Despite the doom and gloom, there are still opportunities in the Spanish mortgage market, says Clare Nessling, director of overseas mortgage specialist Conti.
It’s been a pretty rough ride for property owners in Spain recently. The unfortunate mix of the global economic downturn, over-development, and high unemployment has led to plummeting prices, particularly with new coastal homes and older properties in inland ‘white villages’ popular with the British.
In some cases, prices have dropped by 50% or more, and there’s a surplus of homes which the Bank of Spain estimates at somewhere between 700,000 and 1,200,000. It will take years to clear this glut, and owners are dropping their prices even further in order to attract buyers.
However, any of your clients who may be interested in looking for a bargain in Spain could find themselves in a pretty strong position. Dramatically reduced prices and the opportunity to negotiate these down even further with some very motivated sellers mean that it’s most certainly a buyers’ market.
<strong>Still a hot spot for British buyers</strong>
This may well explain why the percentage of people enquiring about Spanish mortgages has started to creep back up. Spain currently accounts for almost a third (31%) of enquiries we receive, up by 7% on last year, and by 9% since 2009, proving that the British love affair with this country is far from over.
According to recent reports, average property process are still falling in Spain, but experiencing less of a decline in the Costas which are popular with overseas investors. Figures from Tinsa, one of Spain’s leading appraisal companies, show that prices dropped the most in regional capitals where they fell by 8.1% in the 12 months to October, followed by a drop of 7.5% in metropolitan areas. The Mediterranean coast saw prices decrease by 6.9%, and the Balearic and Canary Islands experienced the smallest decrease at 3.4%.
<strong>Healthy appetite for lending</strong>
Despite the doom and gloom surrounding the property market, financial institutions in Spain still have a healthy appetite for lending to foreign nationals, with maximum loan to values still around 65-70%. Generally speaking, smaller deposits are possible in areas where house prices are more resilient, such as the Balearics, the Canary Islands, Madrid and Barcelona. Rates currently start from just under 3%, with repayment deals prevailing. The Spanish banks now own a lot of repossessed properties, so are offering some attractive rates and higher loan to value ratios in order to get these off their hands.
<strong>New safeguard measures</strong>
With such big demand from the UK, The Spanish government is making every attempt to appeal to prospective buyers and to address some of the legal problems which have given the county’s property market such bad press over the last few years.
Buyers can now request a Land Registry certificate in English at a cost of £29 from their local Spanish town hall. In doing so, they can see if there have been any legal proceedings against the property, including those which may result in fines or even demolition.
Other improvements introduced by the government mean that properties which have not been built to current building regulations can be registered on the land registry as long as they are at least four years old, in order to protect owners who, in many cases, bought in good faith. For anyone buying off-plan properties, it’s no longer possible for a new home to be registered on the land registry unless it has the license of first occupation, a construction license and a technical certificate stating that the building corresponds to the plans for which the license was granted.
The Spanish property market is well established and should be viewed as a long-term investment by your clients. For many people buying there, it’s a lifestyle choice, and they’re attracted by the climate, amenities and culture, rather than earning a prospective fortune on their home. If people enjoy what Spain has to offer, property can be snapped up there on better terms than have been seen for years.