We are getting an increasing number of clients asking for long term rentals and this set me to thinking. I was always brought up to believe that money spent on rent was wasted; it went into someone else’s pocket and bought me nothing. A lot of people thought that way too which explains the popularity of home purchase. In the boom people would go to any lengths to “get on the ladder” whilst banks would seemingly lend any amount without a thought to how it would be paid back. That was madness but are we seeing a different madness now?
The experts tell us that the way to get rich is to think counter intuitively; to ignore the herd and go in the opposite direction! When everyone is telling you that now is the time to buy, that’s the time to sell and conversely when no one wants to buy, that is the time to step in. Sounds easy but the fact that so few of us are rich indicates that in practice it’s harder to do! When everyone around you says no it’s hard to stand out and say yes!
Just now popular opinion is that the Spanish property market is risky, the economy is a mess and that it is somehow chancy to buy a home in the country. Now I know how hard it is to go against the crowd but aren’t these just the times, with the market on it’s back, when buying is actually the right and safe path to take?
Apart from contrarian thinking, what other evidence is there? Well there are the fundamentals that will always make
So why don’t you buy today? Well the bar and chat room experts, much of the media and plenty of family and friends will tell you not to and buying in the face of that advice could cause some sleepless nights! It’s very hard to stand out against the crowd. But the reward for those who to take the plunge will be a wonderful lifestyle or holidays from the off and the best investment they will probably ever make!
Finally a thought; for expats a bad local economy is a positive! In booming economies prices rise, in hard times they fall! So as an expat you have a vested interest in your host economy doing badly. Viva La Crisis?
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Comment from Dave Summers and Annemarie Andried reproduced with their permission;
Bill,
Whilst we agree with your take on the situation, a major factor that we consider a stumbling block to committing our life-long savings to a Spanish property is the fact that, the type of property we would create/like would be such that in say 5 - 10 years time when we reach our dottage, or when one of us passes away,and wanted to sell, we can only image that the property would be attractive to another foreigner(not a local) since we have different requirements/ideas when it comes to housing.
Therefore we see this narrowing of the field as a major influence on our (and maybe others) decision to commit fully to Spain . Particularly when there is the added confusion relating to changes in succession laws, taxes etc. which as you know the Spanish have a seemingly continuous habit of tinkering with. Result being confusion (f.i. we have contacted 3 different lawyers to get information about evt. income taxes and requirements for wills, etc. in case being resident/house owner and got 3 very different replies!!!)
So at the moment we are long term renting(Axarquia - inland East of Malaga) and because of the situation we fail to see how this whole scenario is going to improve, even in the medium term (5 years) never mind the short term.
As we are in our mid-60ies, it would require a huge leap of faith to buy the place of our dreams in Spain; I would add we are not your typical old(fashioned)pensioners, since we are looking for sort of ultra modern property, but these always seem to come at a premium and can only be found at the coast whilst we ideally are looking for campo lifestyle.
We do appreciate your obvious efforts to help foreigners finding their ideal place in the sun, and enjoy reading your comments and insights into life in Spain in particular.
Keep up the good work,
on behalf of the Foreign Legion.
Dave Summers/Annemie Andries
My Reply
Dear Dave and Annemie,
Many, many thanks for taking the time to write so fully to me. It is very much appreciated and I found your thinking extremely interesting.
You make some very interesting observations;
- Local V Foreign Taste. This has always been something of an issue! Then again there are different markets between different nationalities; the British and the Irish are neighbours but often seek different things! That said I have never known of there being a problem selling TO Spanish buyers. The problems usually arise where we are trying to sell Spanish properties to foreigners! In fact I sold my home in Spain to Spanish buyers. The reality is that if you reform, design and build well there will be universal interest. Sure, today, Spaniards tend to prefer glossy marble and shiny tiling whilst foreigners tend to go for the rustico look but fashions change and no matter what style you choose if it’s tasteful and well done there will be buyers. The size of your rooms, the layout and so on will ensure a sale.
I also have to say that I expect foreign buyers (ie non Spanish) to again be the main driving force in Southern Spain in the future. The need to escape to cold and grey of the North won’t go away!
- Changes in the law. More troubling but also universal! Governments everywhere tinker with the law incessantly as a justification for their position and privileges! Nothing that the Spanish Government will do can however compare to the recent tax hike in France on foreign owned properties!
Income tax is an individual thing and my only comment here is to say that when you move to a new country you have a fresh start on that score so what you declare and how you arrange your affairs has nothing to do with history!
Property taxes in Spain are incredibly low and because you live amongst Spanish people will not rise significantly.
Inheritance tax has always been a bugbear as the rules in Spain (as elsewhere like France ) stipulate to a great extent who gets what. This can and will change but all movement is towards giving you, the writer of the will more power. It is also the case that credit will be given to the law of your own country in the rules applied to any will. My wife and I always have what in Britain is considered normal; everything left to the survivor, in the event of both dying, everything equally between the kids. We reproduced this in our Spanish will and the advice was this would work. That said you do need legal advice. I can recommend an excellent “economist” in Velez Malaga you could talk to about this. I have known Manolo Mendez for some 16 years and always found him to be extremely helpful and knowledgeable. His command of English is excellent and he has a big mixed clientele.
Gabinette Fiscal Mendez,
C/. Felix Lomas 32,
29700 Velez-Malaga,
Tel +34 952 502 100
Fax +34 952 501 221
Email velez@gfmendez.com
C/. Felix Lomas 32,
29700 Velez-Malaga,
Tel +34 952 502 100
Fax +34 952 501 221
Email velez@gfmendez.com
- Finally I understand about your property requirements. You think like me. Comfort and convenience before anything else! My advice here would be to look for a good, well built modern country property and expect to add the comfort touches to it. Double glazing is easy and in my own finca we added insulation with a plasterboard inner skin to create a cavity which was filled with insulation.
I’d strongly recommend solar water heating but also solar panels for generating electricity. Again these are no longer expensive and they offer the chance to not only reduce bills but also increase usage and therefore comfort.
With regard to heating it can be difficult to install central heating after the house is built but that may not be necessary. Modern pellet fed fires are both cheap to use and extremely efficient. You could attach radiators to adjacent rooms as well. These fires are so much cleaner and more efficient than the old wood burners! In this connection a lot of the fireplaces in Spanish homes are badly sited and useless and consequently give the impression that this type of heating doesn’t work. It does!
Obviously I can make recommendations for these things as well.
I hope these comments are helpful. I have given your objections a lot of thought and understand them. It’s just that at the end of the day I still think, even for you, that buying is the way to go!
