Housing market shrinks again

August 21, 2011 – 5:28 pm

Housing market shrinks again

Home sales in June were the lowest since the property crash began, show the latest figures from the Statistics Institute (INE).
There were 24,699 home sales in June (excluding social housing), down 26pc on the same time last year,  even June 2009, when the crash was thought to be at its nadir.  It is clear that, after a deceptively promising start, 2011  is turning out to be the worst year yet.
Compared to June 2007, sales were down 60pc – a teeth-jarring fall by any measure.
Year-to-date, transactions are down 11pc compared to last year, 3pc compared to 2009, and 55pc compared to 2007.
Assuming that prices have fallen by an average of 30pc since 2007, then in value terms (Euros) the market has shrunk by 70pc since then. That means 70pc less money around for everyone who lived off the housing market, town halls in particular.
All this helps explain why many town halls are now in the jaws of a financial crisis: They ramped up their spending and overheads during the boom, assuming it would last for ever, but now the money has dried up and they can’t afford to pay their bills. A 70pc fall in revenues from real estate helps explain why.
Why are transactions still falling? Partly because the credit crunch is still in full swing – in Spain at least – and partly because the abolition of mortgage tax relief at the end of last year brought forward sales that might otherwise have taken place in the first half of this year. So the figures might make the market look worse than it actually is. To find out we will have to wait and see if there is a recovery in the second half of the year, let’s hope it improves in Tenerife too.
By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , | Comments (0)

Tax rules reforms by UK treasury

August 13, 2011 – 10:22 am

New UK treasury rules affect property owners in Tenerife.

New UK treasury reforms could see retirees who live and own property abroad able to spend up to a third of their time back home each year without paying any tax.

The new laws, to be implemented in April 2012 if they are passed, wll allow British retirees living abroad to be back in the UK for 119 days of the year before they are liable for any local taxes. This will come as positive news for many expats who live and own properties in European destinations such as France or Spain, but still spend a significant part of the year back in the UK seeing friends and family or for medical issues.

Under current regulations, expat retirees are only able to spend up to 90 days in the UK per year before they are deemed ‘resident’ and charged tax. Not only will this number of days be extended in the new laws, it will also allow those who have been home for under 90 days in the last 2 tax years able to retrospectively ‘claim back’ their extra days – in other words, they will be able to spend 182 days total in the UK next year before they are charged tax.

Chief executive of tax and investment planning firm Blevins Franks, David Franks, said the reforms would be a welcome relief for both British expats living abroad, and foreigners who own property in the UK and spend significant time there. “The new rules are a major advance in providing certainty for individuals who have homes in the UK and visit there frequently, so we hope they will be implemented”, he said. “They are still at the draft stage at the moment, but they have been welcomed by tax practitioners and so we do not expect any major changes.”

Hopefully, those expats in Tenerife will  be able to take advantage of the new rules when necessary.

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

Time running out for second homes tax breaks

March 24, 2011 – 9:44 am

Time is running out for tax breaks on second homes

Time is running out for holiday  owners to upgrade their property while simultaneously cutting their tax bills. A £30m tax break, which cuts the cost of second homes for more than 65,000 families, is to be withdrawn next month because of EU laws. Attractive tax incentives were introduced in the eighties to encourage people to invest in quality holiday properties in Britain, after the lure of cheap Spanish packages left our many seaside resorts struggling, and in decline. They provided budding UK landlords with a meaningful subsidy towards the purchase and running costs of a second home, as well as more tax concessions when it came to selling. About 65,000 families currently own and run a holiday house in Britain under this tax regime, known as the furnished holiday letting rules, and save an estimated £30m a year in tax. But advantageous treatment of UK holiday property fell foul of EU laws, because they were deemed to discriminate against tourist accommodation in Spain, Portugal, France, Italy and elsewhere in Europe. Either the tax breaks had to be extended to all holiday properties throughout the European Economic Area (which includes Iceland, Liechtenstein and Norway as well as other EU countries); or they had to be withdrawn. The Government calculated that it would add up to £25m to the existing £30m cost of running this scheme if these overseas properties were included. By contrast, cutting this relief would bring an extra £20m into Treasury coffers. From April, losses can only be offset against future rental income and not used to reduce your overall tax bill. Source: Telegraph Online

By Angela | Posted in Economy, General, Holiday, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , , , , , , , , | Comments (1)

Housing glut shrinking in Spain

March 15, 2011 – 10:42 am

On the back of official figures showing housing sales up last year, Spain’s Association of Developers and Constructors (APCE) forecast the housing glut will shrink this year for the first time since the crisis began.“A change in the trend” is how , President of the APCE describes the latest sales figures showing the market grew by 6.8pc last year, and by 5.1pc if you exclude social housing.

Galindo, pictured left, told the Spanish press that the official figures do not count repossessions or debt-for-property swaps as sales, meaning that last year’s increase was a genuine increase in home sales, driven by a recovery in demand. As a result of rising home sales and plunging new housing starts, the APCE forecasts that Spain’s  housing glut will start to shrink from this year on. “More flats are now being sold then built,” Galindo told the Spanish press.

Galindo also forecasts that official figures will continue growing for at least the first couple of months this year thanks to a surge in transactions at the end of last year before mortgage tax credits were eliminated. Sales take a couple of months to get counted in the official figures. After that, however, the official figures are likely to go down.

Looking at the market in Tenerife as an example, more property transactions are taking place again after a difficult period in the property sector.

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

Spain’s property prices fall again

January 12, 2011 – 2:07 pm

Spain's property prices falling

There are between 700,000 and 1.1 million unsold homes in Spain, a figure that could drag the property prices in the country down further this year, according to the Central Bank in Spain.

A spokesperson from the financial body said property values are likely to continue their downward trend due to tax changes in the country. The banking regulator said: “We will see a process of gradual absorption of accumulated excess supply, which will be slow and mean that housing investment will not contribute to the growth of activity in the near future.”

House values fell by about 13% from the peak seen in the first quarter of 2008, according to government statistics. There was also a decline in new-home construction. Only 137,000 homes were built in the year to September, down from the 2007 peak of 750,000 units.

Perhaps with the fall in the value of the Euro, more overseas purchasers will be tempted back to buy in areas such as Tenerife and The Canary Islands, which have been popular in the past.

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

Spain works hard to cut deficit

December 22, 2010 – 2:43 pm

Spain works hard to cut deficit

Spain is cutting its deficit faster than Ireland, Portugal or Greece, seeking to reassure investors that the nation deserves cheaper borrowing costs than its peers. Spain’s central government trimmed the deficit by 42 percent in the first nine months, compared with 31 percent in Greece and a widening budget gap in Portugal. The figures were released yesterday as budget talks broke down in Portugal, and Greece said its shortfall was bigger than reported, pushing up the yield premium investors demand to hold sovereign debt of the so-called euro peripherals over comparable German bunds.

Portuguese 10-year bond yields rose 27 basis points to 5.96 percent, the biggest one-day advance in more than a month. Greece’s yield jumped 73 basis points and Ireland added 32. Spain’s yield gained 9 basis points, leaving the spread over bunds near a 10-week low, reached the previous day.

“Investors seem to be differentiating more between markets as Spain has decoupled in a sense,” said Olaf Penninga, who helps oversee 140 billion euros ($193 billion) at Robeco Group in Rotterdam. He said his view has become more “constructive” on Spanish debt. Spain, which was forced in May to deny speculation that it might follow Greece in seeking an international rescue, slashed public sector wages 5 percent, reduced investment spending and increased value-added taxes in a bid to cut the budget deficit in half in two years. The measures are paying off as the yield difference with Germany has fallen by more than 25 percent from a euro-era high of 221 basis points in June, while spreads for Portuguese and Irish securities rose to records last month.

“Generally the budget seems to be on track and that’s a much better sign than in some countries where this data didn’t show an improvement, so in that sense some of the risks have abated,” Penninga said. The spending plan includes the deepest budget reduction in at least 30 years and aims to slash a deficit of 11.1 percent of gross domestic product last year, the euro region’s third largest, to 6 percent next year. That would leave Spain with a shortfall on par with France.

“There’s more conviction that the 6 percent deficit is achievable,” said Antonio Garcia Pascual, chief southern European economist at Barclays Capital in London. “They’re on track and my sense is they’ll end up a little bit better than 9.3 percent this year.” Prime Minister Jose Luis Rodriguez Zapatero, who leads a minority government, has already mustered enough support in parliament to pass the plan in an initial vote, cutting deals with two regional parties that should assure his government survives until scheduled elections in 2012. By contrast, Portugal’s opposition broke off talks on the minority government’s fiscal blueprint, jeopardizing its passage in a parliamentary vote set for next week and fueling the drop in its bonds. Portuguese Finance Minister Fernando Teixeira dos Santos said yesterday that failure to pass the budget “will plunge the country into a profound financial crisis with very serious consequences for our economy, in which we’ll see the channels of financing for our economy blocked. ”

Spanish tax revenues rose 13.5 percent in the first nine months as the sales tax increase kicked in, according to the government data published yesterday. Spain’s ability to maintain that revenue growth may be hampered by a jobless rate of almost 21 percent that will lead the economy to contract for a second year in 2010, damping tax collection. So far this year, Spanish long-term bonds returned 2.6 percent, compared with the 10.3 percent decline for Portugal and 6.2 percent drop for Irish securities of 10 years or more, data compiled by Bloomberg show. Of the peripheral countries, only Italy, with a deficit of less than half that of Spain, has performed better. Its bonds gained 6.2 percent.

Spain is among the peripherals most vulnerable to rising borrowing costs. Greece accepted a European Union-led bailout that should finance the country for at least two years. Ireland doesn’t need to issue bonds for the rest of this year and Portugal has met 94 percent of its financing needs, compared with 83 percent for Spain, said Chiara Cremonesi, a fixed-income strategist at UniCredit Bank in London.

“We’re still short Spanish bonds because we see the risk of supply not being taken very well over the next four bond auctions,” said Gianluca Salford, a fixed income strategist at JPMorgan Chase Bank in London. “But if things continue as they’ve been over the past few weeks, Spain will continue to tighten gently in line with Italy.”  While the relative risk of Spain has eased relative to the other peripherals, investors still perceive that there is a greater chance of the country defaulting than the Philippines, Thailand or Morocco. Credit default swaps protecting Spanish government cost 206 basis points yesterday, more than the 130.9 for the Philippines, 122.2 for Morocco and 89.3 for Thailand.  “When you look at the figures in Spain, I think we’ve seen the worst,” said Michael Wenselaers, a portfolio manager at KBC Asset Management in Luxembourg, who’s underweight in  Spain and “waiting for the right moment to step back in.”

Source: Bloomberg

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

Economic woes drive overseas property interest

August 14, 2010 – 5:35 pm
Economic woes prompt property searches in Tenerife and Spain

Economic woes prompt property searches in Tenerife and Spain

The Capital Gains Tax hike and the start of the summer holiday season have had no real impact on interest in international property.

According to the latest Primelocation International Search Index, total searches for overseas property were down 7% in June but up by 138% on the same period last year.

The website therefore claims that financial pressures in the UK haven’t dampened interest, adding that other research indicates that one-third of international property searchers are looking to relocate abroad permanently.

The UK’s uncertain economic outlook could therefore be acting as spur for international househunters, particularly as many Britons are now facing more years in the workplace before retirement.

“The data, taken in conjunction with the results of the MyHomeLife panel research, indicates the increasing diversity of the international property market, encompassing investment buyers, relocators, semi-permanent movers as well as traditional second-home owners.While transactions have not yet recovered fully to return to their pre-crash levels, with finance and buyer caution remaining an issue in many cases, this broad range of different buyers is undoubtedly an important factor in explaining the current stability of the international property market.”

The Financial Times has reported that in June, Eurozone mortgage borrowing increased at it fastest pace in almost two years, indicating that confidence in property markets across the EU’s 16 member countries is returning.

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

Spain solicitors say beware the Spanish Revenue

July 24, 2010 – 3:43 pm

The Spanish Inland Revenue ‘penalises’ anyone who buys a bargain-priced home  according to Spanishsolicitors.com

The tax authorities have minimum prices for residential properties.When you buy a second hand home you have to pay a property transfer tax (PTT), established by the Autonomous Communities, which comprises 7% of the sale price which appears in the title deed. Although this is normally straightforward, there has been a recent increase in the number of cases where purchasers have received a tax demand from the tax authorities for an amount which is higher than the PTT they have already paid.

This is particularly true when a homebuyer has bought a home at a low price – a bargain price. The reason for this is because the Autonomous Communities have several minimum-price tables, which are used to calculate the minimum PTT that the purchaser has to pay when they buy a house. The purpose of these tables is to prevent the fraudulent practice of registering a purchase price in the title deed that is lower than the real sale price. As a result, the tax authorities have a reference minimum price for each residential property, and consequently a minimum tax amount. This is not a problem if the purchaser pays more than the minimum tax, but if the tax authorities think that the purchase price has been too low it uses the tables to claim outstanding tax.

So, anyone who buys a second hand home, and is not familiar with all the procedures, may find themselves in the situation where, after having paid the taxman 7% of the property’s purchase price, they receive a tax claim from the tax authorities informing them that they have to pay additional PTT. The amount in question will be 7% of the difference between the purchase price that appears in the title deed, and the price that the tax authorities consider to be the minimum price of the property, plus the interest due for late payment.

For example, if you buy a home for 200,000 euros, you have to pay 14,000 euros as PTT. If the minimum price of your property, according to the tables of the tax authorities, is 300,000 euros, the minimum PTT is 21,000 euros, which means that the taxman will send you a tax claim for the difference: 7,000 euros plus interest.

For this reason, if you are thinking about buying a property whose price, perhaps due to the crisis, has dropped significantly, you should find out its minimum price in the minimum-price tables in order to know how much tax you will have to pay, and to avoid any unpleasant surprises or tax claims at a later date. The minimum prices are usually below the sale price, but in some areas where home prices have plummeted as a result of the crisis, it is increasingly common for this not to be the case.

It is therefore extremely important that before executing the title deed for the property, you contact the tax department of the Autonomous Community where the property is located to find out what the mini

Beware too good a price in Tenerife or Spain may increase your tax bill

Beware too good a price in Tenerife or Spain may increase your tax bill

mum price of the property is, according to the tax authorities´ tables. This will enable you to find out how much tax you will have to pay, and allow you to plan your finances accordingly. In particular it will save you from being subject to unpleasant surprises in the future in the form of a tax claim from the tax authorities.

If the purchase price that appears in your title deed is less that the minimum price given by the tax authorities, and you pay less PTT than is due, the tax authorities will send you a tax claim informing you that you have to pay the difference. After you receive the notification, you will have a limited period in which to appeal, and present your arguments to justify why the property’s purchase price is less than the price that is given in the minimum-price tables. Typical grounds for appeal are that the purchased property is in poor condition, or that it has a sitting tenant (which lowers its value). You can also provide a valuation report from an independent expert that shows that the market value of the property is less than the value assigned to it by the authorities. However, it is extremely unlikely that your appeal will be accepted, and that you will not have to pay “extra” tax, as this only happens when there are extremely strong grounds. Therefore you should not count on the appeal being accepted, as the tax authorities “accept” that you have purchased a bargain-priced home, but they will tax the sale using the property’s minimum price in the event that the sale price is lower.

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

Final month left to claim CGT charges or lose them.

July 17, 2010 – 10:47 am

Final month to get the extra CGT back for purchasers in TenerifeSpain is on cloud nine after winning two of the biggest sporting gongs in the world, but there is a rather more pressing matter for them to deal with – at least for the Brits who sold a property in Spain between 1997 and 2006 – who have just one month left to begin claiming back capital gains tax charged illegally on the sale of their home.

The Spanish Government illegally charged British people more than double the amount of Capital Gains Tax, (CGT) they owed on their properties between 1997 and 2006. The poor Brits who had chased the sun to Spain in search of sea and sangria were forking out a whopping 35 per cent under the ‘non-resident’s income tax’ bracket. Spanish nationals residing in similar homes were paying the proper rate – just 15 per cent of any capital gains. The overcharging is estimated to have raked in more than £350 million for the Spanish Government.

In 2009, following much outcry from British owners of Spanish properties and an expose by a group of Spanish lawyers and a UK based currency specialist, the European Court of Justice (ECJ) ruled that the tax contravened European Community Treaty rules against discrimination. They agreed that any UK or EU citizen who sold a property in Spain between 1 January 1997 and 31 December 2006 could claim back the excess charges.

Now, those affected by the illegal CGT charges have just a month left to make their claim or face losing out on the chance to get back what is rightfully theirs. All claims must be finalised and settled by the end of October this year – as August is considered to be a holiday month in Spain, sellers have just one month left to kick off their claims, which can take up to three months to be realised.

The average amount of money being recovered is around £15,000, so it is more than worth checking if you are eligible for a refund. More than 500 British families have already been successful with their claims.

Even if you have tried previously to recoup the money and not been successful, lawyers are saying that a second try is most definitely worthwhile as some of the rules governing eligibility have changed – indeed, the European Court of Justice have recently opened new legal actions allowing claimants to make a second attempt.  The industry  estimates that there are still thousands of Brits who sold Spanish properties during the eligible time period who haven’t come forward. So if you bought a property in Tenerife, the Canary Islands,  or mainland Spain, get that claim in pronto!

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

Cost of maintaining property overseas increases

June 13, 2010 – 11:40 am

Maintaining property in Tenerife on the increase

Maintaining property in Tenerife on the increase

85% of overseas property owners say the cost of maintaining their property has gone up in the last 12 months, so check out this guide on how to reduce the cost of being an overseas property owner.



Over a million Brits currently own a home overseas, with France and Spain being the most popular destinations. However the global economic slowdown has hit homeowners not only at home, but also abroad as the cost of maintaining a property has increased -over a fifth of owners (21%) are struggling to meet the increased costs, according to latest research.

Whilst mortgage rates may have gone down for many owners, the overall cost of owning a property overseas (including local taxes, utility bills, maintenance costs etc) has continued to grow and the rising costs of ownership have been magnified by sterling’s depreciation.  Many homeowners are also seeing their rental income from a holiday home hit, as the number of potential tenants decreases with more people opting for ‘stay-cations’ in their home country.

To help the million plus Brits who currently own a home overseas, HiFX has complied a guide to reducing the cost of ownership, including cutting the costs of international money transfers, how to ensure the property is as tax efficient as possible and how to maximise rental opportunities.

1. Protect yourself from currency fluctuation:

Two years ago the average overseas home owner transferred £10,000 a year to meet maintenance costs (including overseas mortgage payments) and provide spending money when they visit their second home. However as the pound has taken a beating against all the world’s major currencies, they now have to convert significantly more in order to meet the costs associated with their international property such as maintenance costs, mortgage payments, utility bills and local taxes.

For example, in October 2008, £10,000 would have bought you €12,900.  To receive the same amount of Euros today, a Brit has to transfer £11,896, almost £2,000 more.

Advice for Brits who are feeling the pinch:

People making regular currency transfers should set up a Regular Payment Abroad plan with a currency broker that allows you to lock into an exchange rate for up to 12 months ahead so you know know exactly how much is being transferred every month. A Regular Payments Abroad plan also saves you forking out on commission and transfer fees. Banks typically charge up to £30 as a transfer fee on each and every transaction, up to 2% commission on the amount being transferred and, depending on the destination bank account, you may also be charged a further 0.5% receiving fee by the overseas bank.

Those who are uneasy about fixing the exchange rate and are more bullish about Sterling’s future or those who are making international transfers on an ad-hoc basis should at the very least shop around for better exchange rates and compare the rates offered by their high street bank with a currency specialist, particularly one which offers an online service for smaller amounts of money

2. Cash in on rental opportunities

According to the research, almost 70% of holiday home owners are missing out on vital income by not renting out their overseas property. Almost half of those that do rent it out only do so to friends and family who traditionally pay less than other tenants.   Talk to neighbours, the local economic development office and estate agents about rental rates, which websites work for advertising their holiday home and the seasonality for tourists.  If you decide to use a website to advertise your holiday home, put some effort into putting great pictures up and writing an attractive description.

3.  Ensure your property is tax efficient

Overseas home owners have to pay ongoing taxes on ownership, such as local taxes or even tax on rental income.  This is usually payable in the country where the property is located, but if you are a UK resident, such income also needs to be recalculated into Sterling and is taxable in the UK, regardless of where it is paid, with any appropriate relief given in the UK for taxes paid abroad. Each country will tax the income according to its own rules, so sometimes more allowances are available abroad than in the UK or the tax rates abroad may be lower, but the higher tax liability will be due.  However, there may be ways of reducing your tax bill, but whatever you do, you only pay tax when you make money. Spending money unnecessarily to save tax can often be a false economy; after all, why spend £100 to save £40? It is important to make sure that you claim whatever allowances you are entitled to. Make sure you know the rules or employ someone to prepare the returns for you.  Trying to do it yourself, if you don’t understand the rules, can be a false economy.

People who take advice before buying their property abroad often manage to make their purchase more cost-effective than those who buy without taking advice.

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