Author Archives: akinloch

Energy certificates for property in Mallorca and rest of Spain now required

As of April this year, all property owners are now required to obtain an energy certificate on their asset prior to sale  (or rental – we understand for a period greater than 4 months).

El certificado energético, obligatorio para la vivienda de segunda mano a partir de 2013

A notary will not perform a property transfer without one of these documents.

All estate agencies are required to have this, along with up-to-date registry and tax documents prior to marketing.

Specially qualified architects, surveyors, industrial engineers, and official energy efficiency surveyors will be able to provide this.

How much these documents will cost seem to vary, with figures being banded around from 300€  to 600€. We understand they will be valid for 10 years.

How these measures will be implemented is not known, considering the number of properties for sale.

The reports will cover areas such as boilers, glass thickness, roof insulation etc. It will also carry recommendations on how to improve efficiency.

They will be valid for 10 years.

El “certificado de eficiencia energética” as it is known is Spanish, will not apply to new build properties as they have energy certificates since 2008.

PropertyWorks is happy to provide details of our collaborating company

Click here to provide details and we will forward your information to our collaborating energy certificate company

Do you have a Holiday rental property in the Balearics? The legality explained

this article is taken from Spanish Property Insight and written by Will Begsa of ETL lawyers.

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice.

http://www.spanishpropertyinsight.com/2013/04/29/tourist-rental-licences-in-the-balearics-explained/

High homeownership rates mean that the average Spaniard is much richer than his northern european counterpart

The controversial conclusion of a study on the average capital of European citizens per country, elaborated by the European Central Bank (ECB) and published last Tuesday, is that the average Spaniard is richer (and much more so) than his German counterpart.

At a time when southern Europe calls for the “solidarity” of its supposedly wealthier northern neighbors, it is surprising to learn that, in fact, in terms of private capital, things are not what they seem. According to figures from the ECB, the average net assets (minus all debts) of an average  Spanish citizen totaled 291,400 euros, compared with 195,200 for Germans, 233,400 for the French, 170,200 for the Dutch or 275,200 for the Italians (the second highest). If these data are correct (in Spain they were collected in 2008 before the housing bubble had fully burst), it would mean that the average Spaniard is 50% richer than the average German, 25% richer than the French and 71% richer than an average citizen from the Netherlands.

This is not all. In fact, if we look at the medium -that is, those Spaniards located in the middle of an imaginary list going from the richest to the poorest, the difference is even greater: the median in Germany is 51,400 euros, 115,800 euros in France and 103,600 euros in the Netherlands of EUR, while in Spain it totaled 182,700 euros followed by 173,500 euros in Italy.

While the Germans account for 28.7% of European households, they have only 24.3% of Europe’s wealth, while the Spanish, with 12.3% of households, has 15.6% of the EU’s capital.

Incidentally, a special case in all these comparisons is Cyprus. Its citizens, with an average of € 670,900 (266,900 euros of medium) are the second richest in the EU after Luxembourg.

The key to this surprising data is the different ownership structures between citizens of one country or another. Spaniards and Italians have a huge love of bricks and mortar. That is, they want to own their homes. And the truth is that they do: 82.7% of the Spanish and 68.7% of Italians own their own homes, compared with 44.2% of Germans and 55.3% of the French.

The average capital among Spanish homeowners is 337,900 euros, after deducting outstanding mortgage debt; while the capital of non-homeowners is 68,900 euros. German homeowner’s average capital is higher, 381,200 euros. The problem is that many Germans do not own property.

Obviously, other factors should be taken into account. First, the average income in Spain is still well below that of its northern neighbors. And this is important because homeownership burdens become heavier when the family’s income is lower. On the other hand, we must keep in mind that one has to live somewhere.

Furthermore, it should be noted that only 5.6% of Spaniards have mutual funds, compared with 17% of Germans or Dutch, and only 23% have private pension plans, compared to 46% of Germans and 50% in the Netherlands. This will mean, in the future, that citizens from these countries will have higher incomes, but also face an extra expense that homeowners will not have to face.

So, the question is: which is better, having a larger capital but a lower income, or having a higher income in exchange for lower equity?

New Catastro/Rating app available for Android phones

This useful app for android mobile phones gives you instant access to the cadastral plans and other information for the whole of Spain.

https://play.google.com/store/apps/details?id=air.CatastreandoMobile&hl=en

The cheapest properties in Mallorca 2013??

1b

For the urbanites.

Its not pretty and the area is colourful, but for 17,500€ you get a 70m2, 2 bed apartment in the centre of Palma.  That cant be bad and works out at about 250€/pm2. Considering the average price in Palma is about 1,800€/pm2 it looks an absolute bargain.

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1

For the rural type

A 20m2 stone shed in a field in Petra. It comes with 1100m2 of land, a toilet and a stream!  

At 21,000€ this is very cheap.

A beautiful and natural home to be demolished…

This house is apparently harmful to the rural character of the area.

charlie1

It is made of straw bails and timber.

Charlie, the owner, built on a large plot in Pembrokeshire

He did though, overlook one small detail, planning permission. He has applied now, retrospectively.

It is claimed it is harmful to the environment. I suspect he is being made an example of.

In my view,  it is fairly clear he is no big-time developer, it is a sustainable and wonderful economic solution for housing his family.

More at   http://naturalhomes.org/save-charlies-house.htm

A flying skyscraper… Is this the future?

“Light Park” is a skyscraper designed to hover over the streets of traffic-jammed, polluted Beijing, by architects Ting Xu and Yiming Chen. They conceive the future of skyscrapers as mega-structures that make up for the shortage of urban space on the ground by hovering up in the air by means of a massive helium-filled balloon.

The Light Park uses non-polluting solar energy for its propulsion and is designed to provide  housing, commercial and recreational spaces – a sort of utopian eco-city.

The technology behind the Light Park is based on existing hellium balloon designs. It uses solar-powered propellers, airbags and atmospheric pressure for takeoff and cruise flight. Translucent solar panels located on the top of the aircraft. In order to avoid additional weight and decrease wind resistance, the skyscraper uses a cable-suspended structure to attach the slabs to the mushroom-like cap. The planting slabs are irrigated with rainwater collected on the large cap surface and are distributed in a way which allows maximum exposure to sunlight on each level.

European court rules Spanish mortgage law is abusive

From El Pais.

http://elpais.com/elpais/2013/03/14/inenglish/1363264199_406548.html

The European Court of Justice on Thursday ruled that Spain’s mortgage law is incompatible with a European directive on abusive practices in consumer contracts, opening the door to more legal protection for households facing eviction from their family home.

The ruling comes in response to a question posed by a Barcelona court in connection with the eviction of Moroccan immigrant Mohammed Aziz from his home in January 2011, after he failed to meet mortgage payments on a 138,000-euro loan granted to him by savings bank CatalunyaCaixa in July 2007.

The court wanted to know if the eviction breached Aziz’s rights. The European Court ruled Thursday that the process of ousting him from his home infringed the European Union’s 1993 Unfair Terms in Consumer Contracts (93/13EEC) directive on consumer protection.

The ruling will apply to all eviction cases currently being processed across Europe but will not apply retroactively, as pressure groups have been calling for. Amendments to the mortgage law, which is more than a century old, are currently going through parliament, and it appeared as if the government was waiting for the Luxembourg-based court’s judgment before proceeding with the passage of the draft law.

One of the anomalies of the current law in Spain is that if a homeowner fails to meet a single monthly mortgage payment, the bank can initiate accelerated proceedings to evict the borrower and take possession of the property. Even if the borrower alleges the contract he has signed is abusive and a court agrees with him, if the eviction has already been carried out the homeowner has the right to compensation but not the right to recover the property. The bank can also ask for full repayment of the loan even after obtaining possession of the property in question.

“The Court […] holds that the Spanish legislation does not comply with the principle of effectiveness, in so far as it makes it impossible, or excessively difficult, in mortgage enforcement proceedings initiated by sellers or suppliers against consumer defendants, to apply the protection that the (93/13EEC) directive confers on those consumers,” the court’s ruling said.

The court also questioned whether Aziz would have willingly signed on equal terms with the bank a contract that included a penalty clause for back payments with an annual default rate of 18.75 percent. “The national court must in particular compare that rate with the statutory interest rate and determine whether it is appropriate for securing the attainment of the objectives pursued in Spain and does not go beyond what is necessary to achieve them,” the court determined.

Some facts you should know before buying property in Spain.

Borja Mateo (www.borjamateo.com) is a real estate expert and author who believes many people misunderstand the property market, which leads them to make the wrong investment decisions. He recently published an article in the Diario de Mallorca answering some basic questions about the current state of the market. Here we summarise his most interesting points.

The current state of the market can be gathered from the following facts: Prices of real estate have fallen around 48% since their peak. There are between 6.1 and 8.5 million properties which are either empty, under construction or in the rental market. The annual demand for new housing is of 130-170 thousand units, so the existing housing stock will be enough for many years. Current prices still do not reflect this over-supply reality.

“The area in which I am interested is different” This is a common mistake. The drop in real estate prices affects all areas to a greater or lesser extent. Reduced access to credit and the high supply of properties are relevant factors currently affecting all areas. It is true that some areas are less affected than others, but it will be dangerous to believe that a particular area is completely immune to drops in prices.

“Banks are going to start lending soon and prices will skyrocket”. Reality is quite different: banks are not going to go back to previous lending levels anytime soon. The Basel III reform, which has greatly affected the credit market, means in practice that much less credit will be available for families in the near future.

“Lowering the price any further would be like giving the property away”. False. No property owner thought prices would drop like they have, but it happened. Prices that seem bargains today, in a few years may be considered expensive. It is a fallacy that prices will not go any lower. Only when the number of property transactions has recovered strongly we will be able to say that prices have bottomed out: for this to happen, we think prices have to come down even more.

“Nobody is going to sell a property at a lower price than the one they paid for it”. These days, buyers and tenants have the upper hand. The over-supply of rental properties is pushing prices down. Lower rents mean lower property valuations, as their potential rental yield is factored in. This underlying conditions are not going to change for a while.

“The property is being sold at cost price”. The fact that the price of land has dropped by 80-100% from its peak, means building is now much cheaper than during the housing bubble. Therefore, it is perfectly feasible that the current market price of a property is now well below what it cost to build.

“Nobody is going to want to sell at a price lower than their mortgage”. Many people would happily sell just to cover the amount of their mortgage -just ask those who have been evicted. Today’s prices are 20% lower than last year’s, and more expensive than they will be in twelve months’ time.

“In my area, no one needs to sell, so prices will not fall”. An unemployment rate that may reach 28% in 2013 affects everyone. Prospective buyers demand discounts. As general supply increases and demand decreases the decreasing-prices dynamic intensifies.

“The bank is financing it, so it has to be a good investment”. Mortgages are great business for banks: buyers are offering a large asset (the property) as guarantee, plus their own personal guarantee (all their present and future assets), plus often those of a guarantor.

“After a cycle of drops in house prices, there must come one of rising prices.” In the current situation, with an existing house stock that exceeds 63 times the annual demand for housing, this cycle could perfectly last for 20 years since 2006.

“Why rent when you can buy. Renting is throwing money away”. In the same way that rent is an expense, so is the payment of interest -and much more so when it comes to acquiring an asset whose market value is falling. If we compare Mr A who buys a property with transaction expenses of 7%, a decrease in prices of 10% over the next 12 months, and a mortgage at 1.5%; with Mr B, who rents an equivalent property paying a rent priced at 3% of the property’s value, we can see how only during the first year, Mr A has lost 14.3% of the purchase price while Mr B loses only 3%.

So, as a general comment, the best thing now would be to wait as much as one can before buying or renting (or to sell as soon as possible) as prices will fall further in the foreseeable future. 

 

An Energy Performance Certificate for Buildings is now needed to sell or let Spanish property.

The Energy Performance Certificate for Buildings is a European initiative to promote energy efficiency in existing buildings and new constructions that has come into force this year 2013. From now on, potential buyers or tenants of a house, flat or commercial premises, will require from the owner of the property an official energy rating. This classification, similar to that carried by white goods, may influence their decision on the purchase or lease, as it is obviously in their financial interest to buy or rent an energy-efficient building, other than one with high energy consumption levels.

Promoting energy efficiency in buildings is aimed at achieving a reduction in overall energy consumption of fossil fuels, with a subsequent reduction in greenhouse gas emissions and in the country’s energy dependence, as well as, in the medium term, saving money for many families.

In the long term, the energy certification of buildings could also be used by local and central governments to regulate the various taxes, tax incentives, grants, etc., related to the purchase or lease of properties, rewarding more efficient buildings.