Spain is not only a popular holiday destination but also one of the favourite places to buy a second home for British investors. As the local economy continues to recover the property market is getting a good boost as well with the latest reports indicating a 5 per cent increase in sales from a year […]
Spain is not only a popular holiday destination but also one of the favourite places to buy a second home for British investors.
As the local economy continues to recover the property market is getting a good boost as well with the latest reports indicating a 5 per cent increase in sales from a year ago.
As the market is gaining momentum buyers’ appetites change, according to Peter Esders, commercial director of Judicare Group, an international legal services company.
“Gone are those buyers who buy any new property they are offered and back in are lifestyle purchasers who are looking at completed properties,” Esders explains.
“When you talk to people buying completed properties, they often believe here are fewer legal issues than buying a new household as the property is finished. Those of us who have been in the market for a long time remember that it was not so long ago that people were buying new properties because they thought that there were fewer legal problems with them than older properties.
“It is interesting how attitudes change when, in reality, the situation is that the potential legal issues are simply different in each case, rather than being safer in one situation over the other. Using an independent lawyer to help you buy should identify any issues no matter what type of property you are buying.
“As lifestyle buyers return, we have seen an increase in the number of people purchasing rural properties in Spain. Prices at the moment are rock bottom and there are some real bargains to be had in the more rural areas, where prices were already lower than properties right on the coast. However, there are some issues that need to be thought about when buying a rural property in Spain.”
Esders’ top tips for purchasing a rural property in Spain
- Identifying who is the ‘registered’ seller
Identifying the registered seller may seem obvious but this may not necessarily be the case. Due to Spanish inheritance rules and tax issues, properties may be registered by several different people or in the name of somebody who died. As a result, the person who is keen to sell the house may not be registered or may not be the sole registree in the legal documentation.
For example, often siblings share the same rights. The custom of not registering an inheritance in order to avoid inheritance taxes and costs is particularly prevalent in rural areas as a property will be passed down the generations and everybody knows that it now belongs to, for example, the children even though this is not registered at the land registry. I have dealt with purchases in the past where the seller had to arrange the inheritance of the property by two separate generations before getting the property into the name of the current owner and then proceed with the sale to my client. Therefore, is it vital to check that all the registered owners do in fact want to buy and are fully engaged in the process.
In the case of the registered person being deceased and inheritance never been completed, the rightful owner may be selling the property even though they don’t have their name listed at the land registry. This is a common situation as it is custom to find ways to avoid paying fees and taxes associated with changing legal documents. Obviously, in these situations, there is substantial potential for things to go wrong (for example fraud can occur), so it can be tricky to protect the buyer.
- Assessing the dimensions of the property and plot
When it comes to measuring the exact dimensions of the property and the plot, both entries in the land and catastral registry can be misleading. Often, the advertisement of the house does not match the reality or what is registered with regards to divisions, size and boundaries as people usually avoid declaring these to save costs and taxes in rural areas.
It is vital that not only searches are carried out but also a surveyor is employed to identify what is registered, its size, the boundaries and what is actually included. By assessing that information, you and your legal adviser can then make sure that everything is consistent. Also, this should be discussed with your neighbours to avoid any future disputes as properties may have been divided into separate plots but without any legal consent. In fact, in some cases, the division is illegal as it falls below the minimum plot size set out by the local authorities.
Obviously, unless the property is listed in the land registry, it is difficult to identify what the boundaries are and who actually owns it. It has been a long time since I dealt with a case in Spain where the land was never registered although you still might see part of the properties unregistered, such as an extension or swimming pool.
- Verifying if the property has any planning permissions
In rural areas, it is more common to have properties that are built without planning permission as there is less chance of you getting caught. I have even seen properties that are painted in the same colour as the ground in an attempt to camouflage them and avoid the authorities spotting them. Then the day after the authorities lose their right to order demolishing of the property, it is painted white or whatever colour the owner actually wants it in.
Buildings or structures often have planning permission but it doesn’t mean it is legal. There was a property that had planning permission to build the nicest water reservoir for their rural property you could imagine. The water is kept so clean that the owners swim in it and it had a diving board. Yes, you guessed it – they were able to get planning permission for a water reservoir and not a pool so they built a pool anyway but registered it as a water reservoir.
A related issue is the intended use of buildings. Just because an outbuilding exists, it doesn’t mean you can use it for whatever you want. I am currently dealing with a buyer who wants to convert an outbuilding to a living area. Unfortunately, there is a planning restriction, which means he can only use that building for housing animals. Many people would simply ignore that restriction and therefore, it is crucial that careful attention is made to the exact description of what is registered and cross reference that to what is actually built.
- Minding the utilities included
Obviously, in rural locations, the question of utilities raises its head. For example, the property may not be connected to mains sewerage as it is slightly off the grid and may require a septic tank. It may even be that the property doesn’t have a permanent connection to the electricity grid and relies on a generator to provide electricity. Also, a lack of water can be an issue in Spain, especially during the summer, so all grounds need to be covered.
- What about rights of way?
Another potential issue is the property’s accumulated rights of way. Identifying this may be difficult if not registered, and therefore it is important enquire and establish whether this is the case. Such rights of way can be common (right to walk across your land etc), others not so much (rights to hunt or right to extract water).
- Evaluating the tax implications
Your legal team should also carry out all the usual checks to avoid additional taxes. It is important to understand beforehand the tax implications of buying a property so that there are no extra charges or unwanted mortgages.
All of this shouldn’t put you off from buying a rural property. There are many advantages to purchasing a house in the countryside as the prices are generally lower and you are usually getting a more spacious house than buying on the coast. The views in the countryside can be equally spectacular and the areas are certainly quieter.
