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EU Property Solutions- Experts in all Spanish property issues

EU Property Solutions offer professional assistance and advice in all areas of European property in particular, Spain. We can help provide strategies and solutions to solve problematic property issues, negotiate with lenders on debts, help reclaim lost deposits on unfinished developments and help with repossessions and mortgage arrears across Europe. We have offices in London, Belfast and Spain.

Buying or selling property in Spain?
13 September 2021

This blog will be providing you with tailored advice on how to avoid these pitfalls when buying or selling property in Spain.

The Spanish property market has been through a turbulent period over the last decade. It's important to work with borrowers assisting them out of difficult situations often not caused by themselves as they fell victim to the Property Crash.

The 2007-2008 crash has led to people looking to sell and get out of the property burden and those looking for a bargain investment.

We have a few pointers if you’re considering buying or selling a property in Spain.

SELLING:

Price the Property to Sell

  • The property market in Spain has masses of supply currently, especially in the British/Foreign investor market.
  • Your property needs to be priced to sell, or it will sit on the market for a long time.

Will you clear any outstanding mortgage and debts?

  • Will your sales proceeds (sales price less costs) clear your outstanding mortgage?
  • Do you owe any debts for IBI taxes or Community Fees?
  • If you do not clear the mortgage your lender will not release their charge on the property and the sale cannot complete.

 Sales Costs

  • 3% Capital Gains tax if you are a non-Spanish Resident.
  • Estate Agent fees are 3-6% of the sales price.
  • Energy Efficiency Certificate typically €150-€300.
  • Plus Valia Tax – this is a local tax on the increase in the value of the rateable value of the land.

BUYING:

Purchase Costs

  • Legal conveyancing fees
  • Land Registry Fees
  • Notary Fees
  • Income Tax Provision when purchasing from non-residents.
  • Bank fees for money transfers and mortgage fees.

 Future Costs of Ownership

  • IBI Taxes
  • Community Fees
  • Utilities
  • Insurance
  • Non-resident tax

It all adds up.

 Understand what you are buying.

  • Research is essential
  • Is your mortgage affordable in the long term? Does the rate change?
  • What rental yield can you achieve – be careful if you have been promised a yield. These often don’t materialise.

Brexit and your registrations.

  • Have your NIE number ready well before starting the purchase process
  • Open a Spanish Bank account well before the purchase process.
  • Brexit implications for use of property need to be understood.


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Developers and Promoters - 2006+
23 August 2021

Developers secured cheap land which they then obtained high-density planning for. This was all financed by the Banks. Then the promoters set about feeding the growing hunger for holiday home purchases, and the properties were sold for crazy prices.

Then in came the Banks again, stage left, returning to the fray and offering the unknowing purchasers ’ cheap mortgages with high Loan to Value Mortgages (LTV). All you saw as buyers was your ultimate dream being sold to you at very attractive rates and guarantees – and not what was really going on behind the scenes. If we dig a little deeper, developers didn't purchase prime plots, but low-value land, e.g. desert land near Murcia and Almeria.

They built here using shoddy and cheap building practices, saving them money. These flats and houses were then mis-sold to you – the unwitting buyer - for a high price, without any knowledge of what you were actually buying into. This mis-selling of cheap property resulted in high margins for the developer and these lucrative spoils were then spread between the main protagonists of the process – the developers, promoters, and Banks.

It was a well-oiled machine greased by massive commissions and bonuses from the attractive margins gained. The system survived because of the unscrupulous standards of all those involved, as well as the solicitors and notaries who also propped up this profitable business model.

Rotten to the core, the system fed people’s greed for money and profit. Everyone in the chain was part of the conspiracy – apart from you who unwittingly handed over your hard-earned cash which kept the wheels turning. The extent of this corrupt system ran deep, for example, even the Mayor of Marbella received over twenty years prison sentence for facilitating dodgy planning permissions!

Every level was in cahoots to sustain their lucrative financial rewards, which they all believed would go on forever. A nice little earner that would continue to boost prices and keep reaping huge profits. With no plan B in place, nothing was supporting it when things did eventually go wrong. Because the 2008 financial crisis hit at full speed, almost overnight, this property disaster's aftermath is still being unraveled.

Even today, hundreds of thousands of people are still trapped in negative equity property hell or left out of pocket from holiday homes that were never built or finished. 



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Foreign Property - Debt Nightmare
20 August 2021

For most of us, when we reminisce about 2005 – 2008, it’s mainly positive. A prosperous time when the economy was booming, and we had a bit of spare change in our pockets. A time when thousands of Brits and Irish, could finally realise your dream and splash out on your very own slice of paradise. Purchasing a ‘luxury ’ holiday home in places like Spain or Cyprus was suddenly an affordable opportunity.

This is in no way indicative of the state of mind of any of you who purchased your dream property in the EU, but this buying frenzy was encouraged by duplicitous bankers, promoters, and developers. Rubbing their hands with glee, it was a cash cow that they believed could be milked forever. During this period, the appetite for the holiday home market grew significantly - quickly becoming flooded and causing demand to soar to even higher heights.

And to add wind to its wings, funds were easy to access both at home and abroad; non-status mortgages were two a penny, and credit checks didn't even factor into the equation. With little to no barriers stopping the purchase of too 'good to be true places' in the sun and non-existent due diligence from the professionals, it was only a matter of time before the foundations of this property boom literally crumbled underneath us all.

It was not just the developers and Banks to blame, but also the valuers, notaries, solicitors, and dodgy promoters.

Together they invented attractive, but totally unfounded, property valuations before the unscrupulous sellers sold at crazy prices. Every aspect of the process and each stakeholder involved, coupled with lax financial regulations, was responsible for the self-perpetuating nightmare that buyers unwittingly bought into.

Much like the film ‘The Long Short’, whilst part-fictional, showed that everybody and anybody could get rich during these times whatever the situation. And it did not matter that the money earned by the developers, bankers, and promoters was at the detriment of the unsuspecting property buyers, like yourselves.

So, it’s no wonder that in the autumn of 2008, when the world stopped turning and the financial crisis hit like a blunt instrument, these properties built on financial sand in the years before, suddenly sank quickly into negative equity, leaving people stuck with unwanted debt.

It was a crazy world, where we witnessed well-established Banks like Lehman Brothers, which had been around since 1850, collapse. Others like Allied Irish Banks (AIB) and the Royal Bank of Scotland (RBS) went under state control and materially are still there.

Countries including Cyprus and Spain were savagely hit as the whole banking industry was shored up by their State Banks. The collapse of the financial sector, and many of its long-established institutions, started a domino effect, leaving those at the end of the chain the main losers.

Those of you who had dared to live the holiday home dream had become the unwitting victims. Your once refreshing holiday cocktail left a bitter lingering aftertaste that you are still paying for to this day!

 



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Interest-only mortgage coming to the end of its term?
20 August 2021

It is entirely understandable why buyers were dazzled by the lure of relatively small monthly repayments, for what was then deemed to be an extended period, against such attractive yields.

 

But, when it comes to the repayment of interest-only mortgages, many people have approached their lenders for more time. In some cases, the lender may have changed to a new entity, leaving borrowers left to deal with a different bank than the one that sold them the mortgage in the first place. Such requests have usually been refused as the Banks stick rigorously to the mortgage contract, which clearly states the date change from interest-only to repayment.

 

The 10–15-year period of interest-only mortgages usually take purchasers into their early retirement: a time when changes in income can be devastating. For example, a gentleman, now 78 years old, recently advised us that his mortgage would rise from €345 per month to an unsustainable €2,894 per month.

 

These mis-sold mortgages, and the promises around them, have unfortunately left victims in a financial disaster. 

 



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Can a Spanish Debt be collected in the UK?
12 April 2021

Recently we have seen a large increase in enquiries from people who have mortgages overseas, specifically in Cyprus and Spain asking the question of “Can a foreign debt be collected in the UK?”. Many are concerned with some loan sales now being undertaken by Banks across Europe, as the Banks at last look to clear all problematic debt and tidy up their ‘books.’

Such problematic debt cases include:

  • Those in arrears, be it one month or multiple months behind on mortgage payments.
  • Unaffordable repayments brought about as mortgage products moved from interest-only to Capital repayment.
  • Negative Equity on Property.

Many people think merely ignoring a foreign mortgage debt problem will see it go away. Yes – a lot of time has elapsed since the 2008 crash but like elephants, these Banks do not forget! 

Banks are still relatively civil in most instances providing there is engagement in some form, but across the board – their patience is wearing thin. They are employing the following approaches to close troublesome mortgage accounts, to name but a few:

  1. Applying for European Enforcement Orders,
  2. Appointing strong legal firms to enforce in the UK,
  3. Making their own enquiries as the people’s worth/assets, and
  4. Most worryingly for our clients, the sale of loans to Vulture Funds…the name should be a clue as to how they conduct themselves…not so civil!

Foreign Banks in the main are still approachable. As ever it’s a case of the right type of engagement, usually undertaken by a trusted party.

Some people believe that this ability to chase foreign debt in the UK, as provided for under Cross Border Claims EC 44/2001, will diminish with Brexit.

We do not see this happening as the EU will still be our main trading partner and such provisions ensure safer trade conditions for all.

Under law, anyone, including Bank’s and any other foreign trading entity can secure a Judgement in their country and then bring this to the UK and apply for a European Enforcement Order.

This Order when granted, and they usually are, enables the creditor to pursue clients here in the UK, which can, in turn, see UK assets such as homes, businesses and in some instance’s pensions, come under threat.

The legal costs in such recovery actions can be horrific and payable by the debtor as well.

As ever we use the mantra of #KnowtheWorstAchievetheBest.

Definitive advice is imperative. Relying on uninformed opinions is no good for those facing this sort of situation. Relying on ‘bar room’ legal opinions is dangerous – especially when these opinions that may suit your arguments, are wrong.

In conclusion, if you face foreign mortgage problems, get the best advice you can. If it goes wrong, then you will be pursued at some time. Do not ignore the issues, seek out professional help to know your options.



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Spanish Mortgage Issues
08 April 2021

Are you unsure if your property is in Negative Equity?

Negative Equity occurs when the current loan or mortgage balance secured on a property is higher than the current market value of the property. Subsequently, some borrowers refer to them as Negative Mortgages.

For example, if a borrower’s current mortgage balance is €150,000; but a recent comparable property may have sold for €100,000 (before selling costs of c8-10%)…this borrower is in Negative Equity and faces a mortgage shortfall of €50,000+.

Such Spanish property issues/shortfalls are due and payable in full as and when the property is sold or disposed of.

We have had contact with and helped many hundreds of people who purchased in Spain and across Europe at the height of the crazily inflated market, pre-2008.

These couples and individuals took out huge mortgages which were too readily available. These scenarios in turn later left the majority of mortgage holders in some form of financial difficulty. Leaving them exposed to an asset with falling value.

Many who still own a property in Negative Equity feel trapped. They are unable to move on, being dubbed ‘mortgage prisoners’ or ‘Stuck in the Sun’.

We are experts in Spanish Mortgage Law; assisting borrowers who still suffer from a Negative Equity loan.  We and our hand-picked legal teams work with all lenders across Spain. We can tailor our services based on your circumstances and lender.

A recent example saw us settle a Negative Equity position on a proposed sale of c€120,000 for £25,000 including costs. Genuine telephone testimonials are available to support our work.

Borrowers often bury their head in the sand. They face the very real risk of Spanish mortgage default or Spanish mortgage repossession. These scenarios can be life-changing and will expose your UK Assets and Income.



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Community Fees & IBI Taxes
08 April 2021

Have you fallen behind on Community Fees & IBI Taxes? If so, read on!

We assist people daily who have significant mortgage arrears and missed community fee payments. Many borrowers who purchased properties in Spain were not aware of costs such as Community Fees and IBI taxes. These additional costs and Mortgage Debt in Spain can result in significant stress.

Community fees are owed to Community Presidents in Spain. These Presidents are charged with ensuring the community in which you have purchased is visibly up to scratch – for example, the maintenance of common areas, swimming pool cleaning, and general upkeep of grounds.

It is important for borrowers to keep up to date with these fees as debt collection can be instructed by Presidents in Spain to the UK and Irish Debt Collection Agents.

If you cannot pay your Spanish mortgage and fall into arrears, then your mortgage balance will increase.

Missed payments are added to the balance along with penalties and interest. Furthermore, you risk legal action and ultimately you are putting your home assets and income at risk if you do not act.

If you cannot maintain payments on your Spanish property, then swift action is needed. If you act quickly through an intermediary then the matter can be brought under control and an amicable and desirable outcome achieved.



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What If I Die Before My Overseas Mortgage Expires?
29 October 2020

A tough question but a common theme our team experience.

Demographically speaking, a majority of our clients are those of retirement age who purchased property during the boom period in Europe pre-2008. There have been multiple occasions where we have received enquiries from people who have advised their mortgage term will last long into their 80’s.

Firstly, this is evidence of “loose-lending” and pre-2008 many lenders did NOT follow proper protocol. Since then many Central Banks’ have become tighter and increased regulation on lending across Europe. Ask the question of how a Bank deems someone of retirement age able to repay a capital repayment mortgage? Madness.

What is most alarming, is that some clients do not know how they can continue to pay the mortgage! Nor, the implications of not paying and if they did die – put simply debt does not disappear.

Should a borrower pass away the debt does not go with them. Instead, it will be put into the deceased’s estate and may have implications in terms of potential inheritance for children, etc. No one would wish to leave this burden on their children.

Accordingly, this is NOT a matter to be avoided, we have solved troublesome mortgages of this type in Spain, Cyprus, Portugal, France & further afield.



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SPANISH PROPERTY EXPERT REVIEWED OUR WEBINAR
09 June 2020

As you may be aware we held our first-ever live webinar on the 27th May 2020 on Spanish & Cypriot Property Debt.

We had a great blog write-up from Property Market expert Mark Stucklin who discusses our webinar below.

—————————————————————————————————————————————————————————————————————————–

The economic crisis building as a result of the coronavirus pandemic will leave some people with mortgages in Spain in financial distress, through no fault of their own.

If this happens to you, it is advisable to seek help from independent experts on how to handle the situation.

Last week I attended my first webinar (online seminar, for those that don’t know), held by Terry Bell, speaking on behalf of Bell & Co. in the UK and Ireland, and EU Property Solutions in Spain and Cyprus.

These companies specialise in helping people with business and personal debt find negotiated solutions to their financial problems.

Terry’s presentation about the typical financial problems borrowers from the UK and Ireland run into with mortgages in Spain and Cyprus was an eye-opener.

For instance, there are still many people struggling with mortgages taken on in the boom years before 2008. They are not getting any younger.

Terry explained that the “demographic” of people with mortgage problems in Spain means that time is not on their side. They need to sort out this problem before it’s too late.

There are many people in arrears on their mortgage payments who think they can walk away from their foreign debts. They think the problem won’t catch up with them back home. That is wishful thinking, even for those who did this years ago.

Slowly slowly, Spanish mortgage debts are being worked through. Debtors are pursued back home on the basis of EU directives, increasingly by vulture funds who have bought the debt.

The worst thing you can do is stick your head in the sand and hope the problem will go away. It won’t.

The best thing you can do is contact third-party expertS, who have dealt with many cases like yours, and know what to do to get the best solution for you.

Experience is key to negotiating the best terms in this complicated situation. This is probably something you have never had to deal with before. And every lender in Spain has a different approach to dealing with what they refer to as ‘delinquent debt’. Only experience of dealing with many cases helps you decide the right strategy.

Terry talked about all the problems facing borrowers in Spain and Cyprus. There’s one brutal problem in Cyprus – that we can be grateful few borrowers in Spain are having to deal with:

  • Namely the Swiss Franc mortgages that were so gaily mis-sold to borrowers in Cyprus back in the boom years.

Since then, the value of property in Cyprus has plummeted:

  • Whilst the Swiss Franc has appreciated, crushing borrowers financially in a vice of negative equity.

Mercifully, most borrowers in Spain have euro mortgages, but some of them will still be in negative equity more than a decade after they purchased.

And now we have a new wave of financial problems to look forward to, thanks to the coronavirus crisis.

If you find yourself in financial distress, and unable to cope with your mortgage in Spain, don’t stick your head in the sand.



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Will I be receiving no rental income in 2020?
18 May 2020

Following the UK confirming that those returning from overseas travel will have to Self-isolate for 14 days, the Spanish Government has followed suit imposing the same restrictions.

With this in mind, the question is - will you be receiving no rental income in 2020?

This year’s Summer Holiday season may well and truly be cancelled. 

If you are reliant on rental income to support:

  • Your mortgage payments,
  • IBI taxes, and
  • Community Fees on your Spanish Second Home -

The above will see you face increasing pressure to top-up payments from your home income.

Speaking with a local Costa Del Sol Agent:

  • It was confirmed that many Second Home Owners will take on long term rentals but given supply, these rental agreements will be very low in income.

Furthermore, many will be left without employment & may fall behind on their rent.

Second Home headaches are stressful enough in more positive times, but in these trying circumstances, they can be a real burden.

There are ways to end this burden in an effective manner without the need to travel to Spain.

Especially if the mortgage is greater than the true market price and the associated selling costs…which can be as much as 12%.

Thanks for reading guys!



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