Spain, which once prospered by excluding other
European powers from its New World riches,
is now a leading member of the EU.
Situated in south west Europe, it has borders
with France (from which it is separated by
the Pyrenees) and Portugal, and a coastline
that stretches either side of Portugal from
the Bay of Biscay in the north to the Mediterranean
in the south.
Important industrial areas are in Catalonia
at the southern end of the border with France,
and the Basque Country on the northern end.
Both have their own ethnic languages and independent
aspirations.
Most overseas investors, especially those
with an intention of letting their properties,
will look first at Spain’s popular Mediterranean
coastline facing Morocco and Algeria. Running
from north east, where Spain meets France,
to south west, where Gibraltar is perched,
these areas are the: Costa Brava, Costa Dorada,
Costa del Azahar, Costa Blanca, Costa Calida,
and Costa del Sol. The last three, being the
most southerly, are the most popular.
Offshore there are the Balearic Islands, and
further south off Africa are the Canary Islands,
both a popular holiday and investment destination.
The current Spanish Government, whose party
won the election three days after the Madrid
train bombings last year, was elected on a
ticket promising reduced government intervention
in business, increased action against fraud,
and reintroduction of labour market regulations.
Still catching up years languishing under
Franco’s dictatorship, the Spanish economy
has been resilient to the last international
slowdown, the OECD decided in its last report
on Spain. ‘Strong employment growth
has led to a substantial decline in the high
structural unemployment rate but labour productivity
has stagnated’, it said.
Domestic demand sustained activity during
the first half of 2004, but net foreign demand
weakened while inflation rose due to the oil
price shock, said the OECD. ‘Although
some weakness can be expected in the short
term because of the oil price hike, activity
should accelerate again to close to 3 per
cent over the projection period’.
A 2003 report from Banco de Espana concluded
that house prices in Spain had doubled over
the past 25 years, most of the increase coming
in the last few years. Between 1997 and 2002,
the average price of housing had risen by
78 per cent, and the (then) latest official
information for the first quarter of 2003
showed a projected annual rate of increase
of 17.5 per cent, it said.
Since then the Royal Institution of Chartered
Surveyors’ European Housing Review 2005
has reported that ‘the housing boom…
continued to power along during the first
nine months of 2004’. Prices were still
rising at an average annual rate of 17 per
cent, and 18 per cent in Madrid.
UK investors have not been slow to pick up
on the Spanish property boom and many have
been buying development properties.
The buying process itself has some pitfalls.
For example, estate agents, of whom there
are very many, are not subject to statutory
and professional controls. Also property taxes
owed but unpaid by a previous owner (up to
five years back) are a charge against the
property regardless of a change of ownership.
So a buyer can end up having to pay outstanding
council taxes. Likewise unsettled mortgages
remain a charge on the property.
In some areas there have been planning permission
problems were investors have bought property
built on land designated as agricultural and
have found themselves having to contribute
towards the cost of roads and utility supply
systems when developers have moved into the
area.
Spanish inheritance laws have strict rules
about family entitlements that need to be
considered.
Property ownership is recorded in a property
registry which includes details of any encumbrances
and charges. A parallel but separate registration
system records the location, description and
boundaries of the property and any shared
services and areas in common ownership. The
two are now always in full agreement.
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