Tag Archives: property mallorca

Palma town council to ban holiday rentals in apartment blocks

We understand Palma town council is close to banning holiday rentals in apartment blocks.

Long-term rentals will not be affected, nor detached or semi-detached dwellings and always when a specific tourist rental licence is granted.

The Gobern Balear will also empower other local authorities across the islands to prohibit apartment rentals if considered necessary.

The legislation has come about via an unlikely alliance between the left and right-wing parties as a result of skyrocketing long-term rents, overcrowding, and a strain on local infrastructure.

There has also been opposition from hoteliers, who see holiday rentals as unregulated and unfair competition.     Similarly, block residents have been complaining about the general poor behaviour of holidaymakers.

We understand the exact details of the new law that have yet to be approved, including the prosecution process.

Other measures being studied include a limitation on the number of holiday rental properties an individual may exploit.

long term property rental prices have soared in the last 12 months with an average increase of 6% pa.

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?

Gathering in Palma de Mallorca to raise awareness of the consequences of bank eviction.

A demonstration has taken place in Palma de Mallorca in order to show solidarity to people who, they claim, are victims of the “banking and estate agency violence”. The demonstration was organized after it made front page news that a man in Granada had committed suicide on Thursday hours before he was due for eviction. The organising group says this suicide was not a “one-off” and that many hundreds of lives are being broken by abusive banking legislation.

What is a nota simple?

A “nota simple” is a summary report from the Property Registry that describes the property in the deeds, known as the “Escritura”.

It should be noted that a nota simple is only informative and is not valid in front of a court. A registry certificate is needed for the courts.

Judicial information is brief, and usually covers outstanding debts (mortgages or unpaid taxes), the current owners, the boundaries, the total square meters of the land and of the house.

It also describes the type of land, any rights that others may have on the property, such as public paths/roads, water or sewage lines, etc.


The Bad Bank – coming to Spain soon.

The Spanish government is creating a “Bad Bank”, or “Banco Malo”, in which to put all the toxic property assets.

The idea is to progress from the current building crisis by drawing a line under the current woes in the construction sector.

Basically, the Government of Spain issues debt and buys from Spanish banks all their bad investments, which are accumulated in a “bad bank”.

Presumably, the acquisition takes place at a significant discount relative to the actual value, so that in the long-term, taxpayers could even win when the assets are re-sold.

At Property Works, we beleive that this measure, although not without its risks, could be of some help to help the Spanish economy overcome the deflation of its recent property bubble.

Time will tell…

“La Opción de Compra del Inmueble” or “Property Purchase Option Contract”

“Opción de Compra” or “Purchase Option”

This is a contract signed by both parties outlining the terms and conditions of the sale.

It should  describe:

  • the property to be sold including the building’s size and land size, neighbours, rights of way, easements, etc
  • its registry and deed number
  • its ratings number
  • the price
  • the vendor and purchaser’s name, id and addresses
  • the deposit amount
  • the date of completion
  • what will happen if the contract is broken
  • who will hold the deposit
  • the commission payable to the agent by the vendor
  • consider subject to survey clause.
  • Do not confuse an  “opción” or option with a “señal” or deposit. A señal is a small deposit, perhaps 1,000€ to hold the property until contracts are drawn up.  It has no legal status and is usually done over a handshake.
  • These contracts are often provided by the agents and primarily represent their interests or the vendors interests.  Do not be afraid to suggest that your lawyer will want  to be provided with this document.
  • You will need independent and impartial legal advise on a purchase contract, so get a lawyer.
  • Ensure you have an English translation so you know what you a signing/buying.
  • The days of paying 10% deposits are gone . Try negotiating down to 5%. This is much more reasonable.
  • Do not expect to get your option deposit back easily without a fight if the money is held with the agent, vendor’s lawyer or vendor, so make sure the money is held by a trusted third party.  If it goes to court it can take years.
  • Do not sign an option until a minimum amount of due diligence is carried out. Most vendor’s can and should wait for you to check out some basic pre-purchase details.
  • Remember an unprofessional agent wants your signature as soon as possible in order to claim a commission.
  • Forget paying cash for the option, however much the agent or vendor likes it. This is an antiquated and unreasonable request.