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!

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.

Last week we wrote about how the resale market and house prices were definitely improving. But now, it seems, even the new-build market is finally recovering.

On Spanish Property Insight Mark Stücklin notes that since 2008 the building of new houses has dropped by 97%. And, once the recovery began, a lack of new housing meant there was nothing for sale to meet demand. But in April 2016, for the first time in two years, sales of new-build housing went up by 15%. This part of the business has been the slowest to recover from the crisis but, now, says Stücklin, it looks like joining the rest of the market in an upwards curve. This can only be good news for buyers, sellers and investors alike, showing that after eight years, buying a new or old property in Spain is once again looking like a solid investment decision. 

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.