convince Dublin to place a levy on public servants’ pensions to improve social security accounts. “If you look at a country like Spain it just shows how politically difficult it is to push through these kinds of decisions,” said Rossa White at Dublin-based brokerage Davy. Analysts in Spain recognise the importance of state stimulus, but say Zapatero is doing little to change a crumbling, construction-based economic model. “The government does not want social conflict, it doesn’t want problems, it just wants this crisis to end as soon as possible, and it’s going to leave us indebted,” said Juan Carlos Martinez Lazaro of the Madrid-based IE business school. Others expect Zapatero to be forced into drastic spending cuts next year as government income slides, the mood sours on Spanish debt in crowded bond markets and the euro zone’s No.4 economy proves unable to stage an export-led recovery. “We are going to see potholes in highways and rubbish piling up in cities because debt is going to swell and we are going to see brutal spending cuts in the 2010 budget,” said Santiago Nino Becerra at Barcelona’s Ramon Llull University, who forecasts Spanish unemployment will rise as high as 26 percent next year. Ratings agency Fitch said in a report last month sovereign lenders with its top “AAA” rating, Spain among them, were at risk of being downgraded if they could not cut swelling public debt and budget deficits over the medium term. Standard & Poor’s stripped Spain of its AAA rating in January over fears of a significant deterioration in public finances and a decline in growth prospects. Fitch and Moody’s have so far held ratings and kept stable outlooks, although Fitch sees Spanish government debt next year nearly doubling to 65 percent of gross domestic product from 36 percent in 2007. Fitch head of global economics Brian Coulton does not see an outright collapse in Spain’s fiscal revenues, along the lines of the steep decline seen in Ireland, and says its exporters are keeping a larger global share than competitors in France. “We expected Spain to go through rebalancing of low trend growth, with the external sector mitigating the adjustment,” said Coulton. “The rebalancing is going to be more difficult because of the global recession.” Story from The Guardian

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Ireland & Spain: Property Boom Cousins

Spain could be sliding towards harsh budget cuts like those forced on another former euro zone high-flyer Ireland. Concern about Ireland’s deficit and exposure to bank losses pressured its government to slash spending and hike taxes this month to reassure investors of its long-term solvency. Although Spain has just launched a bank restructuring plan, it has nothing like Ireland’s exposure to bank liabilities nor its dependence on housing-related revenues. This relatively favourable position means bond markets are giving Spain more freedom to spend — but therein could lie its greatest risk. Spain’s Socialist government may be given enough fiscal room to double its debt level and build a double-digit deficit, then be unable to correct imbalances as growth fails to rebound. In such a scenario, rating agencies could turn on Spain and impose the same kind of downgrades that have hit Dublin, which launched what critics dubbed “the budget from hell”. “You can think of Spain as a slow-burn situation. If they don’t get the right policies over a number of years, they’ll get themselves into quite a mess over public finances,” said BNP economist Dominic Bryant. Spain is the only one of the world’s eight largest economies that will suffer two consecutive years of contraction in 2009 and 2010 after the collapse of its domestic housing boom coincided with the global crisis, according to Fitch Ratings. Unemployment in Spain is rising faster than in any other developed country and is widely expected to top 20 percent, or 4.5 million, in 2010. On the eve of the global crisis, Spain and Ireland seemed in good fiscal shape with balanced budgets and low public debt after running the euro zone’s two biggest ever property booms. In the space of 18 months, the Spanish and Irish governments have had to take responsibility for the collapse of housing and credit bubbles funded by their private banks. Spain launched one of Europe’s biggest fiscal stimulus packages, paid for by public borrowing, and Ireland could see a massive jump in national debt due to its efforts to cleanse banks of tens of billions of euros in risky assets. Most analysts say Ireland’s government has been forced to punish its economy to save banks, a situation Spain must avoid. “I am angry and disillusioned at the price we all have to pay for the failures to manage the economy,” wrote Jim Power of financial services firm Friends First after Ireland’s emergency budget was unveiled. Spanish Prime Minister Jose Luis Rodriguez Zapatero has made no secret of his aim to keep up discretionary spending and compensate for a collapse in construction, tourism, and car sectors that formerly drove half of Spanish growth. He fired Economy Minister Pedro Solbes this month after he said Spain had to respect EU deficit limits and appointed his public administration chief to speed up fiscal stimulus equivalent to nearly 5 percent of gross domestic product. Spain’s government accuses Bank of Spain Governor Miguel Angel Ordonez of alarmism for warning the social security system could enter deficit and Spain must launch structural reforms, the need for which the IMF also emphasised on Wednesday. In the case of Ireland, pressure from the European Commission and markets helped convince Dublin to place a levy on public servants’ pensions to improve social security accounts. “If you look at a country like Spain it just shows how politically difficult it is to push through these kinds of decisions,” said Rossa White at Dublin-based brokerage Davy. Analysts in Spain recognise the importance of state stimulus, but say Zapatero is doing little to change a crumbling, construction-based economic model. “The government does not want social conflict, it doesn’t want problems, it just wants this crisis to end as soon as possible, and it’s going to leave us indebted,” said Juan Carlos Martinez Lazaro of the Madrid-based IE business school. Others expect Zapatero to be forced into drastic spending cuts next year as government income slides, the mood sours on Spanish debt in crowded bond markets and the euro zone’s No.4 economy proves unable to stage an export-led recovery. “We are going to see potholes in highways and rubbish piling up in cities because debt is going to swell and we are going to see brutal spending cuts in the 2010 budget,” said Santiago Nino Becerra at Barcelona’s Ramon Llull University, who forecasts Spanish unemployment will rise as high as 26 percent next year. Ratings agency Fitch said in a report last month sovereign lenders with its top “AAA” rating, Spain among them, were at risk of being downgraded if they could not cut swelling public debt and budget deficits over the medium term. Standard & Poor’s stripped Spain of its AAA rating in January over fears of a significant deterioration in public finances and a decline in growth prospects. Fitch and Moody’s have so far held ratings and kept stable outlooks, although Fitch sees Spanish government debt next year nearly doubling to 65 percent of gross domestic product from 36 percent in 2007. Fitch head of global economics Brian Coulton does not see an outright collapse in Spain’s fiscal revenues, along the lines of the steep decline seen in Ireland, and says its exporters are keeping a larger global share than competitors in France. “We expected Spain to go through rebalancing of low trend growth, with the external sector mitigating the adjustment,” said Coulton. “The rebalancing is going to be more difficult because of the global recession.” Story from The Guardian

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Ireland & Spain: Property Boom Cousins

Now that I am mortgage-approved, have the balance of my funds nicely in place, and receive tens of bargain Spanish properties every day to my email address, I just want to buy something…….anything!… …and that´s the danger. I must remember that this is my home, not an investment property in Spain . I plan to live in this place for many years, so I really need to get this right. The problem I have is that, with working in the real estate industry, I get to see a lot of great deals and a lot of lovely Spanish properties , and it´s very easy to get distracted in the current market. I´m going to take a breather for a week or two – it´s all been a bit stressful. But as soon as I´m back searching, I will let you know how I get on. Related Posts An Agent Buys a Property in Spain - Part 3 – Making the Offer An Agent Buys a Property in Spain – Part 1 – How Hard Can it Be?! An Agent Buys a Property in Spain - Part 4 – The Auction

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An Agent Buys a Property in Spain - Part 6 – Itchy Feet!

Benalmadena: Now only selling a third of the volume of properties compared to the start of 2008 February drop broadly maintains January rate of decline No reaction to Q1 price decline Estate agents report hefty price falls New house sales fall 29.3 percent Spanish property owners were still struggling to sell homes in February, figures showed on Tuesday, even though price falls gathered pace according to official data and some estate agents said prices were plunging. Sales fell 37.5 percent year on year to 34,669, the second-lowest number since the series began in January 2007 and the 12th straight month of declining sales, figures from the National Statistics Institute (INE) showed. Joaquin Garcia, who works in his father’s small real estate firm in Benalmadena, a resort near Malaga, said the business was only selling a third of the properties it was shifting during Spain’s property bubble that burst at the start of 2008. “People are waiting to see if prices continue to fall. There is interest but the banks are not offering credit. The few deals we’ve done have all been cash buyers, Spaniards from the interior buying second homes,” he said. Banks have set tight conditions and higher interest rates on new mortgages than for existing borrowers, while Spain’s shaky economy with unemployment at one in six workers is further undermining an already over-supplied market. Official data shows house prices belatedly responding to the sales freeze, with a 6.8 percent year-on-year drop in the first quarter. However, private surveys show far larger drops which are persuading buyers to wait. Garcia said Spanish sellers had cut prices by around 15 percent in the last six months, while British sellers were successfully selling homes along the high-rise beachfront because they have been willing to slash prices by up to 30 percent this year, compensated by gains on changing their euros into the weak pound. After surging more than anywhere else in Spain over the last decade, spawning a massive increase in developments, prices in Malaga province officially fell 10.7 percent year-on-year in the first quarter. British builder Taylor Woodrow said there was still plenty of interest from Britons in its Spanish developments, although interest had markedly swung towards the cheaper end of the market, properties costing less than 250,000 euros. February’s fall in house sales followed a 38.6 percent drop in January and continued falls of over 25 percent in almost every month since INE started publishing the figures at the start of 2008. INE data showed sales of existing houses fell 45.2 percent while deals on new homes were 29.3 percent lower year-on-year, and 8.7 percent down on a month earlier. Story from Reuters

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Spanish Property Still Moving - Slowly

I know what you´re thinking – why didn´t he check with the bank before making an offer? To be honest, I just assumed that all would be ok. Even now, I reckon that if I´d had a little more time, and the cash buyer hadn´t been on the scene, I could have found a bank to provide a Spanish mortgage on that property in Marbella . For the cash buyer, the risk was all his – no banks to consider. And let´s face it, even in the worst case scenario where the new owner may have been asked to pay a fine as a result of any adverse ruling by the town hall in Marbella, the fact that he secured the property at such a great price was probably enough to persuade him that it was worth the small risk. So, there we are. I´m gutted. My advice to any prospective buyer of a bargain Spanish property is to be fully prepared, so get yourself mortgage approved, and spend time speaking to a lawyer to make sure you are aware of any potential pitfalls. By doing this, you will be able to compete with a cash buyer and react with the same speed. Related Posts An Agent Buys a Property in Spain - Part 3 – Making the Offer An Agent Buys a Property in Spain - Part 4 – The Auction An Agent Buys a Property in Spain – Part 1 – How Hard Can it Be?!

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An Agent Buys a Property in Spain - Part 5 – Losing Out