Renting property in Barcelona


 

 

 

 

 

Ah, Barcelona. Lovely city. Famous for its gastronomy, football, fashion and its Architecture, specially buildings designed by Antoni Gaudi such as the Sagrada Familia, Casa Mila or Parc Güell. A very cosmopolitan city with inhabitants of all countries and cultures. Also a great place for foreign remote workers and professionals to live and work. A vibrant city with a very fast pace rental market, probably driven by foreign and national demand, and a shortage of properties to let. This has caused some sort of  a rental bubble in the city and privileged surrounding areas such as the seaside (Gava-mar, castelledefels, Sitges) or more towards the mountains such as Sant Cugat and Valldoreix. It is estimated that rental properties are at their highest peak. Huge demand has caused an increase on rent of 20% to 30% in the last 12 to 24 months. An average 3 bedroom property in the city of Barcelona is let for around 1,400-1,500 Euro. This is very good news for those who own or want to buy property in Barcelona with the aim of letting them on a long-term basis.

It is clearly a Landlord´s market and tenants very often see properties disappear from the rental market in 48 hours. This puts landlords in an even stronger position and allows them to ask for rents that would be unthinkable 2-3 years ago. Excellent news for landlords and not so good for prospective tenants as they are now facing higher rents but we should always look at the bright side. This is a sign that Barcelona, in spite of the last political events and the absence of a local Government, is thriving when it comes to the property market and rentals are their highest performer at the moment. And if a city thrives, then their inhabitants, businesses and commerce should benefit as well.

The above only refers to long-term rentals. If we bear in mind that there is another market for holiday rentals, Airbnb and et al, then we can clearly see that Barcelona has a lot to offer to those foreign investors wanting to either get a property in a vibrant and sunny city like Barcelona or invest in a property that can be let with a good return.

Some caution needs to be placed on holiday rentals as not all properties count with a touristic licence. The current Mayor is targeting holiday rentals with no touristic licence and the penalties and fines applied can be very high. In light of this, any person wanting to buy a property in Barcelona and exploit it as a touristic apartament should make sure that the property counts with the necessary licences. Alternatively, a long term rental would be a good solution as it still brings a good return in the current rental market.

And for those wanting to rent a property, just two lines of advice:

  1. Reserve the property if you saw it and you like it (otherwise it may disappear from the market a few hours later)
  2. and get some independent legal advice if unsure as to the terms of the tenancy agreement.

I am writing this post from Barcelona, at 6:30 pm. The sun is still shinning and the Barcelonians are getting ready for the weekend. It is probably time to log off and have a glass of cava or an estrella beer outside!

 

What is the plusvalía tax? And why should it be charged after the death of a person?

This is a question very frequently asked by our clients. The question usually comes with a frown on the face. Clients understand the concept of Inheritance tax: someone dies, and the Tax office applies a tax because the beneficiary gets “presumably” wealthier. So far, so good but what is the plusvalía tax then? Clearly, the beneficiary has already paid a tax on death so why should he/she pay another tax when a person dies?

That´s a very good question and the answer is simple. There is another tax because this allows local councils to get more revenue. Now that we have faced the honest truth, we need to focus on understanding what this tax is and whether it could be avoided.

In order to understand this tax we need first to bear in mind that each property has a rateable value affixed by the local councils (valor catastral). This value is the base on which a multiplying coeficient will be applied to ascertain the minimum tax value of a property.

Ok, wait a minute. We are now talking about too many values. What is the rateable value and what is the minimum tax value? The former is the value recorded in the local council´s registry. It does not have anything to do with market values. The second one is the minimum value that the Tax office will accept in a property transaction. Buy or inherit a property for less than that tax value and you will most certainly have the Spanish Tax man knocking on your door asking for further tax on your property transaction.

Now that we have a slightly good idea on the two types of values, we can explain that the plusvalía tax is a tax levied by the local council every time that a property is transferred, whether this is by death or a sale. In this case we are talking about a death and therefore the plusvalía tax will have to be paid by the beneficiary of the property or the estate. Regardless on whether the property is worth more or less than when the deceased acquired it, the local council will look at the rateable value on the date in which the deceased died and will also bear in mind the date in which the property was initially acquired by the deceased. Using some values and applying some multiplying coeficients the town Hall will the charge a tax, which is the plusvalía tax. The longer the deceased owned the property, the higher the tax (up to a maximum of 20 years, where the tax coeficients reach a ceiling and do not go any higher). This tax should be paid within 6 months of the death of a person and if it is not paid within that period of time, then penalties and interest will apply.

Can the plusvalía tax be avoided? Well, there is some discrepancy here. The general approach is that the plusvalía tax should always be paid and then, in those cases where the market value of the property has gone down then a refund can be requested but this will only happen in sale and purchase transactions, specially for properties that were acquired in the peak of the Spanish property market and have been sold recently for a loss. When it comes to the inheritance of a person, there is little that can be done to avoid it and the sooner is paid the better.

Your lawyer or the Notary Public preparing the deeds should be able to give you a pre-calculation of the potential plusvalía tax when he sends you his quote and estimate of costs. And once received, there is no other option than to pay it and as they say in the UK “bite the bullet”!

BUYING PROPERTY IN SPAIN UNDER-VALUE

 

Spain is still recovering from the brutal economic recession that has affected its economy for the last 10 years. One of the main consequences of the recession was the collapse of the property market where properties went down in value consistently, reaching lower values that left many property owners in negative equity as their properties were worth less than their mortgages.

In certain areas of Spain, like the coast and seaside resorts, the value of properties went down 30% to 40%. These properties are now being purchased by savvy foreign purchasers who have identified the chance to buy a property in a sunny place for very affordable prices. What many purchasers do not know is that we are facing some cases where the property is purchased below its tax value. As this may sound gibberish to those who are not familiar with Spanish law, let me explain what this means in layman terms and with an example.

Imagine that Joe Bloggs wants to buy a property in Fuengirola and the property is for sale for 100.000 Euro. Joe then makes an offer of 90.000 Euro and the seller, another British, let´s call him John Smith, accepts the offer because he wants to move back to the UK to be closer to his parents who are getting old and need some care. Joe Bloggs is delighted to have found a bargain and decides to buy the property for 90.000 Euro. However, Joe may not know that properties in Spain have a minimum tax value. This is the minimum value assigned by the Tax office to each property and the minimum value which the Tax expects the property to be sold. Joe did not instruct a lawyer to advise him in the purchase and decided to buy with the help of an estate agent. The latter did not check the tax value of the property and did not advise Joe that, actually, the property had a minimum value of 125.000 Euro.

The transfer tax or stamp duty in Fuengirola, Andalucia, for a property of that value is 8%. Joe, after completion, pays 8% of the purchase price (7,200 Euro) to the Tax Man in Spain and then forgets about this matter.

6 months letter he receives a letter from the Tax Office saying that he has bought under value and that the tax paid should have been 10,000 Euro (8% on 125,000 Euro). The letter states that Joe needs to pay the shortfall of 2,800 Euro plus another 25% penalty charge. Joe can choose between a) paying the shortfall and the fine or b) appealing the decision. However, option b will probably involve legal fees in the region of 1000 Euro and a valuation fee of around 500 Euro. Furthermore, there is no guarantee that Joe will succeed with the appeal. In a case like this one, Joe might be better paying the shortfall and the fine.

All the above could have been avoided if Joe, his lawyer or his estate agent had checked the minimum tax value of the property before committing to purchase the property. It could well be the case that Joe, after getting this information, would have still bought the property as it was a bargain but this fact is an important fact that Joe and any potential purchaser should know and consider before buying property in Spain. The minimum tax value should be considered to avoid surprises. Unfortunately, the only way someone like Joe would have learnt about this would have been if he had used a diligent independent lawyer. Food for thought.

Spanish mortgages – Latest news.

 

Following our previous article about mortgages in Spain.

The CJEU resolution (21th of December 2016) allows consumers to claim their money back retrospectively from Spanish Banks

 

As we explained in our previous article, The Court of Justice of the European Union (CJEU) was recently asked to decide about an important case for Spanish consumers as well as for Spanish Banks. The final decision has now been issued and this is good news for those individuals who got a Spanish mortgage but not for the banks.

Some of you will recall that some Spanish mortgages signed in the last 15 years contained a clause that Spanish Courts recently declared null and void because of the “lack of transparency” and “the failure to inform customers adequately” when they signed the mortgage deed. These clauses are known as a “cláusula suelo” which means that they are subject to a minimum monthly payment even if the interest rate, which usually has a variable rate linked to the Euribor, is negative.

If you bought a Property in Spain during the property bubble (2000 to 2008) you were probably paying the appropriate interest. However, the interest rates were quite low after the recession and those who had a “clausula suelo” on their mortgages have been paying an unfair and excessive interest on their mortgages which they can probably claim back.

The consumer’s action group (Adicae) started in 2013, on behalf of 15.000 mortgage holders, a claim against banks claiming for the nullity of the “cláusulas suelo”, after these had been declared “abusives” by the Spanish Supreme Court but with a retrospectivity to May 2013. This was clearly unfair. If a clause in a mortgage was considered abusive then the consumer’s right to claim should not be capped to May 2013. It should be retrospective to the date in which the mortgage deed was signed.

The said action group went to Luxembourg asking for the backdating to the date that the mortgage was signed and the CJEU has today decided that Spanish Banks have the obligation to refund unlawful interest from the very beginning: backdated to the date the mortgage was signed (instead of May 2013).

This means that Spanish banks have to pay consumers around €4.000.000. Goldman Sachs says that BBVA will be the Spanish Bank with a higher debt in front of consumers with €1.815.000.000; CaixaBank (La Caixa) with €750.000.000; following them: Banco Popular and Bankia with €160.000.000. These are the main banks but there are around 40 more banks involved.

Obviously, there are some exceptions depending on the mortgage holder’s profiles or depending on the specific circumstances of each case, but what is clear is that if you or your clients signed a mortgage in Spain during the property bubble years you or them could have the right to claim some money back.

In the following months Spanish Banks will probably try to sign transactional agreements with consumers. We strongly recommend to contact a Spanish Lawyer for advice to 1) analyse your mortgage in detail and inform you if contains a “cláusula suelo” and 2) see if you have the right to ask for a refund when that Decision takes place and last but not least 3) to deal with your Bank to ask for the refund or to negotiate with it.

 

 

Claudia Font & Antonio Guillen

Spanish lawyers at gunnercookellp

1 Cornhill London EC3V 3ND 53 King Street Manchester M2 4LQ

 

Spanish Powers of Attorney signed in the UK

image-for-poaA new Spanish case Decision by the Director General of Notaries and Registrars in Spain (DGRN) has been issued on the 14th of September 2016 affecting Spanish Powers of Attorney signed abroad and therefore also those signed in the United Kingdom.

The said decision of the DGNR rejected the registration in Spain of a purchase transaction where a Spanish Power of Attorney signed before an English Notary Public had been granted. The reason for rejecting the registration of the document was that the Land Registrar considered the powers and faculties of the English Notary Public who notarised the Power of Attorney (POA) not sufficiently proved.

Under the aforementioned Decision, a foreign POA should have the same structure than the Spanish public documents. This means that the document should be signed by an authorized person with capacity to give faith and certify the identity of the donor/grantor and his/her capacity.

 

This Decision stated that the foreign POA should also mention that it will be legalized according to the relevant International rules. In the case of a POA signed in the UK, this means the legalisation of the document with the apostille of the Hague Convention.

 

The key point is to ensure on the document that the UK Notary public is giving sufficient warranties to the relevant Spanish authorities as to the capacity of the donor/grantor. From now on, a Spanish POA where the UK Notary Public is restricted to certifying the identity of a person will not be sufficient. A Judgment on capacity will also be required.

 

We are of the opinion, that the said decision cannot be extrapolated to all cases. The power of attorney that created this “storm” of doubts was a power of attorney solely drafted in Spanish and the Notary Public in question limited his involvement to adding a certificate to the power of attorney which lacked any mention to capacity. We therefore think, and hope, that Spanish Notaries and Land Registrars will reconsider their position with regards to the powers of attorney executed in the UK and will soon start to recognise these again. However, there could be the odd exception where a Spanish Notary or Land Registrar will turn down a perfectly valid power of attorney executed in the UK. To avoid these kind of situations, some carefully attention needs to be put into the drafting of the power of attorney to ensure that the document has a higher chance of being accepted in Spain.

Do not hesitate to contact gunnercooke’s Spanish desk if you require further information or help with the signing and execution of a Spanish Power of Attorney in the UK.

A quick guide on buying property in Spain for UK solicitors

Beach huts

 

 

 

 

 

 

Do you have a client looking to buy property in Spain?

How can you help him/her from the UK?

 It is quite likely that you will have one or two clients looking for a property in Spain. The uncertainty of Brexit and the temporary weakness of the Sterling pound has not stop British buyers from their dream of buying a home in Sunny Spain. It is true that they are not buying as much as they did before the recession but they are still buying second homes and looking for a place to retire or a place to spend family holidays.

Very often, clients will contact their trusted advisors to see if they can give them some guidance or recommend a lawyer able to deal with the purchase of the property in Spain. Obviously, you cannot be expected to be versed on Spanish law and the normal thing is to recommend the client to look for a Spanish lawyer or to recommend one, if you have come across a firm in the past and you were happy with the service provided. Having said that, knowledge is never a burden and therefore see below a few tips on what should and what should not be done when buying property in Spain which will prove of help if you are approached by one of your clients asking for advice:

1) Help your client to make an accurate budget.

Apart from the price of the property your client should consider other costs involved in the transaction:

– Taxes, Notary and Land Registry: Approximately 10%-12%.

– Spanish Lawyer fees*

– Surveyor**

* althoughnot mandatory (because the Spanish Notary usually carries out the main checks on the title and charges), we would always recommend instructing a Spanish lawyer who can collaborate with you when your client is buying in Spain. He will carry on a full due diligence on the property and draft the necessary contract. The Notary Public will not do the above.

** we would recommend to have one when your client is buying a resale property in order to be 100% sure about what yourclient is going to buy.

2) Inform your client that he/she should save a 30%-40% deposit plus 10%-12% for the Notary, taxes and Land Registry fees.

Nowadays, most of Spanish banks are not offering mortgages which exceed 70% of the appraised value of the property. Your client will need to ensure that he/she has enough deposit to complete on the purchase, usually around 30%-40%.

3) Your client should have a clear idea of what he is planning to buy before committing to a purchase

Spain has different regions with big differences between them in terms of weather, lifestyle, tourism, etc and most importantly, in terms of price. We would recommend your clients to visit the place in winter so they can get an idea of the way of life outside the tourist season.

Once they decide where they want to buy, the second step is to consider the different types of properties they can buy, i.e. brand new, old property, off-plan property, urban or rustic land, and obtain legal advice to ensure they are fully advised on all aspects of being the ownerof a property in Spain.

4) Encourage your client to check different options of mortgages.

Make sure your client fully understands the conditions of the mortgage offer. We would recommend to have the draft mortgage deed reviewed by a Spanish lawyer in order to ensure that it does not contain abusive clauses. In our recent article about Spanish mortgages we talked about some abusive clauses that some Spanish lenders have been including in their mortgages in recent years and that should be avoided when getting a Spanish mortgage.

Look for the mortgage which is most appropriate for your client´s income and financials. There is a range of mortgages on offer and yourclient should pay special attention to the interest rate, repayment period, fees for setting up the mortgage as well as early repayment and cancellation fees.

 5) Advise your client to reserve the property and sign a purchase agreement or “contrato de arras”.

If yourclient finally finds “the” property, he/she will have to reserve it while you and your Spanish lawyer will be collaborating and dealing with all the checks that the transaction requires to ensure that they are buying safely. Your client will need to pay a reservation fee of around 3000 Euro which will take the property out of the market. Then, once all the checks have been done, and the documentation has been reviewed, he/she will be asked to pay a deposit of around 10% with the signing of the purchase agreement (contrato de arras) and the rest will be due on completion.

Signing an “arras” contract means that both parties have the right to withdraw:

If your client decides not to proceed with the transaction he/she will lose the deposit, but if it is the seller who withdraws, or if the property has been misrepresented, yourclient will be entitled to claim double of the deposit: his 10% plus another 10% compensation.

6) Consider engaging a surveyor.

Your client may consider that the property needs to be surveyed by a professional with appropriate experience and qualifications. That is very sensible thing to do, but your client will find that some Spanish estate agents will discourage this. If that is the case, the client needs to follow his/her own instincts and still instruct his/her own surveyor.

7) Check the annual expenses of owning a property in Spain.

Be certain of the likely annual expenses your client will incur, including service charges, property tax (IBI), non-residents income tax, wealth tax if applicable, electricity, water, gas, etc.

8) Instruct an independent Spanish lawyer to collaborate with you.

All of the above-mentioned advice can became a terrible bureaucratic fight if yourclient does not engage the expertise and help of an independent Spanish lawyer.

A Spanish lawyer will guide you or your client through the entire process, avoiding extra costs and, what is more important, ensuring that the property your client is going to buy has all it needs to be transferred into his/her name: no charges, no development plans affecting it, etc.

You can instruct a Spanish Lawyer based in Spain or in the UK. Please note that there are several UK law firms with an in house Spanish lawyer able to provide legal advice without your client having to go to Spain.

 9) Warn your client not to declare a lower value than the actual purchase price.

In the past it was quite common to declare a low value for the property in order to minimize the transfer tax payable by the buyer and the CGT payable by the seller. Nowadays, the Spanish treasury will prosecute anyone who declares a price lower than the one effectively paid. The wrongdoer will be fined and additional interest will be applied. On the other hand, when your client decides to sell the property, he/she will be liable to pay Spanish capital gains tax on any profit made and he/she will be liable for CGT on a much larger (but not real) profit.

 10) Recommend your client to make a Spanish Will.

We would recommend your clients to sign a Spanish Will when acquiring a property in Spain. This in order to avoid potential problems in the future for their relatives and beneficiaries. It is not compulsory but in our own experience, really advisable.

Claudia Font & Antonio Guillen

Spanish Desk

Gunnercooke LLP

www.gunnercooke.com

 

London   Manchester

Do´s and don´t when buying property in Spain

dos-and-donts

 

 

 

 

 

 

 

Do’s & don’ts when buying in Spain.

DO’S.

  • Make your budget.

Apart from the price of the property you should consider other costs related to the transaction such as follows:

  • Taxes, Notary and Land Registry: You should consider 10%-12%.
  • Spanish Lawyer fees*
  • Surveyor** although it is not mandatory to ask for a survey, we would recommend to have one in order to be 100% sure about what you are buying.
  • Real Estate Agency fees: if you are using a real estate agency for the search they will charge a percentage of the price, depending on the region although the norm is that this is paid by the seller.
  • * although it is not mandatory to instruct a lawyer when buying in Spain, because the Notary carry out the main checks (charges etc) we strongly recommend you to instruct one to ensure that your interests and investment are properly protected.
  • Ensure you have 30% for the mortgage deposit plus 10% for the Notary, taxes and Land Registry fees.

Nowadays, most of the banks are not offering mortgages which exceed 70% of the price, so you will need to ensure you are able to pay a deposit of 30%, as well as paying the costs.

  • Decide what and where you want to buy.

Spain has different regions with big differences between them in terms of weather, lifestyle, tourism, etc and most importantly, in terms of price. We would recommend that you visit in winter so that you can get an idea of the way of life outside tourist season.

Once you decide where you are going to buy, you should consider the different types of properties you can buy, i.e. brand new, old property, off-plan property, urban or rustic land, and obtain legal advice to ensure you are fully advised on all aspects of being a new owner.

  • Check different options of mortgages.

Make sure you fully understand the mortgage agreement you are going to sign. We would recommend to ask for the mortgage deed to be reviewed by a lawyer in order to ensure it does not contains abusive clauses.

Look for the mortgage which is most appropriate for your capabilities and needs. There are a range of mortgages on offer and you should pay special attention to the interest rate and repayment period, fees for setting up the mortgage as well as early repayment and cancellation fees.

  • Reserve the property and sign a “contrato de arras”.

If you find “the” property, you will have to reserve it while your lawyers are dealing with all the checks that the transaction needs to ensure that you are buying safely. You will need to pay a reservation fee of around 3000 Euro which will take the property out of the market. Then, once your lawyer is happy with the legal documentation, you will be asked to pay a deposit of around 10% with the signing of the purchase agreement (contrato de arras) and the rest will be due on completion.

Signing an “arras” contract means that both parties have the right to withdraw:

If you decide not to proceed with the transaction you will lose the deposit, but if it is the seller who withdraws, or if the property has been misrepresented, you will be entitled to claim for double of the deposit.

  • Consider engaging a surveyor.

You may consider that the property needs to be surveyed by a professional with appropriate experience and qualifications. That is very sensible, but you will find that some Spanish estate agents will discourage this.

  • Find out about the annual expenses of owning a property in Spain.

Be certain of the likely annual expenses you will incur, including service charges, property tax (IBI), non-residents income tax, wealth tax if applicable, electricity, water, gas, etc.

  • Hire a Spanish lawyer.

All of the above-mentioned advice can became a terrible bureaucratic fight if you do not engage the expertise and help of an independent Spanish lawyer.

A Spanish lawyer will guide you through the entire process, avoiding extra costs and which is more important, ensuring that the property you are going to buy, has all it needs to be transferred (no charges), no development plans affecting it, etc.

You can use a Spanish Lawyer based in Spain or in the UK. Please note that there are several UK law firms with an in house Spanish lawyer able to provide legal advice without you having to go to Spain.

  • Make a Spanish Will.

We would recommend to sign a Spanish Will when acquiring a property in Spain.

DON’TS.

  • Do not be forced by the bank to get their insurance or other bank products.
  • Do not sign any document if you do not understand them.
  • Do not pay more than what was agreed.
  • Do not sign any document without a Spanish lawyer.
  • Do not buy a property without taking legal advice.
  • Do not pay large amounts of money to developers who do not offer you the security of a Bank Guarantee for these payments.
  • Do not be tempted to declare a lower property value than the actual purchase price.

In the past it was quite common to declare a low value for the property in order to minimize the transfer tax. Nowadays, the Spanish treasury will prosecute anyone who declares a lower price. The wrongdoer will be punished and additional interest will be applied. On the other hand, when you decide to sell this property, you will be liable for Spanish capital gains tax on any profit made and, you will be liable for tax on a much larger profit when you sell later. The safest way is to ask at the payment office of the nearest tax agency and they will give you the exact value of a particular property.

By Claudia Font & Antonio Guillen

BREXIT AND SPAIN: TWO MONTHS LATER

WHAT WOULD AN EVENTUAL BREXIT MEAN FOR THOSE BRITISH THAT WANT TO BUY PROPERTY IN SPAIN?

How would it affect British people who own properties in Spain? And those who are in the process of buying them?

It is too early to know what is going to happen but the more immediate effect is the depreciation of the sterling pound. If you already own property in Spain then no need to panic and as the old saying states: Keep calm and carry on!

If you are planning to buy a property in Spain or have fallen in love with a specific villa and do not want to wait until there is more certainty about the future of the UK in the European Union, you can compensate the depreciation of the sterling pound with some measures. Below you will see some examples:

  1. You could offer to pay the purchase price in Sterling pound. This may prove interesting for the seller, especially if it is a British seller (something not that unusual these days). By doing this you will not be exposed to the depreciation of the pound and you will not pay a higher price for the property in Spain.
  2. If the above is not possible, you should then use a foreign currency broker who will be able to buy the Euro for a more favourable rate than the one offered by your High Street bank. Unless you are a High Net Worth Individual who has the privilege of having a bank account with a private bank, in which case you may get a similar rate to the one offered by a Foreign Currency broker.
  3. Finally, the economy in Spain and in the UK are not that stable. Use this point to negotiate a reduction in the price. In spite of an increase in property demand in certain areas of Spain, the property market is still far from recovered and the current economic and political uncertainty could help to get a substantial reduction in the price that could compensate the money that you may lose with the depreciation of the sterling pound.

These are just a few recommendations. Obviously, don´t forget to instruct an independent lawyer for your purchase. Whether is Antonio Guillen and Claudia Font at Gunnercooke LLP (or another lawyer) do not make the mistake of using a lawyer recommended by an estate agent or the seller because that could lead to a conflict of interest and eventually to a problem.

 

 

Holiday apartments in Spain. Do I need a licence?

Sombrilla

 

 

 

 

A few days ago I wrote a post in connection to the property market in Barcelona and the increase of holiday apartments in the city.  The Catalan Government has recently regulated the holiday rentals market and now allows holiday rentals as long as the owners comply with certain obligations. Unfortunately, the situation is different in other touristic places such as the Balearic Islands or the Canary Islands where there are several restrictions to holiday rentals. Take the case of Mallorca, for example. In Mallorca it is only possible to let out for short periods of time dettach and semidettached houses. This leaves apartments and terrace houses outside of the regulation and therefore unable to be let out on a short term basis. There are some exceptions with some apartments but these usually involve the whole building counting with a touristic licence.

When it comes to deattached and semidettached houses in Mallorca, these can be let out for holidays as long as a touristic licence has been obtained and the owner has complied with the following requirements:

– File the necessary declaration of commencement of activity (DRIAT)

– The property is let out for short periods of time that can never exceed the period of 2 months

– The property is let out in its entirety and not on a “per room” basis

– Cleaning and maintenance services are provided

Having said that, what happens if the owner of an apartment in Mallorca or Menorca wants to let it out for short periods of time to different occupiers and he does not have a licence? Well, in that case it would be better to let it on a long term basis. The income might be lower but at least there will be no fines or penalties for breaching the law.

The above applies to the Balearic Islands but each region in Spain has different rules and therefore not all regions face the same restrictions. As always, it is advisable to do some research before embarking on buying a holiday apartment, specially if the ulitmate intention is to let it for holidays.

 

 

 

Buying property in Barcelona

old medieval street

 

 

 

 

 

 

 

 

 

Barcelona is probably one of the most beautiful cities in Europe. Woody Allen tried to show it in his famous film “Vicky Cristina Barcelona” although he excesively focused on the usual landmarks and buildings, forgetting that there is beauty in many other places apart from the usual constructions from Gaudi. However, it still was a good marketing tool for the city.

Property wise, Barcelona has suffered like any other city in Spain. Property prices have fallen for the last 5 years although 2013 has brought some interesting news. According to the Real Estate website www.idealista.com , property prices in Barcelona fell by only 1%. This may look like bad news to most of you but the reality is that the forecast was for a fall of at least 7% to 8%. What has happneed then? La Vanguardia newspaper thinks that this reduction in the decline of prices is due to Foreign Buyers. In fact, the said newspaper estimates that 10% of those who buy in Barcelona are probably foreign, being Russians, Chinese and Indian the nationalities that are showing more interest in the city followed by the usual British, French and other Europeans.

One of the reasons for this increase in interest from non-European investors is the so called “Golden Visa” which grants immediate residency rights to any non-European investing more than 500,000 Euro in property in Spain. At the same time, many Foreigners look at Barcelona’s potential in the touristical rent market. The city is used for long weekend breaks, stag does, romantic breaks and many others and in most cases those travelling to Barcelona use touristical apartments rather than Hotels, being this type of accomodation an alternative with some relevant success.

So, what should you do if you are interested in buying a property in Barcelona? The first thing you should do is take a holiday in Barcelona and explore the city. Your budget and motives shoud vary depending on whether you are looking to buy a first home, a second home or an investment. Many Estate agents speak English and they should be able to point you in the right direction. Once you find a property that you like, the agent will probably ask you to pay a reservation of a few thousand euro or perhaps even a deposit. This is where the lawyer work starts and where you need to tell the agent that you will instruct your own lawyer for the transaction.  You will be told that there is no obligation to instruct a lawyer in Spain and that there is a professional called “Notary Public” who can prepare all the documentation. Yes, that is correct in a way but it is still very advisable to instruct your own lawyer in the same way that you would do in the UK.

The lawyer (abogado in Spanish and advocat in Catalan) will check all the documentation and advise you before you enter into any contracts. He will also carry out searches to check the planning situation and whether the property can be let out as a touristical apartment. You can find Spanish lawyers in Barcelona, of course, but also in the UK. It is up to you to decide which lawyer you want to use. Some investors prefer to use a Spanish lawyer based in the UK because they are regulated by the UK Law Society, others prefer to use someone local. The important thing is to instruct an independent Spanish lawyer and not to proceed with the purchase without independent advice.

Enjoy the city!!

Antonio Guillen is a dual qualified Spanish lawyer- English Solicitor from Barcelona who is currently practising in the UK.