Why its a buyers market, tax dodgers look out, Spain stubs it out, Ricky Gervais and how to improve yourself. Smarter than your average newsletter.
News
Distressed sales on the Costas
Sunday Times
It's a buyers' market on the Costas - with a glut of off-plan investors desperate to sell before having to complete. Prices are plummeting, so is it time to go bargain-hunting?
The Costa property markets were set ablaze by off-plan investors in 2002 and 2003. To the enthusiastic amateur speculator, such Spanish property apparently offered a risk-free, tax-free, high-return investment; unscrupulous but persuasive estate agents had no trouble selling "hot projects" to credulous British and Irish buyers, many of whom went to Spain for the weekend to buy a holiday house and came home with several off-plan investments.
It was a classic greed-driven stampede that distorted demand and fed construction frenzy. If asked about the risk of a dearth of buyers down the track, an agent's standard reply was: "It'll never happen." Now, lots of those off-plan developments are finished, and it's crunch time: investors must either take possession of properties they never meant to own, sell on, or lose their stage payments. Many people now face losing tens of thousands of euros if they fail to complete, or can't find a buyer quickly.
The problem is that demand has slumped - by 40% or more. Developers are also making life difficult for off-plan investors by denying potential buyers access to sites; they still have about 25% of their own properties left to sell, so there's fierce competition for buyers. The situation is grim and likely to grow worse as more developments reach completion.
For those who can afford it, completion may be the best option, always assuming that they have avoided the most mediocre developments. The long-term market fundamentals are good. But the reality is that many do not have finances robust enough to hang on until things improve. They over extended, confident of finding a buyer and never having to
complete. Now they must find a buyer, fast, or breach their contracts with developers, losing some or all of the money they've put in. Most have made stage payments of at least 30,000 (£20,000), although some stand to lose much more.
One Irish investor, Sinead, faces losses of £92,000, plus interest on a 20-year loan. Sinead (she's too embarrassed to have her full name mentioned), bought two off-plan sites in the Reserva de Marbella II project, hoping to use one as an investment to pay for the other, which she would rent out. "I have not been able to sell either and completion is rapidly approaching," she explains. "I do have the option of abandoning one property only, losing the £44,000 I have paid for it so far, and completing on the other. But this makes me very nervous, as I'm sceptical that rental income will cover the mortgage payments, and doubt I will be able to sell it even in a few years' time. The developer is apparently now offering apartments for sale at £135,000 - which is 10% less than I paid for one of them. The situation is a complete disaster." Sinead needs an 11th-hour buyer to limit her losses, but buyers are scarce. The only way to guarantee interest is by slashing the price, and she will still have to pay a hefty commission.
These sorts of difficulties haven't gone unnoticed. Sinead is using www.spanishpropertydiscount.com, which promises bargain- hunters "a genuine saving under current market values". The fact that such companies exist says a lot about the state of the market.
Lighthouse, tied to umbrella organisation the Interagency Network, has also started offering an online auction service, www.lighthouse-auctionroom.com, modelled on eBay. Shaun Powell, head of Lighthouse, says it will appeal to a niche market of cashed-up, well-informed buyers ready to grab a bargain. "All the properties in our auctions have a reserve price at least 20% below the market price." That depends on how you define the market price.
So just how many investors are in this pickle? Probably thousands, given that many 2002-2003 sales were to people like them. While Powell believes the market has turned the corner after 18 months in the doldrums, others, including myself, think it will take another year at least for it to bottom out, certainly as far as "bog-standard" apartments go. So bottom-fishers, who can wait until the squeals of pain get louder, should stay at home.
Meanwhile, buyers who can't wait any longer can already find properties available for less than they cost two years ago. The buyers' market on the Costas is just getting going.
The UK could be developing into a nation of property investors as a new report revealed that many young people are keen to own property abroad in the future.
According to a survey by UCB Home Loans, the specialist lender of Nationwide, there is an increasing interest among young people in the potential of buying a property abroad, as house prices in the UK show little sign of falling significantly in the months and years ahead.
Buying a property can be difficult for first time buyers in the UK at present, as house prices remain relatively high and property price inflation has begun to pick up again in recent months. However, the prospect of buying cheaply on the continent, in areas such as Spain or France , is an appealing option for many young people, as the revenues created by buying to let abroad can help finance the purchase of a home in the UK.
Over 30 per cent of young people in the UK would like to live abroad one day and see the opportunity to invest in a property while living in a foreign country as an excellent opportunity to get onto the property ladder. While many who want to live abroad would be keen on returning to these shores one day, the option of buying a property in a foreign country that they can then let out on their return to the UK means that there could be a massive increase in the number of property investors in Britain among the younger generation.
Keith Astill, managing director at UCB Home Loans, told MyFinances.co.uk: "Whilst 92 per cent of the young people interviewed want to own their own home when they are older, it is likely that some of them will never actually make it."
However, while many may not make it onto the property ladder in the UK, by investing in overseas property there is far more opportunity for them to make a substantial income.
The study by UCB Home Loans also discovered that two in three youths in the UK expect to buy their first property between the ages of 25 and 30. Therefore, with many of these properties likely to be buy-to-let investments in the UK and overseas, the UK's property investment market looks set to continue to boom over the coming years.
Buy-to-let investments have proved extremely popular during the property price boom, as investors have recognised the prospect of making significant gains from houses, but as the market has cooled in the UK, the opportunities in emerging countries such as Cyprus and Bulgaria have continued to grow. With more young people than ever currently looking to buy property abroad, it appears that the demand for overseas property investment will continue to increase for some time to come.
UK residents have lost close to £2 billion while changing currency to buy homes abroad.
Foreign Currency Direct has revealed that the 550,000 Britons who have second homes abroad could have lost as much as £1,830,840,000 on exchange rates from banks.
This is because there is a large difference between the exchange rates offered by high street banks and those offered by specialist currency providers.
People buying €100,000 to fund a home could save £2,774 by going to a specialist service, rather than changing the money at a high-street bank, Foreign Currency Direct calculates.
This translates into a saving of four per cent on the asking price of a home.
"Buying a home abroad is a life changing event for most people. However, buyers must consider the impact of exchange rates on the cost of overseas property purchase. Most high street banks offer their customers uncompetitive exchange rates by default, meaning people pay more for their property," said Peter Ellis, managing director of Foreign Currency Direct.
He added: "With the trend of rising net emigration and foreign property purchase, this will become an increasingly important issue. Currently, an enormous amount of money is needlessly 'Lost in Transaction.'
"By shopping around, and choosing a specialist currency provider, individuals can save money."
Spain looks to hit tax dodgers
FinancialDirector.co.uk
Practice of paying for part of a house in cash will be frustrated by new laws, according to reports
Spain has introduced rules to prevent the historic practice of paying for large chunks of property in cash to evade tax.
Legislation shortly to come into force will mean that individuals will no longer be able to pay for a portion of properties they buy in cash, The Times reports.
The Spanish government is keen to crack down on the practice, and has introduced new tax identification numbers on all property documents in an attempt to stamp it out.
The practice will be familiar to many British people who have bought houses in the country, the paper reports. It is likely they will be affected by the crackdown, as the government seeks to claim back tax on the cash portion of their purchases.
Average home prices rose 10.1 percent in Spanish cities in 2005, confirming the market's 12th consecutive yearly increase, the biggest independent surveyors' association said on Monday.
Despite frequent warnings that the market is overheating and the first interest rate rise in years, the figures show Spanish house price growth is slowing only minimally.
Last year's rise compares with 12.5 percent in 2004 and 15.8 percent the year before.
The association, which valued 275,000 properties during the year, said it expected another advance this year. "For 2006 we forecast that home prices will rise again, but more slowly than in 2005," it said in a statement.
Since the end of 1985 house prices have risen by an average 10.8 percent a year, according to figures from Tinsa, another surveying company.
Apparently insatiable demand for new homes -- on the back of low interest rates, a growing population and foreign demand -- has fuelled a long construction boom in Spain and a huge increase in the amount of mortgage lending.
Housing industry sources forecast new home starts exceeded 800,000 in 2005, more than France, Germany and Britain combined.
Property of the month...
Riviera del Sol Duplex penthouse - MLSPH104543
Riviera del Sol Duplex penthouse
Price: € 259,950
Beds: 3 Baths: 2
Built Size: 110 m2 Plot Size: 0 m2
Duplex penthouse, Residencial, Furnished, Fitted Kitchen, Parking: Off road parking, Pool: Communal Pool, Garden: Community, Facing: Southwest Views: Mountains, Panoramic, Sea. Features: Conveniently Situated for Golf, Conveniently Situated Schools, Good Road Access, Landscaped Gardens, Marble Floors, Popular Urbanisation, Roof Terrace, Spacious Accomodation, Sunny terraces, Walking Distance to Shops, Well presented.
Additional Notes:
This modern 3 bed / 2 bath duplex penthouse has great sea views and 2 large terraces to enjoy them from. The small community also enjoys a lovely pool & garden area & off street allocated parking. This property would make a great family home and is well situated only a minute´s drive from Calahonda exit off the toll road.
Este moderno ático - dúplex de 3 dormitorios / 2 baños tiene fantásticas vistas al mar y 2 grandes terrazas por donde admirarlas. Comunidad pequeña que disfruta de una linda piscina , jardines y una plaza de parking abierta. Esta propiedad es ideal para una familia y está muy bién situada a tan sólo un minuto de la salida de la autopista en Calahonda.
Peace of mind is part of your purchase - all Hiperprop sales consultants are accredited
What's on
Event info supplied by
Lloyd Cole
24 January, 2006
Remember him? We do. 1980's glum rocker, looks a bit like Jimmy Carr.
Telephone : 952 22 41 09 website
Teatro Cervantes C⁄ Ramos Marín, s⁄n
Tickets From € 7 up to € 21
Abstract Art
27 January, 2006
Artist and professional saxophonist Taoufiq Hsaine displays his work. Hey come on, at least its free.
Telephone : 606 668 018
Hotel Puente Romano
Marbella Golden Mile
Free entrance
Echo & the Bunnymen
18 February, 2006
Post Punk Scousers do Malaga
Telephone : 952 22 41 09 website
Teatro Cervantes C⁄ Ramos Marín, s⁄n
Tickets From € 9 up to € 24
Jazz
18 January, 2006
Alan Barnes, Bruce Adams join the Diego Suarez trio, nice..
Arroyo de la Miel
Casa de Cultura
Like fossils?
Go to the Paleontology Museum in Estepona, Plaza de los Misioneros, Tel 952 807 148, open Mon-Fri 9am to 3pm, Sat 10am to 2pm.
They've got over 600.
Want to know what movies are showing in VO (original version) each week on the Costa? Check out our cinema guide.
Painting in Andalucia - If you can't free your hidden artistic talent in Andalucia and the Tejeda National Park, maybe you should stick to skirting boards. Guests staying at the beautiful 200-year-old Finca el Cerrillo, spend their mornings painting in the finca's gardens and olive groves while afternoons are free for exploring or relaxing by the pool. Headwater ( www.headwater.com ; 08700 662650) has a week at the Finca el Cerrillo, including tuition, meals, flights and an excursion to Granada, from £899pp.
Foreigners in Andalucía make up 4.2 per cent of the population -
The foreign population in Andalucía has gone from being 1.4 per cent of the total in 1998 to 4.2 per cent in 2004, reveals the latest report by the Andalusian Institute of Statistics. This report also shows that the biggest increases in the immigrant population were in the provinces of Almeria and Malaga. Sur In English
Smoking Ban in place - 1st Jan saw the introduction of Spain's new anti-smoking legislation. Smokers can only purchase cigarettes, cigars and tobacco from licensed outlets (ie tobacconists) or licensed vending machines. Smoking is banned in nearly all pubic places - bars and restaurants are now obliged to offer a non-smoking area. For full details read http://www.euroweeklynews.com/ewn/news.php?ref=100801343426312
Fun stuff...
Ricky Gervais Podcast
Post Xmas Blues? Cheer yourself up with a dose of comedy..
Ricky Gervais, award-winning comic and writer of "The Office" and "Extras", has created a 12 part podcast available from the Guardian website. Its basically Ricky, his co-writer Stephen Marchant and their "producer" Karl discussing some of life's questions.
What-casts? Don't worry- podcast is a geek term for an audio file basically. If you're a Ricky Gervais fan just download it and listen. Oh, and its free.
Instead of trying to sell your crap Christmas presents on Ebay, have a look at www.wikipedia.org. Its the online encyclopedia, created and edited by internet users
So no more looking at pornography on company time, learn something useful instead! Or teach someone about your specialist area of expertise by creating or editing a page.
PS the "Did you know.." section is a must for all you pub bores. So get swotting, there will be a test.
Odd News
For those of you who always liked Trevor McDonald's "And Finally.." segment on News at 10. Reuters have their own online collection of the day's odd news stories
It's a buyers' market on the Costas - with a glut of off-plan investors desperate to sell before having to complete. Prices are plummeting, so is it time to go bargain-hunting? 
The UK could be developing into a nation of property investors as a new report revealed that many young people are keen to own property abroad in the future. 
Practice of paying for part of a house in cash will be frustrated by new laws, according to reports 
Remember him? We do. 1980's glum rocker, looks a bit like Jimmy Carr.
Like fossils?
Improve yourself, and others: Wikipedia 
