Each time a property is transferred from one person (physical or legal) to another, the transaction attracts an Impuesto Sobre Transmisión de Patrimonio (I.T.P.). Or, in English, Tax on the Transfer of Wealth.

This tax is payable by the buyer and is levied by the Autonomous Region level of government. In the case of Andalucia it is the Junta de Andalucia who levies it. On 31st December 2011, when everyone was out celebrating the coming of the New Year, the Junta quietly raised the level of taxation, in particular for more expensive properties. Current rates are shown in the table below:

The tax is levied on the declared purchase price, i.e. the price set out in the escritura (title deed).
Here are two examples of the tax payable:

Example One: Cortijo sold at €159.000. Tax at 8% x €159.000 = €12.720.
Example Two: Finca sold at €880.000. Tax at 8% x €400.000 + 9% x €300.000 + 10% x €180.000 = €77.000 (an average of 8.75%).

There is a legitimate way to reduce at least some of this tax!

Imagine you are a Spanish home owner unable to meet your monthly mortgage repayments. You have two choices: either sell the property, pay off the loan and pocket whatever difference remains or sit tight and do nothing until the bank eventually obtains an order to evict you.

In countries such as the United Kingdom the lender takes the risk that the security obtained (i.e. a charge on the property) will be sufficient to liquidate the debt in the event of non-payment. At the worst the mortgagee can simply hand over the keys to the property and say "take it, it's yours, do what you will". If there is a shortfall when the property is disposed of, the lender loses.

In Spain however, this system, known here as dacia, is not available to homeowners. And the risk of the shortfall is carried not by the lender but by the borrower. If a homeowner is unable to repay the debt he/she is liable to pay not only the outstanding amount but also punitive interest charges and costs. And, even worse, the value at which the property is taken over into the bank's ownership is largely under the control of the bank itself. In other words the bank can acquire the property at a low price and the outstanding balance, plus interest, remains payable by the borrower. All of his/her other assets can be called upon in order to repay this.

There are loud calls to end this harsh practice but the Rajoy government doesn't want to know. Introducing the dacia would lead to irresponsible borrowing, they say. Good citizens have the responsibility to ensure that they borrow only what they know they can repay, seems to be the logic.

How does this influence the stock of properties available from bank repossessions? Homeowners who find themselves in difficulties will do everything they possibly can to sell their property, even at a loss, because their liability is likely to be far less than if the property is repossessed. So, those properties that reach the banks' portfolios are, basically, pretty unsaleable.

On 12 May 2016 a decree enacted in 2012 (Decree 28/2012) comes into force. It has important bearings on people who rent their homes or parts of their property for holiday lets on a daily or weekly basis. This affects many of our clients. Under this decree all persons who let their properties in this way will be required to register the activity.

The Junta’s intention in redacting this decree is ostensibly to ensure that such lets meet certain minimum standards. However, since there has been no clamour from consumers for a raising of standards we can safely assume that the real motives are:

• to appease the hotel industry which complains about unfair competition from unregulated businesses 
• to raise taxes from people who currently hide their letting income by, for example, receiving all or part of their income in overseas accounts or in cash.

However, there are some very important exemptions, principal among which are:

• the regulations apply only to URBAN properties. Owners of RURAL properties are still required to register their property as Vivienda de Turismo en el Medio Rural but will not be required to meet the minimum standards established by the new regulations.
• properties let to tenants who stay for two months or longer as these are not considered to be holiday homes.
• If a person has three or more holiday lets within a one kilometre radius this activity falls under the  regulations governing tourist apartments.

The onus is on the owner of the property to register it before 12 May 2016. Unless this is done and a registration number obtained, which must then be displayed when offering the property for holiday rentals, the owner will no longer be permitted to rent the property.

It is estimated that there are as many as 80.000 properties liable to register but by the 12th May only 3.000 had registered. Failure to do so can result in a fine of up to €150.000.

We had been thinking for many years about retiring to Spain and each year we spent some of our holidays visiting different areas.  Les was born and grew up in the West Indies and wanted to get back to warmer weather than that of England.  Auds is from the Emerald Isle and a sun lover.  We have two children, both with commitments in England so wanted somewhere within easy reach and good options on flights - Spain fitted the bill.

We reached a point in our careers when we had had enough and wanted another way of life. Being too young to retire we decided to invest in a self-catering holiday destination. We set out our search criteria and used the major internet property portals to identify several properties.  We rented a casita in Almería Province and spent several days viewing before settling on a property that provided a main house for us, three rental units and a swimming pool.  We agreed the price, arranged a property survey and put our home on the market.  Unfortunately we had to withdraw from the purchase due to legal issues with the property.  We were now about to become homeless having sold our family home of 23 years!

So back to the drawing board.  More extensive internet searching threw up potential properties and one in particular caught our eye on the borders of Málaga and Cordoba Provinces.  The owner was selling directly so we called him to test the water on price flexibility and also on the legality of the property.  Getting the green light on both counts we flew out for a few days.  We loved the property, agreed a price and arranged a survey.  Once again we had to withdraw from the purchase due to legal and also structural issues!

Returning once again to the internet we broadened our search criteria and identified properties across Andalucía.  By now we had left England and were living with my sister in the French Pyrenees.  At this point we were becoming somewhat sceptical about ever finding a rural place that was legal and structurally sound.  We decided that we should base ourselves in Spain for seven weeks and blitz the market, found a casita to rent, contacted a number of estate agencies and drove from France to restart our search.

The seven weeks flew by and we viewed more than forty properties across Andalucía.  It was towards the end of our stay that we met with Allan Hilder from Another Way of Life.  We had identified several properties on their website that looked interesting.  Allan, and his colleague Paul, arranged viewings on all but one.  That one was in the midst of legal wrangling about ownership so they advised against it.

What goes up must come down, so we’re told, but, in property, it is often the opposite. After a tough decade, the Spanish housing market is recovering, and Andalucía, in particular, is benefitting.

Foreigners constitute a significant proportion of Spanish property buyers, as Spanish Property Insight notes. In the first quarter of 2016, 99.427 houses were sold, an increase of 9.8% on the same period of 2015. And of these 12.856, or 12.9%, were bought by non-Spanish buyers.

Although the Brexit referendum, and a weakened pound, might be considered reasons for stalling, the highest number of foreign property investors are still from the United Kingdom: in the first quarter of 2016, British buyers bought 2.814 properties (22% of all purchases by foreigners), followed by the French, who made 1014 purchases (source: Spanish Property Insight).

The most popular areas, according to a recent Property Registrars’ report are Andalucia, Catalonia, Madrid and Valencia. 

Such a burgeoning market is great news for anyone who wants to make a safe investment. Buyers from all over Europe, as well as the Chinese, are seeing Spain as a good prospect. Obviously, however, the continuing strength of the demand for Spanish property has a downside: property prices have gone up by 6.9% over the last year.

On our patio in the Albayzin district of Granada we have a large olive tree. Like the lemon tree on the other side of the patio it is a force of nature. Every second year the crop of black olives is huge. In the past I have tried curing them to rid the bitterness. Without much success. 

The tree grows at such a phenomenal rate that it invades the windows of the house and when the olives ripen they fall onto the terra cotta paving and leave terrible black stains which only agua fuerte will shift.

So… two months ago I decided to kill two birds with one stone: heavily prune the tree when it was still full of olives, abandoning the harvest to the rubbish collectors. I left nine huge bundles of olive branches by the underground refuse bins one Saturday night. On Sunday morning they were gone and I spent the entire day with a pressure washer trying to clean up the patio.

A couple of weeks ago our neighbour María-Luisa bused. The postman had left a parcel with her as we were out. “What have you done with the olive crop this year?” she asked me. I sheepishly admitted that I had thrown it away. “Why?” she was incredulous. “I’ve got some of yours here”, she said disappearing into her house.

She presented me with a shallow plastic dish of gnarled looking black olives. A strong aroma of oregano pervaded the dish. “I made these from one of the branches that hung over my patio” she proudly announced, pushing them on me. “They’re yours,” she said. They tasted delicious.

The huge lemon tree on our patio in the Albayzin district of Granada is, and always has been, ecological and entirely natural. And just as in the human population people are made in all shapes and sizes, so it is with lemons! In the photo there are a few of this year's plentiful crop. Most are round, the shape associated with lemons, but some are elongated and others well, just weird, as the photo shows.

Do they most closely resemble the faces of witches from Shakespeare's Macbeth? Or crab claws? Or were they speaking through open mouths when time froze?

Whatever, they are as wonderful as they are weird. And their juice is heavenly.

Author: Allan Hilder

Four years ago my husband and I led a 'city life', he was a successful commercial photographer and I was the Director of the Netherlands Institute. But there was something unsatisfactory about our lives and we decided that we wanted to make a change. Not just a change of country but a bigger, all encompassing change of life and lifestyle. We wanted a different way of living, with a smaller carbon footprint and more connected to nature.

So we embarked on a journey of searching for that special place. High on our wish list was a place in a natural park, where we would have nature on our doorstep. That however was a difficult box to tick, as properties in nature reserves are scarce. During our search we somehow ended up in La Alpujarra and I am not sure whether we chose it or it chose us.

You would imagine that this gem in Southern Spain would attract many tourists but it actually doesn't and is therefore relatively unspoilt and peaceful. The small trails and old bridle paths that lead through fertile, green valleys and along rugged mountain tracks are definitely off the beaten track. It is a picturesque place where it feels like time stood still.

We exchanged our city life for a life in the mountains, we bought a traditional, stone built cortijo with 2 hectares of land. The house was ready to move in to but the land had been neglected for many years and it needed trees planting, a lot of water and tlc.

One of the reasons we wanted to live in nature was because of our two horses and our desire to go out on long rides. We wanted to be able to just ride out of our own gate into the natural park, and that we found!

Wherever you are in Spain, but particularly in Andalucia, you are likely to know the name of a small town in Las Alpujarras, even if you have never been there. Order a bottle of water in a bar, or buy one in a shop and the name you will mostly likely see emblazoned across it is Lanjarón, a place that is famous for water, in more ways than one.

This modest town was the first in Spain to bottle its spa water and you can still drink the water free of charge direct from the spring. There are also several fountains to be found throughout the town, where you can fill up your bottles before a walk or a day out. Lanjarón is also a spa town, and at the balneario you can find all sorts of treatments, from the cosmetic to the health-giving, that use the local water. 

But the one week of the year when you can really experience how important water is to the local community is from June 23rd, the Noche de San Juan, to June 26th. From midnight on the 23rd, everyone, old and young, resident and tourist, ready or not, will get wet as the biggest water fight in Spain, Europe and probably the world, begins. The aim? To soak and be soaked, before going off for a drink and a bit of a party. 

The biggest shock you will encounter is that a water pistol is not going to cut it; on the balconies of the main street you will see water hoses worthy of fire stations and the residents are not ashamed to use them. You can get your own back, at least a little, by buying a bucket before the fun starts (they are on sale everywhere), standing under a hose to fill it up, before throwing the contents at someone else. In less than an hour, the party has moved from one end of the town to the other, the main street is a river, and you will wish you had worn your swimsuit after all…

When clients of ours buy or sell a property in Andalucia, we do all we can to make the process as simple, enjoyable, transparent and cost-free as we can. Unfortunately, sometimes we are let down by other players in the chain, as happened recently.

A vendor client of ours had returned to Germany to live and no longer had a Spanish bank account. When the sale went through the buyer's lawyer agreed to cancel the bank guaranteed cheque which had been issued that morning and he made a transfer in the same amount to the vendor's euro account in Germany. A straightforward favour, which should have cost little money.

Imagine our surprise when the vendor sent an email to say that Banco Popular had charged €1.227.51 to make a transfer of  €182.625.00. No exchange, just one click of a mouse to effect the transfer. Absolutely outrageous. And when it was challenged by the lawyer, the claim fell on deaf ears. His request for a refund was continually passed around from office to office. Delaying tactics, hoping that it would be forgotten.

Banco Popular will never again see an account opened by any of our clients. Whatever damage we can do to their business, we will.

The cheapest and most efficient bank is ING Direct. If you are happy to do your banking online they are by far the best and the cheapest. But if you are the sort of person that likes to go into a bank regularly they are not idea as they have few branches: one in each of Granada, Málaga, Sevilla and Cádiz.

According to the June statistics from the Instituto Nacional de Estadisticas (INE) there were 36.856 property transactions in the month, which is the highest figure since January 2013. Even more important from our point of view is that the overall figure masks a fall in new builds. Excluding these, which make up less than 18% of total transactions, paints a much different, even more rosy picture. 

Sales of existing properties, which is our market, reached a level not seen since late 2007, almost nine years ago. June was the 28th successive month of increases in the number of sales of existing properties.

Total sales for the first six months of 2016, at 207.593 have reached a level not seen since 2010.

Author: Allan Hilder 

Summer may be nearly over but we look back with fondness on exciting times last month. Unlike in countries in the North of the continent, here in Spain as in France and many other Catholic countries, the 15th August is a public holiday, a day on which no business will get done. For anyone used to a 24-hour culture of work, this can be extremely annoying but proper holy-days, as in days where everything is closed, are an extremely important part of Spanish life. Embracing them, and all the enjoyment they offer, will help you feel like a real resident, not just a tourist. The pace here is slower, and adjusting is key.

Here are some of the highlights in Andalucia. Be sure not to miss them next year!.

In Almería, from the 17-25th August, the region celebrates the Fiesta of the Virgin of the Sea, on August 20th, in Vejer de la Frontera, there is a night-time flamenco festival, Malaga’s horse-racing season continues until August 26th, in Niebla (in Huelva province) the theatre and dance festival starts in July and continues until August 28th. Later in the month, in Cadiz, enjoy the livestock market as part of the Feria Real de San Agustin (28th-31st) and, in Baeza, Jaen, from August 28th to September 3rd, the pilgrimage of the Virgen del Rosell, patron saint of La Yedra takes place: watch the Virgen’s statue being taken from her sanctuary in her village to the town of Baeza, and see the streets full of gypsy carriages and wagons. Finally, in Ronda, enjoy the Feria de Pedro Romero, which starts with a parade at 7.30pm on August 30th and continues to the 4th September.

You can find out more about festivals all year round in Andalucia here. 

Most of northern Europe has lost sight of such traditions and festivals, except for a few key ones; in Spain they are a reminder that this is both a notionally religious country and, perhaps more importantly, one that takes celebrations very seriously indeed!

One of the greatest draws of Andalucia is its geographical position. Apart from the obvious attractions of the heat and the sunshine, it also offers access to mountains (the Sierra Nevada) and the Mediterranean. And, if you want to find a property that is well situated to make the most of both of those, then it might be worth considering the Lecrin Valley.

Located south of Granada, and about 30 minutes north of the coast, it gets just as much sunshine in the summer as the rest of the region but, thanks to its position at the foot of the sierras, it also gets lovely cooling breezes. The name of the valley apparently derives from the Arabic word for ‘gateway’ but, according to some websites and locals ‘el Valle de Lecrin’ means ‘Valley of Happiness’ and that seems more apt. Sunny, yet not too hot, peaceful, yet well connected, rich in agriculture and wildlife, it is a perfect place for either a permanent retreat or a holiday home. And, thanks to being slightly less well known, it tends to be cheaper than the Alpujarra. 

At the bottom of the valley, you will find Lake Beznar, a man-made reservoir which looks like a natural lake (apart from the dam!). At 170 hectares, its turquoise waters can be seen from miles around and, if you don’t want to head to the coast, here you can swim, fish and go out on a (non-motorised) boat.

Famous for citrus and almonds, one of the best times to explore this area is when their blossom appears, usually at the end of January for almonds and April for citrus. Early autumn is also very beautiful and, since it is not as hot as the summer, it lends itself to enjoying this countryside through walking, cycling and horse-riding.

Granada is the city of the pomegranate…or is it?

It is pomegranate season in the northern hemisphere and, if you have spent any time in Granada, you will soon realise that this slightly grumpy-looking fruit is very much part of the city’s heritage.

Look at some of the beautiful painted pottery, and you will see a pomegranate is the main motif; look down and you’ll see pavement bollards are decorated with them, look up and you’ll see them hanging from the trees, especially in the Albaicín. Why? Because the city was thought to have been renamed after the fruit during the Moorish period and, now, it is Granada’s heraldic device (i.e. part of its coat of arms). 

However, the origins of where Granada gets its name from are in fact not quite so straightforward. The word ‘pomegranate’ in English is said to derive from medieval Latin, from the words for apple and seeded and in old French the fruit was known as the ‘pomme-grenade’ but the name of the city doesn’t derive from ‘grenade’ at all but from the Arabic word Garnata, which is said to mean ‘Hill of Strangers’. The original settlement was on the plain and therefore difficult to protect, so in the 11th century, the Berber ruler moved his home to one of the hills beside the Darro and the city that we now know was born. So, though the fruit is a wondrous image to have at the heart of a city’s identity, it is not the heart of its name!

According to Spain's Institute of National Statistics (INE) the year on year price increase in the first quarter of 2016 is the highest since 2007. See graph above. The average price of a resale property was 6.4% higher than the same period in 2015. And the rate of increase is accelerating.

Also on the up are property sales. See graph above. In the month of April 2016 there were 35.199 transactions according to the INE of which 28.028 were resales. This is the highest figure this year, 29% above the same month last year and is also the highest number of monthly sales since February 2013.

We have been saying for some months that prices have bottomed out and are on the rise. We have had three vendors increase their prices recently - the first time that has happened since 2007.

Don't wait. Call us now if you are thinking of buying. 0034 958 227735.