Spanish court upholds investors rights in failed property development deposits case

February 3, 2011 – 9:46 am

Spanish laws protect investors deposits for off plan property developments throughout Spain and Tenerife

A Spanish court has upheld the right of investors in a failed property development to have their deposits returned to them, after a local bank attempted to shirk their responsibilities under the country’s guarantee laws. 

The Caja Cantabria bank tried to claim that the guarantee period had ‘expired’ on an investor’s funds, after they paid a deposit off the plan on a property that was never built. Under Spanish law, developers can use an ‘aval bancario’, or bank guarantee, to protect buyers whilst the development and construction of the property is in progress. 

Whilst they obtain funds from their particular bank of choice to fund the property development, the bank holds all deposits in a separate safe account until construction is complete. If it doesn’t complete in a set amount of time, the deposit plus six per cent interest is returned to investors.

Despite Caja Cantabria’s attempts to implement a ‘small print’ to the terms of their guarantee, the court still upheld this national guarantee law, and stated the guarantee period could not expire whilst the investor still had no property to show for their funds. Although Spanish law is not based on precedents like that of the UK, this decision should still reassure off the plan buyers that their money is safe as long as they have a concrete bank guarantee issued to them. This applies not only to mainland Spain but the Islands, like Tenerife are also covered. Clearly this should boost investor confidence.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , , , | Comments (2)

Opportunities still exist in Tenerife and Spain’s property market.

December 14, 2009 – 4:05 pm
Opportunities still available in Tenerife, the Canary Islands and Spain

Opportunities still available in Tenerife, the Canary Islands and Spain

We think there are  good investment opportunities in Spanish  and Canarian real estate today, but some are risky. In three years we’ll probably be kicking ourselves for not advising more investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.

There are hundreds of thousands of possible transactions, but not so many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset.

House prices touched bottom some time ago, they had to fall. The price of land has fallen faster than house prices although it could even fall a bit more.  In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%. Valuations appear to be down 30% in 2 years.. One has to look at real property transactions and a survey of developers to see not only their asking prices but how far they are prepared to drop prices to sell.  Quite a few homes are being sold more than 200,000 homes a year in fact. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt? It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year. Perhaps that purchase in Tenerife should be made sooner rather than later!

The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. We believe that developers have dropped their prices to the minimum.  The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.

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

Expats and problem tenants in Spain

November 3, 2009 – 5:14 pm
Problems with tenants in Spain and Tenerife may be reduced by using an agent

Problems with tenants in Spain and Tenerife may be reduced by using an agent

According to Paragon España , part of the Paragon Advance group of companies offering tenant referencing and rent warranty in Spain, reluctant landlords in Spain are increasingly experiencing problems with bad tenants hit by the economic downturn.

It is claimed that the number of defaulting tenants and evictions have tripled in the past two years and many of the landlords who are experiencing problems are expats who moved to Spain for a better lifestyle and then became reluctant landlords. They have been forced into letting out their homes in order to be able to pay the mortgage and, for those investors who jumped on the Spanish property market, buying off plan, only to see it go into freefall before they could offload their investment, they have had their fingers burned and are having to let long term and ride it out.

Many expat landlords are unaware of the different mechanisms in place to secure rental income and often fail to implement them in their rental agreements which can leave them unprotected if the tenant does not, or cannot, pay the rent, according to Paragon España. This is where the use of a rental agent pays dividends and Tenerife is no exception to this rule.

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

Tips when buying property overseas

November 1, 2009 – 12:22 pm

When buying property You should  spend time researching the companies in the market place – using the right professionals  and estate agents will save you time, money and stress.  is not a process to be rushed.  Time is required to research the market as a whole and your particular destination of choice.

Good tips for buying property whether in Spain or Tenerife can save money

Good tips for buying property whether in Spain or Tenerife can save money

See below five tips for buying property overseas safely, just published by the Association of International Property Professionals. The AIPP is the independent industry body for international property.

1. Independent lawyer

However good your estate agent seems, not all countries are like Spain and Tenerife and an independent lawyer should be  representing  you throughout the purchase of your property overseas in emerging countries. It is the lawyer’s job to protect you and inform you.

2. Do the numbers

Make sure you know your budget before you start looking at properties – this should include at least a provisional mortgage offer if you’re borrowing money. Don’t then be tempted to buy more properties than you can afford (particularly on off-plan properties) hoping to sell the extra properties before completion unless you fully understand the risks as well as the rewards (see point 5). If borrowing money, your repayments will stretch over several years, years in which lending criteria and borrowing costs may change. Discuss the long term repayment with a financial specialist before proceeding.

3. Beware exchange rate movement

The rates do not need to move substantially to affect the value of your purchase. When you start looking, £100,000 may buy you a certain property – a 10% drop in the value of the £ against the Euro, for example, may then put that property out of your budget. If you’ve already signed contracts to buy, this could cause you a problem. Speak to specialists in this area and secure your rate of exchange early. The rate fluctuations will also affect the costs of mortgages (if you raise the mortgage overseas and earn your income at home). Again, speak to a foreign exchange specialist to highlight the risks and to take appropriate action.

4. Use professional agents and developers

There are few, if any, guarantees when buying property, at home or overseas. Employing a professional agent or buying from a professional developer will also help you.

Ask lots of questions. 3 year old children are known for asking lots of questions (why? why? why?) and you should follow their lead when talking to agents about a purchase. Initially, focus questions on the company itself, not the properties for sale. Dig around for details on the founders of the company and the track record of the company.

Ask for client testimonials (real ones) and make sure you find out in detail exactly what service they offer. Don’t just take their word for it – ask for details on their service in writing, preferably in the form of some type of ‘Terms of Business’.

5. Remember the reward: risk ratio

If you are buying property overseas as an investment (as many people have done in recent years), you need to bear in mind that big returns may come with significant risks. Be careful to assess the possible downsides to an investment property as well as the enticing investment numbers that could be achieved if all goes to plan.

Take your time and follow these tips and there is no reason why you’ll be taking any more risk buying overseas than you do at home.

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

0wners forced to rent when unable to sell

October 28, 2009 – 5:00 pm
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Owners in Spain and Tenerife are choosing to rent out property when it fails to sell.

Property owners in Spain and the Canary Islands who are renting out their properties because they cannot sell them due to the country’s depressed real estate market are increasingly experiencing problems with bad tenants hit by the economic downturn. The number of defaulting tenants and evictions have tripled in the past two years, it is claimed.

Many of them who are having problems are expats who moved to Spain and the Canary Isles  for a better lifestyle and then became reluctant landlords because of the credit crisis, according to Paragon Advance España.

Bryn Cole, Managing Director of Paragon Advance España who have offices just outside Marbella, the Costa del Sol and Madrid said that many of these reluctant landlords have moved back to the UK and rented out their properties as they cannot sell them in the current real estate climate.

‘They have been forced into letting out their homes in order to be able to pay the mortgage and, for those investors who jumped on the Spanish property market, buying off plan, only to see it go into freefall before they could offload their investment, they have had their fingers burned and are having to let long term and ride it out,’ he explained.

His company’s research has found that the number of tenants who default on their monthly payments is increasing at alarming rates with tenants also being affected by the economic crisis and unemployment in Spain.

It can take around 18 months through the usual law system and, in the meantime, the landlord still has to pay the mortgage, utility bills and has no redress over the defaulting tenant during this time. If the landlord should refuse to pay and, for instance, the electricity is cut off, the tenant can prosecute the landlord. These facts are another good reason to rent using the services of an estate agent who can try to alleviate any problems as they arise and in so doing, protect your investment.

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

Buying Overseas? Ensure you obtain the best rate for your money.

March 7, 2009 – 12:32 pm
Make the most of your money when changing currencies

Make the most of your money when changing currencies

As the financial turmoil around the world continues, it is more important than ever to make sure you get the best exchange rate when buying overseas. There are two ways to achieve this: timing your purchase; and getting the best deal on the day.

Timing your purchase

If you are buying overseas, you will usually have a window of a couple of months before a completion payment is due – or a longer period to consider if you are buying off-plan and sending stage payments over the course of a build.

Whatever currency you need, the exchange rate will fluctuate over this period of time – so how do you know what the sterling cost is going to be? When is the best time to buy your currency?

An experienced currency dealer like Moneycorp will be able to tell you what’s happening in the market in simple English. If you need to send money to Tenerife, for example, which way is the Euro heading and why?

For these money transfers in Euros, when is the next announcement regarding European interest rates and how might it affect the exchange rate?

While there is no crystal ball and nobody can see into the future, it can pay to have an idea of what is moving the markets. This is how your currency broker can help you to make an educated decision as to when the time is right for you.

Furthermore, if exchange rates are good (or you’re worried about them getting any worse), you can also lock into a “Forward Contract” to guarantee your rate for up to two years in advance.

The beauty of buying currency in this way is that you have a definite sterling equivalent for a future currency requirement, but you only need about 10 per cent of your Pounds available to secure the rate. The balance is due when the money needs to be sent.

Currency companies watch rates all the time, so if you have a target budget in mind, they can let you know if the market moves in your favour. All in all, you are likely to end up more in control of your finances and with a better deal than just by buying your currency at the last minute when it is required.

Getting the best deal

When you decide to make a currency purchase, it’s not usually your high street bank that will get you the best rate. An independent broker such as Moneycorp will save you up to four per cent compared to a bank’s exchange rate – or £6,000 on a £150,000 purchase!

Currency brokers are registered with HMRC as money service businesses, and as they don’t use credit or speculate on the markets, the system is incredibly safe.

Because currency companies deal only in foreign exchange, you should also expect a first class personal service and your own dedicated dealer to guide you through the process. It is also less confusing to speak to an experienced broker, rather than the call centre environments presented these days by the banks.

Good currency brokers won’t charge you any commission and should have minimal or zero transfer charges – so you can save money right across the board. You can find more information on this and property related matters on the Tenerife Property Guide site.

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