Spain Real Estate News

Sir Geoff, England’s hat-trick hero of the 1966 World Cup final, and six other investors claim they are owed more than £2million.

They are suing businessman Mark Cordner, claiming he pocketed a large slice of the cash.

In his defence, Mr Cordner claims he is also a victim after his former partner Michael Hone disappeared. He says he has invested and lost his money and his reputation.

Sir Geoff, 68, was the biggest loser after investing in three off-plan properties in a complex near Puerto Banus on the Costa del Sol.

Yesterday at the High Court in London, Peter Knox QC, representing the claimants, said all of them except Sir Geoff were friends of Mr Cordner who had also acted as their financial adviser.

The former West Ham and England centre-forward, who is due to give evidence on Monday, was persuaded to present a 10-minute promotional video which will be played in court next week.

Yesterday it was claimed investors were told they could more than double their money if they bought the properties before they were built.

One allegedly agreed to plough his savings into the scheme after being told Sir Geoff’s World Cup team mate Martin Peters was buying a property there, which was not true.

Mr Knox said Martin Roberts was told Mr Cordner had bought apartments at the site “in bulk”, putting them at a substantial discount.

It was also alleged that the defendant falsely told Mr Roberts that Tottenham Hotspur boss Harry Redknapp had bought a place there.

Mr Knox said the group had been deceived into handing over the cash to Mr Cordner and Mr Hone.

Sir Geoff’s claim includes a £350,000 loan he made to Mr Hone in May 2004, of which £110,000 was not repaid. The court was told Mr Cordner was liable for the missing money as he was a partner in the “wrongful conspiracy”.

The investors believed they were ploughing their money into a Spanish property company called the Royal Marbella Group. But it never owned the land and the apartments were eventually built by another company.

The group say their rights over the apartments have either been destroyed or rendered worthless.

It was alleged that Sir Geoff, who did not have his own lawyer working on the deal, and the other claimants were told that Mr Cordner would sort out legal matters for them.

But all that happened was that they were sent sales contracts which stated the site was owned by two American companies.

In fact, Mr Knox said, the site was owned by a Spanish company called Azul Properties.

It was alleged that without the investors’ knowledge Azul sold the site in 2004 to another Spanish company, Duja, which completed the building of the apartments three years later. Duja has a 24million euro bank debt.

Mr Knox said: “It appears that the bank debt will swallow up all the equity in the property, and thus defeat any claims the claimants may have for the transfer of their apartments.”

It is claimed Mr Cordner, of Knebworth, Hertfordshire, persuaded the seven investors to buy the apartments by “deceitful or negligent misrepresentation”.

They handed over £1.3million but taking into account interest and other loans the claim is now estimated at about £2million.

Mr Cordner admits he made some of the alleged representations but denies this was done deceitfully or negligently.

The hearing, expected to last five days, continues.

Source:  Express.co.uk

MADRID, Feb 10 (Reuters) - Spanish banks have been told by the Bank of Spain to devalue the housing assets on their books by 20 percent, El Mundo reported on Wednesday, citing sector sources.

The Bank of Spain was not immediately available for comment.

Spain's banks hold property worth an estimated 100 billion euros ($137.1 billion) the newspaper said, taken on over the last couple of years as property companies went bankrupt and their creditors forced to mop up their unsold assets.

Analysts are concerned the country's banks have been keeping a lid on potential losses by valuing the homes on their books at pre-crisis levels, while real property prices have dropped by more than 14 percent from their high in 2007.

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Hopes have emerged that the battered Spanish property market could be hitting something that feels like a floor. Pardon the vague language, but with 1 million homes still on the market to say the future is torrid for Spanish property is an understatement despite the latest positive data.

The most positive aspect of the latest data to be released shows that home sales transactions rose 5.3% between October and November last year, leaving them down just 2.6% year on year, compared to 21% in October and 17% in September.

On top of that Spanish house prices were down just 6.2% on the year ending the 4th quarter, compared to a fall of 7.8% in the third quarter, and 8.2% in the second quarter. However, this is according to the governmental housing ministry index, which is based on the valuations of surveyors. It says house prices have fallen 9.5% since the peak in the first quarter of 2008, whereas other industry bodies say prices have fallen 20%-30% in the past 2 years.

This is all very positive, especially the monthly increase in sales, which is badly needed if Spain is to start clearing the 100s of thousands of empty apartments and villas left from the construction boom. A boom that saw Spain building more properties than, France the UK and Germany put together at its height.

The devastation of the housing market from a catastrophic drop in demand has led to the devastation of the Spanish economy, because of the complete freeze in the building industry. Thousands of jobs have been lost and the economy continued contracting in the third quarter, 2 quarters after its main rivals Italy and Germany returned to positive growth.

On the brighter side, we are once again coming into the hot season for overseas property demand, and Spain is still very much a favourite with British and Irish buyers. According to the top 10 for 2009 recently released by the Property Abroad.com portal, Spain was the most popular country with those browsing and searching for property on the site.

The portal said that Spain, always a favourite with its user base had been knocked into second place since May, when America overtook it. None the less, its holding second place since saw it bring sufficient traffic and search volumes to make Spain most popular for 2009 as a whole.

February is traditionally a very good month for overseas property sales, and this continues throughout the till November. Given that demand for overseas property began increasing in the second quarter of 2009, 2010 could see sales increasing massively in Spain’s less overdeveloped areas.

Source:  Overseas Property Mall

 Feb. 3 (Bloomberg) -- More than half of Spain’s landlords are dodging taxes as the rental market expands, depriving the financially strapped government of more revenue each year.

Owners are asking for payment in cash from tenants to avoid tax on 2.5 billion euros ($3.5 billion) of earnings annually, the Gestha union of tax inspectors estimates. An increase in rental properties nationwide hasn’t generated any more tax revenue.

The Spanish government, seeking to pull the country out of its deepest recession in 60 years, needs all the money it can get right now. The slump was triggered by a crash in the housing market and has left Spain with the highest budget deficit since at least 1980. Taxes go unpaid on income equal to about a quarter of gross domestic product, Gestha estimates.

“The deep economic crisis in which the country is submerged is once again making the hidden economy flourish,” said Juan Jose Figares, chief analyst at Link Securities in Madrid. “The government will be compelled to clamp down on rent fraud.”

A drop in house prices starting in the second quarter of 2008 has forced many people who bought homes as investments to seek tenants for their properties rather than selling at a loss. At the same time, more Spaniards are trying to lease homes after they were priced out of the market in the years before the crash, making it easier for landlords to strike deals that don’t involve the taxman.

The number of properties for rent increased 18 percent to 2.2 million units in 2008, according to data from Spain’s Housing Ministry. Rental income declared by landlords rose by just 0.1 percent over the same period, a report on the Web site of Spain’s tax office shows.

Room to Grow

The rental market has a lot of room to grow. At 13 percent, the proportion of renters to homeowners in Spain is still low compared with other European countries, where 40 percent to 60 percent of housing is rented, according to Madrid-based property consultant Aguirre Newman. Around 65 percent of Spaniards aged 25 to 29 live with their parents, compared with about 22 percent in France and the U.K., economic research institute Fedea estimates.

“During the housing boom, the state was earning so much from home sales that it wasn’t worth chasing the odd landlord,” said Fernando Encinar, co-founder of Idealista.com, Spain’s largest real estate Web site. “Now, with the economic crisis, the government really does need the money and will make efforts to prosecute tax dodgers.”

Easy to Dodge

Encinar, whose company lists 360,000 properties for rent and purchase, said Gestha’s estimate that 54 percent of landlords are ducking taxes “falls short of the true figure, which is set to grow further.”

The penalty for avoiding tax on rent is a fine equivalent to 150 percent of the unpaid amount, according to the Spanish tax office. The tax also must be repaid. There is no punishment for the tenant.

The penalty is almost never applied because tax dodgers are not being investigated, Gestha General Secretary Jose Maria Mollinedo said.

“As both the landlord and the tenant make an agreement not to declare tax or their residency, there is absolutely no way to prove that tax fraud is taking place and therefore no non- declaring landlords are brought to book,” Mollinedo said.

A tax break adopted in 2008 accounts for part of the difference between rising rentals and the lack of tax revenue growth. It gives landlords a 100 percent tax break if they rent to tenants who are under 35, according to a spokesman for Spain’s tax office who declined to be identified by name, citing government policy. He didn’t provide information on how many landlords claimed the tax break.

Weak Incentive

The incentive makes little difference because most leaseholders are over 35 and landlords worry that the break will be repealed in a couple of years, after they’re all registered with the state, Mollinedo said.

Spain can ill afford to lose revenue it should be collecting. The country, which had a record budget surplus equal to 2 percent of GDP in 2006, will probably have an overall public-sector deficit of 9.8 percent this year, according to Finance Ministry data submitted to the European Commission today.

Sellers pay 18 percent capital gains tax in Spain on any profit made from home sales. There were 106,273 transactions in the third quarter of 2009, according to the most recently published data from the housing ministry. That was 14 percent lower than a year earlier and 58 percent less than the market’s peak in the second quarter of 2006. Values decreased as much as 11 percent last year, Idealista.com said.

Tip of the Iceberg

Rent fraud is just the tip of the iceberg, with Spaniards avoiding tax on income of 240 billion euros, equivalent to 23 percent of the economy, according to Gestha. If Spain could reduce that figure 13 percent, the country generate another 25 billion euros of tax revenue annually, it said.

Tenants, happy to find a place at all, aren’t likely to turn into whistleblowers. While rents fell 8.4 percent in Madrid and 12 percent in Barcelona during the first half of 2009, increases over the previous five years continue to squeeze budgets. Rent levels climbed 28 percent in the capital and 56 percent in Barcelona in the five-year period.

Ruben Gonzalez, a 33-year-old Madrid resident, said he received 120 calls in four hours after placing an advertisement in Idealista.com for a 2-bedroom apartment on behalf of his current landlord. Then he turned his cell phone off.

Gonzalez showed the first 30 callers around the 60-square- meter (645-square-foot) city center apartment, which has a broken refrigerator and faulty boiler, rising damp and peeling paint.

“‘Everyone was fighting over the place because it’s better than a lot of what is out there and the owner is legal and insists on a contract.” Gonzalez said. “One couple even offered to pay more than the asking price and another offered a cash bribe to put them at the top of the list.”


--With assistance from Ainhoa Goyeneche in Madrid. Editors: Ross Larsen, Andrew Blackman.

To contact the reporters on this story: Sharon Smyth in Madrid at +34-91-700-9601 or ssmyth2@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at +49-30-70010-6223 or ablackman@bloomberg.net.

Source:  BusinessWeek

In a decision with far-reaching implications for Spain’s property business, Marbella’s plan to legalize more than 17,000 illegal homes along the Costa del Sol was approved by a regional commission last week.

Marbella, which bills itself as Spain’s version of Monte Carlo, was the poster child for corruption and backroom deals in the go-go days. In the wake of the scandals, tens of thousands of homes were found to have been built illegally, including an estate owned by homegrown hunk Antonio Banderas.

Years in the making, the Marbella town plan is something of a bellwether for the country. If implemented, it could provide a framework for other regions to move forward, without destroying people’s homes.


Of course, Marbella, to say the least, is a unique market, even for Spain. The clientele is a swirl of Middle Eastern royalty, Russian oligarch-wannabes and good ol- fashioned Brit nouveau riche.

Here’s how British professional celebrity Piers Morgan recently described Marbella for the Daily Mail:

“Before going there to film an ITV1 documentary, I assumed it was a rough, tough Costa del Crime kind of town where villains hung out with boozed-up glamour models, hookers and footballers, snorting cocaine and avoiding the police,” he wrote. “And to a certain extent it is. But there's another, quite extraordinary side to Marbella--one of staggering wealth and discretion that acts as a fabulously opulent secret haven for super-rich Saudi princes, Hollywood stars, European royalty and billionaire tycoons.”

The huge number of illegal homes found in the area provides stark testimony to the level of corruption that flowed through Marbella and the region. Mid-level bureaucrats were living like sultans. Outrageous proposals for oceanfront condo towers sailed through the system.

The town’s plan, known as the PGOU, is considered a key step for Marbella’s return to the land of the respectable. Not only does it specifically address the illegal homes, it creates a specific guideline for project development--a rarity in many regions.

But the plan has been controversial. Many local critics believe the amnesty program gives developers a free pass for building blatantly illegal projects. Environmentalists charge that the projects have consumed acres of protected public land, especially on the waterfront.

The beachfront condo projects left out of the plan should be demolished, the regional government argues. But Marbella has fought for the legalization of the remaining projects, a battle that includes legal actions by the owners of the condos, including the 297-unit project known as Banana Beach. Typically, the owners had no clue the fully-permitted development was illegal when they bought their units.

“This could drag on for years, maybe even decades,” writes Mark Stucklin of Spanish Property Insight. “That will be little consolation to elderly owners at developments like Banana Beach.”

Source:  International Property Journal

In a somewhat shocking and worrying statement a leading Spanish lender has declared the country’s real estate sector is ‘bankrupt’.

According to Santos Gonzalez Sanchez, president of the Spanish Mortgage Association who speaks on behalf of the country’s mortgage lenders, there is so much debt in the industry that finance for property development has effectively dried up.
 
‘The real estate sector is bankrupt,’ he said, pointing out that Spanish developers had a combined debt of €324 billion in the third quarter of 2009, the equivalent of around 30% of Spanish GDP, according to figures from the Bank of Spain. The interest bill alone is around €15 billion a year.
   
More than 50% of the debt was used to buy land for which there is now no market. ‘Whilst those plots of land are not properly valued, the financial system can’t start afresh and won’t be able to finance new homes,’ Gonzalez told the Spanish press.
 
‘The viability of the property sector is in question and it is putting the financial sector in danger,’ he warned.
 
Gonzalez added that something drastic needs to be done. He said that the Government or the Bank of Spain needs to take a lead in tackling the problem instead of ‘looking the other way’.
 
Some experts believe that Spain needs to create a ‘bad bank’ where all the toxic real estate loans can be dumped, freeing the banks from their bad debts and enabling them to start lending again.
   
Gonzalez also warned that the situation has wider implications as the situation with the developers is pushing up the cost of credit for the whole Spanish economy. ‘The developers’ debts affect the credit ratings of the financial institutions, with all the consequences that has for a sector that still hasn’t fully recovered its liquidity. The financial system will have to explain how long it can bear this situation,’ he added.
   
Experts are also warning that Spanish banks may have to deal with a tidal wave of repossessions this year, with big implications for the property market. The auctions banks normally use to dispose of repossessions are struggling to attract buyers, as the credit crunch has hit even the opportunists who traditionally bought at auction.
 
Spain’s General Judicial Council forecasts 180,000 foreclosures this year, up from 114,958 last year. With few buyers at auction, banks will have to take back the properties onto their books at the write-off price of 50% of valuation, which implies recognising a loss. That could have big implications for the banks and the property sector in general.
 
The big question is what impact this new batch of repossession, the equivalent of 15% to 20% of the current inventory of property for sale, will have on the market. These properties could end up dumped on the market at write off values that will send prices down.

Source:  PropertyWire