It's no secret that times are tough for property markets worldwide. The credit crunch, or "la crisis" as it is known in Spain, has had a major impact on the Spanish property market and it doesn't look like it's going to improve any time soon.
I'm not going to go into a full doom-and-gloom article here as everyone more or less knows what the situation is when it comes to the Spanish real estate market. What I want to do is actually focus on some of the initiatives that the Spanish government should be taking in order to help kick-start the property market once again.
I don't believe we're ever going to see a return to the frantic "everyone is an estate agent" days, that's just not going to happen, well not for the next 20 years at least. But, this is Spain and there will always be a demand for property here, both from the Spanish themselves and from expats searching for a new life.
So let's take a look at lessons learned over the past few years and what measures should be introduced to stimulate this flagging market. Mr Zapatero please take notes!
1. Regulate Estate Agents
I'm sure most people will agree with me that over the past few years things got rather out of hand with every man and his dog, and cat too, selling property here. Expats were flocking to the coasts to sell properties to other expats. As one estate agent (who made a considerable amount of money doing this) told me "it was just so easy, we would fly them over, put them in a bus, show them some properties, take them for a meal and at the end of the day they would all hand over a deposit".
Those days may be over and many of the "fly-by-night" agents are no longer around either but the damage has been done. The remaining estate agents are probably the better ones and I'm sure they would gladly take the necessary qualifications to become recognised and regulated professionals. The government needs to step in now to ensure that this profession becomes regulated to increase consumer confidence and put a stop to the bad practices that have affected the this industry.
2. Make it easer to report a lawyer
For many years it was common practice for developers and agents to recommend their own lawyers to their clients. This brought about the obvious problems in terms of conflict of interests. Many lawyers were really acting in favour of the agent or the developer and not so much for the buyer. I think this happens less these days as people are more aware of this issue, but nevertheless the process of filing a complaint against a lawyer should be simplified and easily available in other languages apart from Spanish. So many lawyers have had a very slap dash attitude and not carried out basic checks for their clients, such as bank guarantees, licences, etc.
Consumers need a simple and effective system to report their lawyers if they believe that they are not acting in their best interests or have not carried out their job effectively. Jumping from one lawyer to another is not the solution but is what most buyers are left resorting to at the end of the day when things go wrong.
3. Tighter control on mayors and town halls
I've lost count of the number of mayors that have gone to prison over the past few years on real estate corruption charges. Why was it ever allowed to get to that stage? Everyone knew this was going on, the locals, the local police, everyone, yet no action was taken for years in most municipalities. It really is time to control the authority of the town halls, they are literally a law unto themselves and it's still going on. Step in now and prevent this greed from affecting so many people's lives.
The Junta de Andalucia thought they were making a point knocking down Len and Helen Prior's house in Almeria in January 2008. It just made the Junta look like fools and scared more people off from buying in Spain. Len and Helen had all the paperwork and planning permission from the local town hall. They did everything according to the law. It was the local mayor who was to blame but was any action taken against him? Don't let these greedy people continue in power, step in and take control Mr Zapatero.
4. Regulate developers and honour bank guarantees
To say that the Spanish coasts have been over developed is an understatement. With hundreds of thousands of properties lying empty and many still to be completed, the extraordinary pace of development and the ensuing fall in quality and lack of infrastructure has really been the kiss of death for off plan property in Spain.
Couple that to the countless tales of the struggle people face when trying to execute their bank guarantees, it's a wonder anything gets sold at all these days.
Dubai has suffered a serious decline in their property market too and they have implemented new regulations for property development to ensure levels of quality, the safety of buyers' money and the reduction of unfinished developments. The Spanish government should seriously take note and start implementing similar solutions.....like now!
5. Reduce purchase taxes
You've spent weeks looking at properties, you've finally decided on the one you want, you've put an offer in and it's been accepted. You think everything's going well until you realise that you are going to have to find an extra 10 - 13% above the price you just negotiated to cover all the purchase and mortgage costs. That's a lot of money! On a resale property you pay 7% transfer tax and 1% stamp duty. Seems a bit greedy to me. On a new property you pay 7% IVA (VAT) instead which also seems a bit greedy really. On top of that there are the notary fees and the mortgage fees which all together turn out to be quite a lot of money. Maybe Mr Zapatero needs to take an urgent look at this and make it easier and cheaper for people to buy in Spain.
Well, those are my ideas, do you have any?
There are of course factors which are really out of the control of the Spanish government, such as currency rates, but there are still a great deal of initiatives that can be implemented to at least start building up some consumer confidence in the Spanish property market. I wonder how I can get Mr Zapatero to read this?
Written by: Justin Aldridge
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