There were first talks of plans to demolish thousands of illegal Spanish properties by the Spanish government, that scared off home owners all across the Costa Del Sol; but now,it appears the government is reversing its decision. The Spanish government is hoping to boost its dismal property market by holding off the demolition of the properties.
Recent trends show that a strong British Pound, low-end prices on brand new houses and steep price falls are now all contributing to a rush of British investors to Spain.
Reports of increased currency exchanges between Pound and Euros are common across many foreign exchange companies these days. Many are witnessing a sharp increase in high figure currency trades. In recent weeks about 20% of the people using trading services have each exchanged more than £200,000 into Euros on average. This is a clear indication that more people are using their funds to buy property in Europe.
The regional government of Junta de Andalusia is expected to make a final announcement in regards to illegal homes and their demolition later this year but experts believe that they will not order the demolition of the estimated 18,000 properties in question. According to news reports, these homes were all built with bogus licenses. They were granted by corrupt council officials and councillors who took bribes from some developers to by-pass planning laws.
When the “illegal” Spanish property scandal first made news back in 2006, the whole Marbella city council was eradicated. Since then, planners have looked for other solutions; those that enforces the law but do not deter future home buyers. Therefore all affected British home owners said to be losing their homes are not expected to be given a reprieve.
Buyers who bought their properties in good faith will not be punished by the Junta de Andalusia government. Out of the total sum of the properties in question, about 400 flats in Marbella might be at a higher risk to go since they have been built on designated green areas. Most others will most likely be declared legal after all.
However, all developers found guilty of using illegal practices will be made to pay for their illegal behaviour.
When the new Urban Plan comes into force early in 2010, Andalusia’s regional councils will have the authority to force offending developers to hand over other plots of land they own. Those will then be used for public projects such as sports centres or parks. The PGOU has so far been only provisionally approved and will need final approval.
“What does not make any sense is that those who bought the properties in good faith and were not advised by the authorities of the illegality of their properties should pay compensation,” said a spokesman for the Marbella city council.
One of the biggest problems in the Spanish property market is still the overflow of new properties on the market. Those that stand empty. This has forced developers to offer massive discounts in order to get them sold, creating huge opportunities for cash-flow rich investors.
Company Metrovacesa, on the Costa del Sol offers a campaign with discounts of up to 55 percent. Two thirds of the 247 flats in the promotion have already been sold. Another Spanish developer, Habitat, is selling their homes with up to 32 percent off the market price.
Some developers are happy to pay compensation for illegal building in the form of land swaps with regional councils but most are too far in debt to even pay their fines or even stay in business.
Owner of Panorama Properties in Marbella, Christopher Clover, says buyers are choosing the best locations right now to take advantage of the favourable market. Homes on the Golden Mile and the Sierra Blanca go for bargains such as properties valued from €300,000 (£263,000) to €1 million. They are snapped up like there is no tomorrow.
“The kind of people who are buying are mostly international buyers. Some are taking out mortgages of up to 65 and 75 per cent of the price or they are cash buyers. Some of these cash buyers have waited until the market is right and want to take advantage now,” Mr.Clover says.
Photo credits: Kiko via Flickr