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10 Things You Should Know Before Buying Property In Spain

15 Aug

With the summer holidays in full swing the attraction of a life spent drinking sangria in the Spanish sun can seem all too alluring.  And if the recent jaw-dropping prices are to be believed, it is now easier than ever to snap up a bargain.  However, as I have shared with you before – owning a holiday home is not as easy and idyllic as it may seem from the glossy magazines.

buying property in spain

Before you part with your hard earned cash you need to do your homework and ask the right questions. (more…)

The Reality of Holiday Home Ownership

8 May

Ten years ago, at the ripe old age of 27 we decided we would buy a holiday home in the Canary Islands.




At that time we thought we were being wise.  We had recently bought our first house to live in and flushed with early career success we decided we should plan for the future.

The plan was: we’ll buy a house in Fuerteventura where the sun always shines.  We’ll take a mortgage, rent the place out to other people (which will cover the mortgage payments) and Hey Presto in 20 years time the property will be paid off and we’ll then be free to live our retirement mortgage-free in the sun.  It wasn’t a fancy or big property.  It had two bedrooms, a little garden front and back and a big communal pool – which was all we figured we needed in retirement.

fuerteventura holiday home

It was a pretty simple plan borne of no investment experience – it was just a dream of a different lifestyle and a plan for the future.

And like all good plans, the plan hasn’t gone according to, well, plan.

In the beginning, the plan seemed to work.  For the first couple of years, the house was rented out long term for 750e per month plus bills on top.  That was great as it covered the mortgage payments – and the debt on the property was decreasing all the time.

The location of the property in the main resort and the huge pools and tropical gardens (and the reason why we had bought the property) were a major attraction and always ensured we had tenants lined up to rent it.

fuerteventura holiday homefuerteventura holiday home

Then out of the blue, the economy started to weaken.  More properties became available for rent and demand started to dip.  At the same time, our huge pools – and which had always been the major draw to the complex – developed a series of faults.

The pools went out of action for some years.

I forget how long – but it was a seriously long time.

The complex started to fall into disrepair.  The beautiful tropical gardens no longer looked so tropical.  The management of the complex were sacked overnight and a new committee formed.  Owners stopped paying their community fees and properties started getting repossessed.  This was now at the time when the crisis started to hit across all of Europe and the rest of the world.

The property which was to be our dream retirement home, quickly became a noose around our neck.  The mortgage rate increased and our payments almost doubled – and due to the fact mortgages are calculated annually – the reduction in interest rates meant nothing to us.

Trying to rent the property became an on-going battle.  Demand was low and supply was high.  It meant a colossal reduction in prices.  The going rent dropped to 380e per month including bills.  HALF of what we had been achieving just a few years earlier.

The pools, which had always been the star attraction, stood empty.  There was no money to fix them, let alone fill them with water.

It was a dark period. A very dark period.  For years money flowed out of our account to pay for a property we no longer wished to own.  But there was no escape.  Nobody was buying property – and we quickly learned the real meaning of property being “illiquid”.

I remember visiting the island during this period and seeing the complex, the empty pools and my property which had been rented to some locals.  If I could have handed the keys back at that point, I would have.  I could not believe what had happened to our dream – it had become a nightmare.  And it was a nightmare which we were paying dearly for every single month.

And then, much to the surprise of everybody, the new committee won a court battle against the original developers to fix the fault with the pools.  Over half a million euros was awarded to the complex to make the necessary repairs and get the pools up and running.

Six months later and the pools were fixed and filled.  Full-time gardeners were employed to tend the tropical gardens which soon started to flourish.  People began to return in their droves to enjoy the homes they had bought with such good intentions.

The community became one of the richest and best maintained private complexes on the island.

I decided to take back control of my property.  I sacked the letting agents and spent a considerable sum of money to refurbish the property.  I decided to let the property myself.  Within a short period of time I had made it to number 1 on Tripadvisor and was taking bookings over a year in advance.

All was so rosy.  I was over the moon.

fuerteventura holiday home

Then the Spanish government got desperate for money and decided they would enforce a little known law: no private property without a special rental licence could advertise a property for a short term let.  If you did and you were found out the fine was 15,000e for a first offence; 50,000e for the second.

Of course, the simple solution would be to obtain the licence, which I was happy to do.  The problem was – the government were no longer issuing them – and had in fact, stopped issuing them some 6 years previous.

Overnight I pulled out of the market.  I spoke to lawyers, letting agents and friends on the island to find out what I could – but the situation was (and still is) unclear.

I discovered I was allowed to let the property to friends and family, but if I got caught advertising the property for holidays I was up for a fine.

Honestly, I could not believe it.  But, it was a risk I was not prepared to take.

And so the dream of holiday home ownership has now entered a new stage.  As I sit here now writing this basking in the sun and looking at the rippling turquoise water in the pool and the swaying palms do I have any regrets?

If I’m honest, I have a few.

There are things I know now, which I wish I knew then – but that is the beauty of hindsight.

I guess the key take out which I want to share is that owning a holiday home in the sun is NOT like any other form of property investment.  In fact, I would probably argue that it is NOT property investment.  Buying and owning a holiday home is a luxury.  And it is an expensive luxury – a bit like if you decided to buy a boat or a fast car.

When you think about buying a holiday home, think about it as a lifelong purchase and be prepared to pay for it year in year out.  I think that is the only way to avoid your dream becoming a nightmare.

A New Build Property Bargain … Or A Lonely Place In The Sun?

16 Oct

Today I was en route to the supermarket when I found myself viewing a show home on a housing development in Fuerteventura (Canary Islands, Spain) where I am currently on holiday. Admittedly, it hadn’t been on the shopping list, however…

Given the mess which is our current financial economy – I couldn’t help but wonder – just how much of a reduction could you get on these new build property developments? Are there any new build property bargains to be had?

The Corralejo Golden Park development is located in what was heralded to be a new “premium” urbanisation area. It is situated 1.5 miles from the main resort of Corralejo, close to the golf course and the protected national sand dunes park and, benefits from a panoramic view of the town, sea and surrounding islands.

The property is a three storey, three bedroom semi-detached house with a private swimming pool and garden.

The spacious hallway has a downstairs cloakroom off it, a separate kitchen and utility room and at the rear of the property a large lounge/diner.

Outside there is a patio terraced area, a small private swimming pool and an enclosed garden.

On the second floor there are 3 bedrooms (2 with small terraces), one family bathroom and a master bedroom with a large en-suite.

On the third floor is a roof terrace with distant sea views.

The spec and finishes of the property are of a high quality and I was impressed by the spacious layout – which had obviously been built with the British market in mind.

The price?

Well, when this was built 5 years ago (yes 5 years ago, but has never been lived in!) the price was 260,000e. But, times have changed. The bank have repossessed the entire estate from the developer and are now selling these repossessed houses themselves. The price for this house is now 144,000e. With today’s exchange rate of around 1.2 you’re talking a sales price of £120,000.

Is that a new build property bargain?

How do you judge a bargain in the current market?

Comparables are hard to come by: there are no accessible land registry records – and even if there were – the illegal, but widely used method in Spain, of undervaluing properties for tax – would skew the prices. Estate agent particulars are unreliable due to the wide variation between asking price and selling price. And as for estate agents themselves… well, you have to take their opinion with a pinch of salt. Plus, you have to factor in the slowness of the market – it can take years to sell a property. Which means the only tool you can really use, is local knowledge – trying to understand, from locals, what else has actually been bought and sold, at what price, in comparable areas.

And then when you have your price comparables, you have to work out how optimistic you feel. Is this still a falling market – or have we reached the bottom? What is the “hope” value you put on this development? What is the likely future potential you see for this area? How many other empty properties are there in the area? What are the signs of future investment?

It’s difficult trying to make a science out of so many unknowns – and so again, the risk needs to be priced in. But then, what is a bargain price?

At what price do you buy, feeling confident you have bagged a new build property bargain? And will the seller even sell to you at that price?

And it’s about feeling comfortable with the risks.

For myself, I liked the house itself and had some belief in the long term future of the surrounding area – the golf course is still open, the premium gated complex opposite shows healthy occupancy, a new large supermarket chain has recently opened and there are murmurings of further private investment in the area…but, did I like it enough?


Will anybody else actually join me in my optimism?

For when I stood on the roof terrace with the distant sea views…all I could see was row upon row of empty, uninhabited houses. And the risk of no neighbours…and potentially never having any neighbours? That was a risk which was too much for me to bear.



Is Now A Good Time To Buy A Holiday Home In Spain?

11 Jun

Amid the news that Spain needs a bailout and the banks are collapsing, Brits appear desperate to cash in on the “Costa Catastrophe” or “Costa Crash” as the popular media have dubbed it, and are rubbing their hands together in glee at the “not-to-be-missed” property bargains which will soon be available.

But, is now really a good time to buy property in Spain?

Of course, when you look out the window on this June lunchtime and see nothing but grey skies and rain (which it’s been doing for the past two weeks) it’s very easy to shout “YES!”

And when you see you can buy a “bargain” beach side apartment for less than the price of a new family car, it is very easy to shout “YES!”

But let’s just wait a minute…This hasn’t been dubbed the “Costa Crash” or “Costa Catastrophe” for no reason. And let us not forget that many Brits who bought in Spain (and planned to retire there) have since had to return to the UK due to currency fluctuations – and for the really unlucky – those who lost their homes and their life savings due to dodgy developers and restrictive Spanish planning laws.  So it’s not all sea, sun and sangria when you buy property in Spain!

But that’s the problem – the Spanish know we Brits are suckers for a bargain. And when it comes to a property bargain – well, we’re up there in a league of our own. The German’s may be known for marking their sunbed territory with a towel, but it’s nothing compared to us Brits’ obsession with property prices and trying to buy any property which appears “cheap”.

Which is probably why the major Spanish banks have now launched real estate websites in English which proclaim mammoth discounts off their new-build developments and repossessed property in Spain.  You have Altamira Santander’s Spanish property website; La Caixa’s Servihabitat; Bankia selling it’s repossessed property through BankiaHabitat ; and if you want some comparables then Idealista is the Spanish equivalent of UK’s Rightmove.

The Spanish banks are desperate to sell. So desperate in fact, Spanish banks will probably also give you a mortgage with which to buy your bargain property in Spain, which is more than can be said of trying to get a mortgage in the UK right now.

But just because the property is “cheap” is now a good time to buy a holiday home in Spain?

Many commentators claim Spanish property prices still have further to fall – so today’s bargain, may be tomorrow’s swizz.

But I think this line of thinking and obsession with the price of a property highlights what has gone so very wrong with the property market.  We have endless conversations about property prices, about what our home is worth, about how much equity we have (or have lost) and everything is all about the price.  Rarely do we think about what a home actually means – it’s real worth to us as a place which keeps us safe and secure and is a place which feels home.  For most people, the real value of a home seems to have got lost – somewhere in between the price paid for it and what it may be worth in two years time…

In Britain, we seem to treat our homes like giant ATM machines – a “bricks-and-mortar-bank-account” – which we can cash in when we want. And that is where the meaning of a home, let alone a holiday home has got lost.

So: is now a good time to buy a holiday home in Spain?

Yes, if you want, and can afford a home in Spain then now is as good a time as any – but remember a home is a home, property doesn’t always have to be an investment.  You could always try buying a house just because you want to live there as a home rather than for what the property may be worth in a few years time.








Holiday Home Rentals Vs. Long Term Rental

30 May

Today I decided to work out the difference between renting my house in Fuerteventura as a holiday let vs. a long term rental.  I sacked my agents last July which I wrote about here, I also updated you about the joys of holiday home ownership here!

Now almost a year on and with my bookings calendar complete to the year end I am able to sit down and calculate was the extra effort and expense worth it?

So let’s be honest when I decided to rent my property as a holiday home and manage it myself there were cost implications. Firstly, I had to provide a lot more furniture and stuff at the apartment than what I did before and I had to upgrade several pieces. The sort of furniture you have in a holiday rental needs to be a better quality than in a long term rental – after all you only have a week to make a good impression so the bed better be comfy!! In a holiday rental you also need more “stuff” than you would normally provide in a long term rental – so I had to buy some added extras such as an ironing board, an iron, hairdryer, TV, stereo etc. And all those extra things cost money!

As a holiday let you then have the cost of advertising.  I decided from the outset to go with Holiday Lettings and they have been very good. It cost me about £280 to advertise for the year.  While the cost of advertising on holiday rental sites seems quite a lot (especially when you have to pay for it in a lump sum and upfront) when compared to the 10% you would pay an agent for managing your property it compares very favourably indeed! But let’s be honest, if you are paying an agent a managing fee then you don’t have to manage the property and so you don’t have to worry about the advertising at all –  so I’m not comparing like with like there.

So let’s compare the amount of time I now spend managing the property as a holiday let compared to when I had it managed by an agent as a long term rental. I have totted up the amount of time I spend on the property and it works out about 2 hours per week, or around 8 hours per month as a holiday let. Previously I would spend maybe 2 hours per month as a long term rental as the agents would always be onto me about something – whether it was the water meter reading or to tell me about a maintenance issue – there was always something which required me to think about, decide or act – or do something!

What I want to stress though is the quality of that time spent now as a holiday let vs. the time I spent when the property was managed as a long term rental. Previously I found everything to do with the property was a problem that was being reported – a maintenance issue, a tenant issue – whatever – it was always negative. Now, when I look at the time I spend on the property it is always positive! Yes, I have had a couple of maintenance issues but in the main my time is spent chatting with holiday makers in a positive light.  My time is spent recommending places to go, listening to what they’ve got up to, taking bookings, taking monies – it’s all positive!  So in terms of a trade off yes I spend a bit more time on it – but now the time I spend is positive. It’s fun stuff. I get so excited for the holiday makers as well and I love hearing their recommendations and things they’ve done – and it also means I have more things to discover when I go back.

Now the biggie that you are waiting for – financially was it worth it?  The answer is a big resounding YES! The property now earns 44% more as a holiday let than when it was let as a long term rental and the huge benefit for me is that I get to use my home as well! Before when it was let as a long term rental I couldn’t stay there. But now it’s a holiday rental I get to spend a lot of time there, have friends and family there – and I am still financially better off! And amazingly in the first year we have now already recouped the additional monies that we spent upgrading the property to a holiday let.

So I am chuffed – I am thrilled to say my first year in managing my holiday let from thousands of miles away has been a success. I am financially better off and I am emotionally better off – I now have a place in the sun which I can properly call my own – and which I can stay at too!