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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.

MORTGAGE GREATER THAN VALUE IN SPAIN – WHAT ARE THE REALISTIC OPTIONS?
24 October 2018

Following the 2008 Global Financial Crisis the Spanish Property Market suffered a drastic decline, and in some instances, property values halved.

This article summarises the current circumstances and trends and the options available to those suffering Negative Equity.

We have observed an improvement in property price trends over the last 12 months. Whilst this is positive, it is key to remember the rises are small and of a small value. It will take a significant time period for prices to ever recover to the peaks of 2007. Accordingly, many investors still deem themselves ‘mortgage prisoners’, feeling trapped by the burden of Negative Equity and unable to free themselves of the property.

Another reoccurring issue of late is that 10-year interest only periods are coming to an end on many property loans. As we move towards the end of 2018, many people are seeing their mortgage payments convert to capital plus interest, causing significant rises in payments to Banks. Couple rising mortgage payments and associated costs, such as IBI tax and Community Fees, with the property value being lower than the mortgage balance; owners are feeling the strain.

Unfortunately, we keep reading forum posts from owners who have handed the keys back to the bank and walked away. Despite best intentions, this does not conclude their liability. In many instances the bank will proceed to sell the property at c70% of the open market value, leaving significant outstanding shortfall debt. Should the lender deem it necessary, they may seek legal judgement in Spain, putting your UK assets at risk through the European Enforcement Order.

Another common problem we see is borrowers who are in Negative Equity marketing their property at a price higher than the current market value in order to cover their mortgage. The main issue here is that any potential purchaser utilising finance will only be able to borrow on the current market value of the property, simply meaning a purchase cannot be achieved at the vendor’s desired price.

We recently met with a lender in Spain to discuss their current protocol in terms of non-performing loans. This eminent lender has confirmed their intention to clamp down on the 5,000+ non-performing loans on a purchased mortgage book, with all borrowers being from the UK and Ireland. They are instructing legal firms in the UK to place charging orders on UK assets for unpaid arrears, providing they have judgement in Spanish courts. This is having a significant effect on investors’ UK assets and equity held at home.

Despite many thousands of borrowers facing these issues, there are solutions available and it is important not to feel trapped.

An option open to +borrowers is the orderly disposal of the negative asset, be it through open market sales or voluntary surrender at the lender’s discretion, followed by lender write down, or in some instances, debt write-offs in full. At times it is possible to include Community Fees and IBI tax debts in these settlements.

Another option open to borrowers in Spain is to sell the property and pay the mortgage shortfall difference. This option is unattractive to most, given the expense of property sales, along with a significant payment to their lender being required. All other property associated debts must be cleared to allow this to complete.

As the market improves there is hope for some overseas owners in Spain, but a large proportion have fallen foul of the market decline. Many blame themselves, but frankly, no one could foresee the decline in the market and the impact it would have on so many. Loose lending practices by Banks at the peak of the market coupled with the following market decline has left many people in a trying situation, due to no fault of their own.

Far too many bury their heads in the sand without realising there is a way out.



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Can overseas property debt affect my chances of buying a property back home?
18 June 2018

A frequently asked question is whether an overseas property debt issue can affect your ability to buy property in the United Kingdom or your home country. There are circumstances in which it might.

The first thing to bear in mind is that it’s always a good idea to cooperate with your lender when you find yourself in distress. Many borrowers believe that their only option is to surrender their keys to the Bank and walk away from their overseas property in the hope that there will be no repercussions at home. You could call this the ostrich move, and it’s not recommended, as there are often other options.

In our experience, Spanish lenders have been known to place interim charging orders on uncooperative overseas borrowers. If you hope one day to sell your property to fund another purchase, your Spanish lender will have to be paid back first, with interest and charges. That could limit your budget in the UK.

We have also noticed a new type of issue for overseas borrowers. If you have borrowed in the UK to buy a property in Spain, then your mortgage is under the jurisdiction of the United Kingdom. We know of instances where borrowers have defaulted on mortgages taken out in the UK, which has allowed the lender to get the default recorded with the credit agencies on the borrower’s credit file, rather than going through lengthy Spanish Court Processes to achieve a judgment. It is unlikely that any lender will offer a mortgage to a borrower with a default on their credit report, so this can prove disastrous to those who need a mortgage to buy in the UK.

Cooperating with your lender is always recommended.

See the below graphic for the Do’s and Don’ts of overseas borrowing:


 

 



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The Do’s and Don’ts of dealing with overseas debt
06 June 2018

 

It is important to understand the correct way to deal with overseas creditors.

Unfortunately, there are many stories of borrowers acting in a way that jeopardises potential settlements and their home assets or income.

Below are the Do’s and Don’ts of dealing with overseas debt.

What to do: –

  1. 1. Liaise amicably with your lender. You will find that many lenders will work with you to find a solution to your debt issues. Many Banks have a commercial decision to make in a lot of overseas debt cases and will look to minimise their losses. If you act amicably and provide the Bank with their requests, in terms of information, you can typically come to an agreeable solution.
  2. 2. Appoint an intermediary. Intermediaries understand lender processes and attitudes and the requirements to achieve settlements. Furthermore, given that debt is such an emotive subject with borrowers claiming mis-selling and lenders believing borrowers aren’t repaying their debts an intermediary can remove the emotion and seek a clear outcome.
  3. 3. Be honest and transparent with your lender. Despite being overseas numerous Banks can locate information regarding your financial circumstances through legal and land registry searches. It is essential you are honest and upfront with your lender. Hiding assets and income will come back to haunt you, and, will have an impact on your reputability.
  4. 4. Be Patient. Any Bank offering debt forgiveness is writing down potentially tens of thousands of euros on their loan book. Of course, a decision like this will take time. Be patient to get the result you want.

 

What not to do: –

  1. 1. Putting your head in the sand and ignoring the bank. We cannot stress the importance of refraining from this. Ignoring the bank will cause friction from the outset and jeopardise your home assets and income. Ignoring the Bank will ultimately see the property go through repossession and you will be pursued at home for the outstanding debt balance should the property value not meet the outstanding mortgage balance.
  2. 2. Assuming the mortgage was mis-sold. Any legal claim regarding this will be lengthy, expensive and fruitless. It would be more cost effective to liaise with the lender to gain an amicable settlement. It is key to understand there that many overseas courts are inundated with property claims.
  3. 3. Withholding your full financial circumstances. Overseas lenders can still seek information regarding your home assets and income. If you withhold information from the bank or lender, you may jeopardise any chance of debt forgiveness and put those assets at risk.
  4. 4. Being aggressive and impatient. If you are aggressive in your approach and push the bank too hard for a settlement it simply won’t work. Instead, you will rile the lender who will dig their heels in and be uncooperative regarding proposals.

 

If you are burdened by overseas property debt, please take the above on board. Our advice could prove fruitful in your quest to achieve a settlement and closure. As stated, it is in your best interests to appoint an experienced intermediary.



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BANCO SABADELL & HALIFAX MORTGAGES
13 April 2018

Banco Halifax Hispana was incorporated in 1993 to serve the needs of Expat buyers in the Southern Costa’s in Spain. Many investors took out mortgages with Halifax, given they were at trusted UK High Street lender giving them confidence in their overseas property purchase and finance they obtained.

 

Unfortunately, many borrowers now find that their loans are no longer with Halifax. Initially, the Building Society was demutualised in 1997 and merged in 2001 with Bank of Scotland to become HBOS.  In 2010 the Lloyd’s Banking Group acquired HBOS and the branches located in Spain became Lloyds Bank International. In the final banking change in 2013 Lloyds Banking Group agreed to sell its Spanish Operation to Banco Sabadell, initially under the banner of Sabadell Solbank and was then fully integrated into Banco Sabadell in 2014. More recently, they have been aggressively enforcing interim charges on peoples UK homes.

Many investors borrowed from a trusted UK based Building Society in Halifax given they could liaise in the correct language with the lender and deal with the mortgage in both Spain and the UK. It is important to remember many of the loans sold by Lloyds Banking Group have become default and problematic. Essentially, Sabadell acquired a non-performing loan book and are doing their utmost to solve the issues for borrowers.

 

One reoccurring issue is that Halifax sold 10-year interest only mortgage products which are now coming to a stage where they enter the repayment phase of the mortgage. There have been significant jumps in mortgage repayments often reaching thousands of euros per calendar month. Couple rising repayments and declining property values since 2008, we are seeing many borrowers struggling with their Banco Sabadell Mortgage.

 

Too many of these struggling borrowers opt to surrender the keys of the property to the Bank and do not enter further dialogue. This is the incorrect way to handle the matter and we know Banco Sabadell have obtained second charges over defaulted borrowers UK home properties.

 

Whilst many investors look to place blame on the Bank they did not write these mortgages and instead are working with borrowers to end their Spanish Property issues. Their proactive methods and legal approach allow overseas borrowers the opportunity to dispose of their property with minimal costs and issue providing it is done through legal avenues.



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The history of the Spanish property market
22 January 2018

From bubble to boom

The Spanish property market has had a checkered past and is one that is characterized by booms and busts. At present, the market in Spain is looking noticeably healthier, with figures indicating that sales had soared in October 2017 and were up 28%. Things weren’t always looking so rosy for investors in Spain or those who owned a holiday home there though.

Read on for our recap of the history of the property market in Spain.

The property bubble

There have been a number of property bubbles in Spain, all of which are characterised by long-term increases in the price of property in the region. The most recent one took place between 1996 and 2008 and saw the prices grow at alarming rates.

Because of the global financial crisis that occurred globally between 2007 and 2008 that economists have described as the first financial crisis since the Great Depression, the price of property steadily began to fall again during the time that this was happening.

Adjustable mortgage rates during the bubble

A notable element of the Spanish real estate bubble is the fact that around 98% of the loans that were taken out during the bubble period were adjustable rate mortgages. These mortgages combine to form over 60% of the value of the Spanish GDP. This should give an indication that a lot of people owe a lot of money on their mortgages in Spain.

To compound the problem, as the crisis has erupted after 2008, people find that their interest rates have risen and so have their mortgage payments. Because of this, people that purchased property in Spain during the bubble are still dealing with the consequences of being saddled with debt which, for many, has lead to them finding themselves in negative equity.

What are things looking like now?

The property market in Spain in 2007, and while figures still suggest that things figures are still 39.8% below this level, there is significantly more confidence in the market at present. The property market in Spain remained strong throughout 2017 and it is thought that things will continue like this during 2018.



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How to overcome the loss of your holiday home
13 December 2017

How to overcome the loss of your holiday home

When you are forced to sell your home abroad, it can feel like letting go of a dream, and moving back home can be a challenge.While it’s easy to bury your head in the sand, it’s important to try and remain positive, so check out our tips on how to overcome the loss of your holiday home.

Keep busy

There’s no point in dwelling on things that can’t be changed, so when it comes to the loss of your home abroad, try not to spend too much time obsessing over what you’re missing out on and instead keep busy with things that you enjoy and make you feel happy. This could be meeting friends or going to the gym, but whatever it is, try to keep your mind from running away with you.

Get on top of your finances

If you’ve been forced to sell your home abroad because of financial complications, one of the best ways that you can make yourself feel better is to make a financial plan and stick to it. Whether this is to save some money each month or contribute to paying off loans, having an idea mapped out of what you need to do is going to make you feel much more proactive.

Do things that remind you of good times

Just because you have lost your home abroad, that doesn’t mean that you have to let go of all the good times you had and the fun things that you got up to. If you had traditions or things that you would do frequently in your holiday home, why not continue doing them back in your UK residence? Of course, some things won’t be possible, but if it was having a cooked breakfast every Sunday, eating outside a few times a week or having a games nights on the weekend with your friends, these things can easily be continued wherever you are.

Go on holiday

The attraction of purchasing a holiday home was being able to relax and enjoy a warmer climate, so why not continue doing this by going away every once in a while? It doesn’t have to be a big, expensive holiday, even just a long weekend in a sunnier part of the UK will perk you up.



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A buyer’s guide: Purchasing property abroad
07 December 2017

Despite their being levels of uncertainty in the property markets abroad, it seems that people are still keen to make their dreams of living in sunnier countries a reality, with popular spots like Spain and France seeing growth in both sales and prices.

When you buy a property abroad, you need to remember that it is a big step, so always approach the situation in a cautious and informed way.Before you sign any paperwork or start packing your bags, check out this guide to ensure that you avoid these common mistakes overseas buyers often make.

Never sign a contract you don’t understand

Of course, one of the biggest challenges that you will face when you buy a property abroad is the language barrier. When it comes to contracts, never sign something that you don’t understand. You should receive two copies of contracts, one in English, the other in the native language of the country that you are purchasing in. Have your translator look at them both to be sure that what is said is the same in each of the two before you put pen to paper.

Seek specialist advice

While you may think you have it all sussed out when it comes to purchasing property, things can vary greatly when you buy a property abroad, so to avoid landing yourself in a troublesome situation you should always seek out the help of professionals. Consult solicitors, surveyors, and architects who will be able to give you thorough advice and answer all of your questions. In Spain for example, it’s customary for some debts to be passed to the homeowner so a special search will need to be done to verify you aren’t buying someone else’s unpaid bills.

Ask the right questions when it comes to new builds

If you are buying from a developer, it’s crucial that you find out about their track record and how long they have been trading for before you go on with a purchase. It may also be useful to see some references from previous buyers, so ask if these are available. Obtaining all of this information will give you a clear indication of how reliable this developer is and whether or not you should invest in their property.

Consider the location

It’s true what they say, location is the most important factor when it comes to choosing a property, so make sure you give it a lot of thought before you decide where you’re going to move. If you’re planning on having visitors, you might want to think about how far the nearest airport it. You’ll also need to consider how close schools and other local facilities are if you have children.



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Pledges are being made that Brits with property in Spain will face no disruption once the UK leaves the EU, but how true is this?
30 November 2017

You can’t deny it, Brexit has caused a significant amount of turmoil, confusion, and worry for the people of Britain. Whether it be fears over immigration or trading between countries, the decision to leave the European Union has sparked fear and worry amongst millions.

It’s also led to a significant amount of speculation and doubt amongst those who own Spanish property. Many people are  asking the questions, “just how much will the vote to leave the EU effect me, my house and my prospects regarding continuing to live abroad?”

Despite this, statements have recently been made by officials in Spain to say that brits with properties in the country needn’t worry. But just how much can we trust this?

What are pledges being made?

The Spanish Foreign Minister Alfonso Dastis has spoken up in an attempt to reassure Brits with Spanish property. He stresses things will remain largely the same once Brexit takes effect. He made a statement saying that homeowners would face “no disruption”. This is largely down to a desire to continue to nurture the countries close relationship with the UK in terms of economic and social exchanges.

What is the current situation with Brits looking to move to Spain?

Spain is still the most popular choice for Brits looking for a summer holiday getaway to a sunny European country. Recent figures have revealed that the country accounts for the largest number of British citizens living abroad in the EU, at just under 390,000.  Brits endeavour to purchase at different times. Some placing a Spanish property purchase on their long-term retirement plan. On the other hand, couples and families with children seek holiday homes they can use throughout the year.

What could Brexit mean for Brits with Spanish property?

There is a lot of speculation that member states who are angered by Brexit, will put pressure on British expats to leave. Luckily those with Spanish property are protected by the EU’s right of free movement. This means that EU members are unable to bar or expel citizens of other EU states.

There are also concerns that Brits abroad may be barred from taking advantage of healthcare and other benefits, but this may not materialise, especially given the fact that the UK plays host to as many as three million EU nationals.

Whether the outcome of Brexit is good or bad for those who own European property. It’s important that everyone remains vigilant and stays prepared as Brexit continues to unfold. 



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Is now a good time to buy abroad? If so, where?
16 November 2017

When it comes to both selling and buying a property abroad, timing is everything.

With market fluctuations occurring and things constantly changing, you need to make sure you’re snapping up a property at the optimum time in order to ensure a good return on investment and to avoid losing out on hefty sums of money. Brits are still seeking solace in European holiday homes, but is now a good time to buy and if so, where? Check out our blog on some of the best and worst places to look if you’re wanting to buy abroad.

Spain

After a decade of uncertainty, Spain is still the most popular choice for Brits buying a property abroad. The volume of sales has been increasing quarter on quarter and there is a lot of confidence being recovered in the market. Properties remain affordable and are a lot cheaper than some of the neighbouring countries that Brits are flocking to, so it’s a good choice if you don’t have loads of money to splash out with.

Bulgaria

If you are really looking to budget when it comes to buying a property abroad, Bulgaria is the best option for you. With its amazing scenery, beaches and mountains, it’s a great choice in terms of location and is also extremely affordable when it comes to the cost of living and of buying property. The average property price is £90,734, while utility bills will only set you back on average £70 a month. With interest increasing in the country, now may also be a good time to buy and sell as you may stand to make money.

France

France has always been another popular choice for Britons interested in buying a property abroad, with the French Riviera being a particular pull to the region.  The newly-appointed French President is committed to reducing taxes for property owners and simplifying the fiscal framework, all strong pulls for anyone about to invest in a home in France.

Generally, how are things looking when it comes to buying a property abroad?

While many markets are continuing to show signs of recovery, there is still a lot of uncertainty, especially given the fact that many of us don’t know what impact Brexit will have.



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What does the ‘weak pound’ mean for you and your property?
09 November 2017

What does the ‘weak pound’ mean for you and your property?

While the thought of owning a property in a sunny European country like Spain does sound extremely appealing, what doesn’t sound so great is the cost implications that go along with it.

If you pay any attention to currency rates you’ll probably have noticed that the cost of exchanging sterling for euros is seemingly higher as of late.

The pound has just entered an 11-month low at 1.11 euro and financial forecasters predict things could dip even further.

What does this mean for people who own property abroad?

Political uncertainty

One of the key factors contributing to the weak pound is of course Brexit. Ever since the UK voted to leave the European Union last June, the pound has been buying fewer euros.

This isn’t the only political element that is affecting the weakness of the pound, or, perhaps more accurately, the strength of the euro.

The French presidential election that took place earlier this year also produced a lot of political uncertainty, driving the euro lower.

However once, it became clear that Emmanuel Macron was likely to win, these concerns were forgotten, leaving the euro in a much stronger position.

Brexit has left us all feeling the pinch and facing financial uncertainty, especially for those who own property abroad as repaying mortgages could prove to be more difficult.

Strengthening euro

It’s important to understand that any event that takes place and makes the euro seem more attractive will have a direct, negative impact on the pound.

The euro has been boosted recently due to the market anticipation that the European Central Bank will start cutting back on its Quantitative Easing programme.

This has resulted in more euros in the Eurozone economy, which in turn has boosted performance. However, if the programme changes, pressure on the euro will lift which will change the game once again and could lead to the pound gaining back some of its lost ground.

Keeping interest rates low

In terms of investment, low-interest rates are usually seen as a negative as they deter foreign investors and make currency seem less attractive.

Many economic observers predicted that the Bank of England Monetary Policy Committee meeting last month would see action in favour of raising interest rates. This wasn’t the case, so a low-interest rate persists and the pound continues to decrease in value. Whether this changes as the political picture becomes clearer remains to be seen but, for the short term at least you’ll likely notice an increase in cost when buying or travelling overseas.

With interest rates across Europe rising, owning property could become more expensive.



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