Currently, servicing borrowings to purchase a property by way of a Spanish mortgage is an attractive prospect for those of you from Northern Europe, particularly the UK, where interest rates have risen in recent months. The Spanish financial services market is in the formative stages of its development - and whilst it is substantially more advanced than the markets of the former eastern Bloc - certain financial products which are widely available in the UK are simply not available.
For some time the UK financial services sector has offered 100% (loan to value) mortgages, non-status or self-certifications products. These are counter culture to the Spanish borrowing mentality where only relatively recently has it become usual for a purchaser to borrow to make their purchase of a property.
It may be interesting to note that unlike the UK, in Spain a mortgage secured against a property attaches to the property rather than the borrower. This means that a mortgage may be transferable - subject to status - between a buyer and seller. If you do not want to assume the mortgage, it is important that your legal advisors ensure that mortgage debt is redeemed by the seller before you complete your purchase.
If you are a buyer who is seeking to fund your purchase in part by way of a Spanish mortgage, I would strongly recommend that you should work with a recognised mortgage broker to identify your precise capacity for borrowing in Spain prior to narrowing your property search. The Rights Group (TRG) works with several such brokers and would be pleased to help you to assess your financial requirements before your inspection visit. Please also remember that you'll need to add in the region of an additional10% of the purchase price of the property selected to cover professional fees, transfer taxes, Land Registry fees etc.
Many works of non-fiction in the "Driving Over Lemons" market have depicted a view of Spanish rural life that is charming, quaint and stuffed full of olive oil soaked personalities who are keen to help the newcomer settle into their neighbourhood. I wouldn't dare to suggest that this is rose tinted - it's not - there is an honesty and grit to Spanish rural dwellers that is heart warming. However, they are used to the harshness of the conditions the extremes of the seasons and the lack of creature comforts. Above all they speak Spanish - they will usually have little more than a "yes" or "no" grasp of English - and why should they!
If your dream is to redevelop a remote and ruined finca in a more rural part of Southern Spain - and there are many - little more than a few thousand metres off the main roads - you are certain to need in equal measures the following:
i. More than "restaurant" Spanish.
ii. An experienced Surveyor - who may be a British trained RICS member or the Spanish equivalent, a Tasador, to provide you with a full structural survey of the property along with recommendation to rectify any obvious failings.
iii. A bilingual Project Management team who should be retained early on in the refurbishment process to ensure that you are able to achieve the finished property that you desire. They will handle the entire process including the creation of the architectural drawings and seeking their approval by the Architectural College. They will obtain the relevant building licences and permissions from the planning department of the local Ayutamento. They will exercise relevant control over the builders and their progress with the aim of delivering, most importantly, on time and on price.
Lesson Eight: Learn good Spanish if your dream home is a Finca or Cortijo in the Campo. Don't be led astray by the promises of an overzealous salesman who assures you that you can build your very own Alhambra Palace on the site of a tumble-down cattle shed - in reality its unlikely. Finally, if the idea appeals but the reality is just too daunting buy a sea or mountain view apartment, villa or townhouse and drive up to the Campo at weekends and stay at one of many great country house hotels!!
Inevitably moving to a new country brings with it the need to preserve as much of your familiar world and possessions as possible. What do you need to bring with you when you relocate? The answer is invariably, the minimum.
Moving house is still, allegedly, the second most stressful activity - next to divorce - that a family can expose itself to. Now imagine co-ordinating prompt and efficient UK or Spanish removal teams to cart your furniture several thousand kilometres to your new home and there to seek to fit the contents of a suburban living room with velvet and mahogany into a whitewashed hacienda. It's just not going to work. That sofa will become a roasting seat on balmy summer evenings and that mahogany cabinet will look just out of place next too the cool cream lines of your new limed oak kitchen.
This sounds simplistic and is not intended to offend those of our readers who have imported their finest lounge suites it is more about appropriate design to fit your new surroundings.
Through our work in Spain we come across properties that have been crammed with too many knickknacks from the old Country. I am not just seeking to dissuade you from incurring the inevitable cost of exporting used furniture to Spain but more seeking to make clear that at some point you may wish to upscale - or downscale - your new home.
One of the member businesses of TRG Network is "Start2Finish" a "House Doctor" service which is active in the Marbella region of the Costa del Sol. They visit resale properties with a view to neutralising bad or outdated taste and "dressing" them for potential buyer interest. Time after time "Star2Finish" is required to advise it owner clients to bin tired or outdated furniture which has been brought over with the purchaser, often many years before. "Unloved" or over designed interiors are - along with price - one of the most noted "turn off's" for a potential purchaser.
Don't bring all those winter woollies - just in case - they'll get eaten by moths. You'll not need them. Usually, in newer properties wardrobes tend to be built in - so you don't need to bring hefty wardrobes with you - and as space is usually at a premium you'll want to rationalise your clothes to lighter cottons and linen with the occasional fleece for winter days.
Have a car boot sale before you relocate and sell as many of your electrical appliances as you can. Purchasing endless UK to Spanish plug adapters will only increase the risk of fire due to short circuits.
Lesson Nine: If you can, relocate gradually, getting used to your new surroundings before filling you new Spanish home with your families treasure trove of useless, albeit, beautiful heirlooms. Move in gradually.
Whilst there are many estate agencies on the Costa del Sol that will happily sell you a property only a relative few will offer the necessary after sales service that is so vital for your comfortable settlement into your new home. Following your move - a tiring experience for many - you risk immense frustration by encountering the bureaucracy of Spanish businesses. Telefonica - Spain's main telephone line supplier, Sevillana - the electricity company and Acosol - the Andalucian water company are just three of the main deliverers of stress overload for the new settler.
Let's be clear. Neither I, nor any of my colleagues in the TRG Network, hold the key to the golden door when it comes to dealing with these utility companies. They are unwieldy mammoths who have been allowed to become complacent and unresponsive to customer power. Being aware that they have many non-Spanish speaking customers Telefonica has introduced an English language service which seems only intermittently manned. When finally answered you find yourself in a vortex of confusion, repeated instructions and delays which only serve to fray the nerves.
The answer is to speak to them in their mother tongue - in the South of Spain: Castellano.
Lesson Ten: Let an experienced and fully bilingual relocation agency or estate agency try to minimise those frustrations attendant in moving to Spain by dealing on your behalf with the utilities.
If you are a still working relocator you will probably be looking to conduct your business as a tele-worker by the use of ADSL or broadband. Currently, whilst certain newer forms of satellite delivery do exist, WiFi is in its infancy, so the majority of business conducted over the Internet in Spain is still routed through fixed line telephone systems.
My impression is that the quality of the technical infrastructure is good with much of Spain benefiting from fibre optic cabling but it should be noted that there seem to be geographic limits as to where one may receive the "super highway". I have to couch this carefully as no one I have spoken to seems to been able to fully explain the system, but it appears that ADSL and broadband are unlikely to be available to a residence which is more than four kilometres from a main road.
Working extensively over the Net suits me much better than commuting. I spent six months commuting on a weekly basis from home in Spain to London as I dealt with my last professional commitments there. Whilst I know and have respect for many fellow residents who continue to commute, I have to say that being based here now full time is much more satisfactory.
Lesson Eleven: If you want to continue to work via the Net you'll either need an office in a commercial centre or to live in a more developed neighbourhood - like most urbanisations - with good and close connections to main roads.
As the Land Registry system in Spain is very well developed many Spaniards do not bother to use the services of a Lawyer or Abogado to handle the conveyancing or property purchasing process. Such an approach for me is simply unthinkable. Let's face it wherever you buy a home you will be sinking into bricks and mortar a substantial chunk of your family's net worth and it is simply not prudent to do so without the input of an expert.
The most basic checks that simply must be made include the following: Is the person selling the property actually the owner according to Land Registry records? Are they up to date? Is money owed to a mortgage lender out of the proceeds of sale? Are local taxes or other domestic utility bills outstanding? Is the plot subject to a compulsory purchase order? Is there a license for the property that has been built on the plot and does it conform with the building regulations both in terms of density - its m2 expressed as a fraction of the whole plot - and its construction? These and other questions of fundamental due diligence must be asked by your legal advisor. Your lawyer is handling a process but whilst he or she must certainly be competent and properly bilingual they must also be responsive to your reasonable requests for clarification.
Please don't be tempted to save the cost of responsive and good quality independent professional advice. Horror stories persist - particularly in the newer development areas of the Costa Blanca.
Clients of TRG, who came to us too late in the process, had been guided by a willing seller's agent into signing a "Private Purchase Contact" and paying a deposit to with a party who was neither the developer or promoter of a new block of apartments. No bank guarantee was given to secure their deposit and no land was ever acquired. And as for the client's hard earned deposit, well it was never seen again..
Choosing a lawyer is a fraught process. For every person who recommends a particular firm another will have a contrary view - whether or not it's based on actual experience. I suspect that may be the nature of any reasonably small community.
In any event I recommend that you avoid a lawyer who is recommended by an Estate Agent. However good they are they can not escape an obvious conflict of interests which are not weighed in your favour.
Whilst establishing the core of The Rights Group over the last couple of years I interviewed - and have test driven - several lawyers in this market. I have selected a small grouping which I feel represent the "best of breed" and whom, together with the right amount of "driving" from my TRG team on a client's behalf, I would now happily recommend. They are at the cheaper and more expensive ends of the spectrum, some are good for retail conveyancing clients and some for the bigger developer clients requiring specialist advice. Above all we now have many satisfied clients who have been well served by our advisor colleagues.
Lesson Twelve: Use the services of a reputable Lawyer or Abogado
in order to properly understand the transaction you are entering into but also ensure that they are responsive to you. Always be tempted to question things you don't fully grasp on first hearing and take notes during meetings.
As the presenter of one of those TV shows that reconstructs gun crime hold ups always says - "we don't want to scare you into believing that you may become a victim " - our aim is to say how it is from our increasing experience of the very good life in Spain.
Must slope off to the crystal pool - as my iced drink is warming up - look forward to seeing you here!!!
© Mark FR Wilkins 2005 (Marbella)
Mark FR Wilkins
The Rights Group SL
034 600 343 917