Monthly Archives: August 2009

Renting to obtain a passive income

August 28, 2009 – 9:24 pm
Renting for an income in tenerife may not be without pitfalls.

Renting for an income in Tenerife may not be without pitfalls.

Tenants worldwide dream of becoming homeowners, and some homeowners dream of becoming landlords – expanding their real estate ownership while someone else pays the bills. This dream is not hard to realise, but that doesn’t mean it is without pitfalls and easy-to-make mistakes .With hard work (which you’ll have to do yourself unless you use the services of an agency) and knowledge/expertise  being a landlord can be a fast track to passive income and wealth accrual.

A common mistake is that whatever the bank says they’re willing to lend, borrowers typically take their highest offer. While this mistake may not cripple you with your home mortgage, over-leveraging your rental properties is a drastically different story.

With rental properties you have far less control over the associated expenses. For example, if you own five rental properties, and suddenly three of the tenants decide to move – or worse, just stop paying their rent – you will suddenly find yourself with not only your home mortgage, but three additional mortgages to pay. If that isn’t bad enough, you will also be faced with eviction costs, repair and maintenance costs, advertising costs, etc. As a general rule, you want your predictable monthly expenses (mortgage, taxes, insurance, legal entity fees, ground rents, etc) to be no more than 50% of your collectable rent. This is why many people use a rental agency, it takes away the daily grind of looking after the properties..

Most landlords simply want the perfect tenants to show up, sign a rental agreement, then pay their rent on time all while keeping the rental property in pristine condition, this rarely happens. Most rental applicants aren’t going to follow this route, again another reason for using an agent with experience to “sniff out” a potential bad tenant

Remember that if a tenant call you to voice a concern, you must listen to them, and then address their concerns immediately (even if that means telling them “no”). If they call to request a repair, send a contractor to the property to assess the cost and seriousness of the problem, and then call the tenants immediately to give them a definite answer on whether and when you will address the problem. Again an appointed agent would handle this for you.

Left unheeded, these small problems and disputes can become major damage to your rental property, or a lawsuit that wastes your time and money. If you haven’t got the required discipline to take care of these matters, then appoint an agent as the normal fee of 10% (normally paid by the tenant) is worth it. We have all heard tales of woe from tenants and landlords and Tenerife is not immune to these problems, but with careful consideration, you can accrue wealth from property investment and lettings.

By Angela | Posted in Economy, General, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , , , , , , , | Comments (0)

New builds fall in Spain.

August 26, 2009 – 6:22 pm
New builds fall in Spain

New builds fall in Spain

The volume of new residential properties in Spain constructed is expected to fall by as much as 25 per cent by the end of 2009, according to a report by the Fundación Laboral de la Construcción.

Residential building activity levels have fallen over the past year or so, culminating in the loss of hundreds of thousands of jobs, due to the global financial crisis, an oversupply of Spanish properties, and a fall in demand for Spain property. Experts project that the new build figures in Spain will remain low until the end of next year.

The construction labour foundation basis its projection on the amount of cement used by Spain property developers, which dropped by 24per cent last year, the largest fall in a decade, while demand for cement has fallen even further so far this year.

By Angela | Posted in Economy, General, Miscellaneous Articles, Property, Tenerife, Uncategorized | Tagged , , , , , , , , | Comments (0)

Top tourist destinations visited by less tourists.

August 25, 2009 – 2:07 pm
Less tourists on the beaches in Spain and Tenerife

Less tourists on the beaches in Spain and Tenerife

Europe’s top tourist destinations – France, the world’s most popular tourist destination, with 79.3 million visitors last year, has been hit hard by a drop in the number of foreign travellers.

The number of international visitors to France in the heat of the summer – July and August – has fallen by nearly one-third, after sinking by 15.5 per cent in the first five months of the year, government figures show.

Spain, the third most popular destination last year, has suffered a 10 per cent drop in visits this summer, following an 11.4 per cent fall in the first half of the year, and Italy is forecasting an 8.3 per cent drop in foreign visitors between May and October.

As frugal foreigners stay in their home countries, Europe’s top tourist destinations are looking at their compatriots to compensate.

According to a Gallup poll, 48 per cent of Europeans plan to spend their holidays in their own countries this year, compared with 43 per cent last year.

Britons, the continent’s top travellers after Germans, have reduced their European trips by 10 per cent. As a result, the beaches of Spain, usually crowded with British and German tourists, are emptier than usual.

Spain last year lost its spot as the second most visited country, as the US took its place with 58 million visitors compared with 57.3 million. The Spanish Government is spending €1 billion euros ($1.7 billion) to support the tourism industry.

As in other European countries, tourists are drinking and eating less in Spain’s usually bustling bars and restaurants. Beer consumption is expected to fall by 13.5 per cent this month compared with last year, Spanish brewers say.

Despite this summer of discontent, France should remain the world’s top tourist choice because travel was down in every country at ”about the same rate,” said Christian Mantei, president of the tourism development agency Atout France.

By Angela | Posted in Economy, General, Holiday, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized, Weather | Tagged , , , , , , , , , , , | Comments (0)

Bank repossessions in Spain and Tenerife

August 22, 2009 – 9:39 pm
Bank repossessions provide great bargains for those with cash in Tenerife

Bank repossessions provide great bargains for those with cash in Tenerife

There was an interesting  article this week in the Spanish daily ‘El Mundo’ about bank repossessions in Spain, and what the 10 biggest lenders are offering investors. It  pointed that Spain’s banks and savings banks – known as cajas – are now the country’s biggest real estate companies. “Nobody knows how many properties they own, not even the banks themselves,” one expert told El Mundo. Their stock of repossessions is growing fast, and is expected to keep on doing so. All thanks to foolish lending in the past.

Banks aren’t, or shouldn’t be, in the property business, so this is a big headache for them. To liquidate their growing stock of property banks start by classifying property as ‘A’ or ‘B’.

‘A’ is new build from developers who can’t repay their loans, good quality, in good condition, and easier to selld, in theory at least. This is reported to make up 70% of the stock the banks now hold. Banks are using their own property divisions – recently set up in most cases – and branch networks to sell this ‘A’ property, offering discounts and preferential financing terms.

‘B’ is made up of repossessions from home owners who can’t pay the mortgage. There are forecast to be 74,000 foreclosures this year, and banks already have 9 billion Euros of bad debts from private owners on books.

Once again if you have cash available then you can bag  great property bargains  in Spain and Tenerife.

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By Angela | Posted in Economy, General, Inspirational, Miscellaneous Articles, Property, Tenerife, Uncategorized | Tagged , , , , , , , , , , , , , , , , , | Comments (0)

Spain and the Canary Islands still popular for those seeking investment property

August 21, 2009 – 10:53 pm
Brits still planning to buy in Tenerife

Brits still planning to buy in Tenerife

The USA knocked Spain off the top spot in July’s Investment Property watch chart – which tracks the level of interest in certain properties and countries from visitors to the site . Madeira island is gearing up for an influx of new visitors from all over Europe as Spanish airline BinterCanarias starts new direct flights to bring in travellers from the Canary Islands. However Spain and the Canary Islands remain popular with those looking for holiday properties and second homes in the sun.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized, Weather | Tagged , , , , , , , , , , , , | Comments (0)

Latest mortgage news

August 16, 2009 – 5:39 pm
Loans increas in Tenerife and Spain as property prices are more affordable

Mortgage costs in Tenerife and Spain reduce making property purchases more affordable

Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell to an all time record low of 1.41% in July, down from the previous record low of 1.61% in May. Euribor is now 73.8% lower than it was this time last year, when it hit a high of 5.393%, leading to significant savings for mortgage borrowers on annually resetting mortgages.

Thanks to the latest drop in Euribor, the average borrower can expect to save around 300 Euros per month, or more than 3,500 Euros per year, on mortgages that reset now.
Euribor has been following down base rates set by the European Central Bank. These started falling in October last year, when they were lowered from 4.25% to 3.75%, and now stand at just 1%. The relentless recent fall in Euribor suggests that the market might be expecting further cuts in base rates.Mortgages fuel the property market, so activity in the mortgage market is an important indicator for the property market.

The latest figures from the National Institute of Statistics (INE) reveal that mortgage activity is still significantly down on last year, but may have turned a corner in May as key figures started to improve on a monthly basis.

The number of new residential mortgages signed in May fell by 23% to 57,614 compared to the same month last year, but rose by 15% on a monthly basis.

The average mortgage value in May fell 14% to 121,120 Euros year on year, but rose 5% month on month.

Overall new mortgage lending was 7 billion Euros, 33% less than a year before, but 20% higher than April.

The average interest rate agreed for new mortgages in May was 4.6%, 11% lower in percentage terms than a year ago, and 2.2% lower than the preceding month.

96% were variable rate mortgages, the remainder fixed rate

By Angela | Posted in Economy, General, Miscellaneous Articles, Property, Tenerife, Uncategorized | Tagged , , , , , , , | Comments (0)

European property prices to improve?

August 14, 2009 – 2:51 pm
European property prices set to improve?

European property prices set to improve?

Property prices across Europe are expected to fall at a slower rate as the economy starts to level out, according to a report released by Invista Real Estate Investment Management. Conditions for the economy in the eurozone during the first half of this year were the worst since it was formed, although signs are that things are starting to improve.

The European Central Bank reports that more European banks have increased their lending, while the cost of borrowing has fallen sharply. The report says that improving property yields could increase the long-term attractiveness of  investing in property.

Tim Francis, director, Continental European strategy and research at Invista, says: “With improved visibility on bottom-of-the-cycle valuations, we are in a better position to judge market pricing against fair value. This will assist in identifying attractive investment opportunities across these markets, some of which are experiencing distressed selling.”  We expect deal flow to improve during H2 2009 as the other mature continental European markets including Spain and Tenerife catch up.

By Angela | Posted in Economy, General, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , , , , , , , | Comments (0)

Imminent Changes to Letting Laws in Spain?

August 12, 2009 – 10:44 am

According to Property Talk Live, Spanish letting specialists Leaders said it always urged the public to take care when choosing a letting agent because short-term-rental-law-in-spainof the complex nature of lettings, and the crucial role the letting agent plays…

From valuing the property and setting up the tenancy correctly, to serving the correct notices in the right way and ensuring a smooth handover at the end – it is vital to carry out every element of the process accurately.

Getting it wrong can have dire consequences; including huge legal expenses, loss of rent, long void periods, loss of tenants’ deposits and serious penalties for not complying with legislation. For tenants it can be an extremely serious matter if legislation regarding the safety of the property and its contents is not complied with.

Leaders’ Managing Director, Paul Weller said: “We are disappointed but not surprised by the significant increase in problems with lettings reported to the Ombudsman.

“Over the last year the property market switched emphasis from sales to lettings in response to the slowdown and we saw an increase in landlords coming into the market who were letting out their homes as they were unable to sell. Alongside this there has also been an increase in agents providing a letting service for the first time.

“Our advice to the public is, and has always been, to use an experienced, specialist letting agent that is well established in the industry, has an in-depth knowledge of the lettings market and a thorough understanding of all the many regulations that apply to lettings.”

At present, letting agents and landlords are not formally regulated, although the Government has proposed plans to address this.

In the meantime, more than 6000 letting agents, including Leaders, have signed up to the Property Ombudsman scheme and follow the standards laid out in its Lettings Code of Practice. This is seen by the Ombudsman as the first step towards the time when all lettings agents must be legally required to sign up for a redress scheme.

Weller said: “Demand for rental property is currently very high and many of our branches are experiencing significant increases in business, in many cases from landlords and tenants who are new to letting.”

By admin | Posted in General, Property, Tenerife | Tagged , , , | Comments (1)

Protected coastal areas in Spain under threat

August 11, 2009 – 8:46 pm

A new report from international eco campaigners Greenpeace, Destruction at all Coasts 2009, says up to 8,000 kilometres of coast are threatened. It looked at 233 protected areas and found that 120 of them are under threat from construction, pollution or infrastructure.

Spain's coastline under threat?

Spain's coastline under threat?

Environmentalists are warning that many protected coastal areas in Spain are under threat from property development, some of which they claim is illegal.

The report also indicates that the world economic downturn, which has hit the Spanish property market hard, has not, however, acted as a buffer to protect endangered areas as there are some 562,000 properties, 29 golf courses, 51 harbours and 14 commercial centres either under construction or have planning approval in protected areas.

Spain’s coastlines have become a cemetery of cement and the last few remaining protected parts are in extreme danger of disappearing,’ said Greenpeace’s director in Spain, Juan Lopez de Uralde.

The report shows that Andalucia, Valencia and the Canaries are the worst. Some 21 areas are under threat in Andalucia including La Albufera Natural Park, Cabo de Gata-Nijar Natural Park and Grandilla.

It also points out that Spain has more legal proceedings open for abuse of the environment than any other country in the European Union.

Greenpeace wants the Spanish Government to tighten the country’s coastal law, to buy up protected land promise to demolish illegal buildings. Pilar Marcos, who is responsible for the Greenpeace coastal campaign in Spain, said that the organisation has noted 625 suspects in 478 cases of planning corruption and that more than half of these suspects hold public office in Spain.

Greenpeace also says that Spain had taken no steps to stop the deterioration of its coastline in recent years and done little to upgrade sanitation infrastructure and water treatment on the coast to keep up with development development needs, Greenpeace said.

‘Local Governments get most of their income from taxes and fees associated with building and construction, something which fuels the deterioration of the coastline. Solutions have not been applied by practically any institutions who are more concerned with short term benefit than the kind of future inherited by coming generations,’ the report said.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , | Comments (0)

Brits still keen to buy property abroad says survey

August 9, 2009 – 10:41 pm
Brits and Europeans still keen on property in Tenerife and Spain

Brits and Europeans still keen on property in Tenerife and Spain

Results for the 2009 International Survey conducted by primelocation.com show that 70% of visitors to their site are actively looking to buy an overseas property, despite the current economic uncertainty. Of all respondents, 28% said that they are unaffected by the current economic situation, 22% who had delayed their plans because of the economic climate are now back in the market and hope to find a bargain, while 10% said that they are checking out the market but will not proceed just yet

Ann Wright, International Business Development Manager for primelocation.com, says; ‘This is very clear indication that people have not let go of their dreams of owning a property abroad. Indeed, it is encouraging that people are coming back to the market, possibly because of recent press reports of falling property prices across Europe.’

The primelocation.com 2009 International Survey also monitored the countries the portal’s visitors are most interested in buying in; France took top spot with 25%, Spain came second (16%) and was followed by Italy and Portugal which tied in fourth place with 11% each. The United States, Cyprus, Greece, Switzerland, Turkey, Canada and the UAE took the rest of the top 10 spots.

‘It is interesting to note that over a quarter of all respondents currently own/rent a property in France and interest in the country, which has always been the first choice amongst Brits, has remained fairly stable at 25% since 2008. Spain  and Tenerife has increased in popularity since 2008 as people respond to the reports of falling property prices.

“The percentage of people looking to buy holiday homes overseas remains unchanged from last year’s survey (48%), which reinforces the notion that interest is still there despite the worsening economic conditions, “ continues Wright. “However, the number of people moving abroad permanently has decreased; this is possibly a result of the fluctuations in the value of sterling against the Euro. Also, property prices and the oversupply of rental properties in continental Europe mean fewer people are buying with a view to using the property as an investment or income generator.” Not surprisingly, coastal locations are ranked No.1 by all respondents who are currently looking to own or rent an overseas property, followed by tranquil village settings.

‘Planned spending levels are very similar to 2008, which further strengthens the notion that interest in overseas properties has not been significantly impacted by the economic climate. Also similar to last year’s survey results, most respondents said that they want to buy a property that requires minimal work, buyers want somewhere they can start to use and enjoy straight away,’ concludes Wright.

Primelocation.com 2009 International Survey also found that buyers prefer to use an estate agent in the country in which they are buying. UK based agents are also popular because they give the buyer the reassurance of an English speaking service and expert, reliable advice of the processes of buying abroad.

The survey results also indicate that buyers start their search on property portals, which give them access to a wide range of estate agents both in the UK and abroad. Once they have narrowed down their search they are happy to use the services of estate agents who have properties that fit their requirements.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , | Comments (3)