Property Buying in Ibiza [Article 1]

Excellent, weighing up the pros and cons of an extension OR buying another property somewhere... look forward to part 2 :-)
 
Having spoken to a number of expats in Ibiza. They seem to think it better to rent rather than buy. Becuase if something goes wrong because of spainsh law; corruption etc. you can walk away.
 
Thats what we,re planning on doing, and renting out our house in Britain, incase things go wrong once we move there,
although the advice is valuable incase we decide to sell up and buy somewhere ,once we,ve been there a few years
 
heatherp6 said:
Thats what we,re planning on doing, and renting out our house in Britain, incase things go wrong once we move there,
although the advice is valuable incase we decide to sell up and buy somewhere ,once we,ve been there a few years
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if you move out there i think you need to bite the bullet this time and get a car! haha :)
 
zaax said:
Having spoken to a number of expats in Ibiza. They seem to think it better to rent rather than buy. Becuase if something goes wrong because of spainsh law; corruption etc. you can walk away.
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If one took that attitude then you would never invest in anything, never mind putting your money in a bank?

Idea - put it under the mattress. (but what if my house burns down?)
 
MiniMarc said:
if you move out there i think you need to bite the bullet this time and get a car! haha :)
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when we go over there,we,ll be taking our car we,ll be taking our pets with us, and our own personal things, so we,ll have no choice but to take our car :D:D:D
 
haha , i said it because you do a fair amount of exploring by all accounts but only ever by bus when your on holiday!
 
heatherp6 said:
when we go over there,we,ll be taking our car we,ll be taking our pets with us, and our own personal things, so we,ll have no choice but to take our car :D:D:D
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You might be better off selling it and buying one in Spain with the steering wheel on the 'other side' ;) ... just get a NIE number first !

deepseadiver said:
If one took that attitude then you would never invest in anything, never mind putting your money in a bank?

Idea - put it under the mattress. (but what if my house burns down?)
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Very much get where you're coming from ... but beware - the Land Registry system and registration of rights is a minefield, as is the legal side of searches etc. The tax you pay (stamp duty equivalent) if I remember right is far higher than in UK so you have to make that back on equity increase before you sell on to break even. Been through a load of grief in and out of Portugal and survived financially (only just !) ... but bear in mind it's not like buying a house or flat over here - far more complex in terms of potential "issues". You have to be very very careful on many fronts especially as a foreigner !

Also bear in mind there's a huge over-supply of properties at the lower end of the price spectrum so the scope for capital growth may not be nearly as much as one might think, especially when you take into account purchasing costs. That translates as you may wait a considerable time to get your initial investment back if you have a mortgage and/or your property sold if you want your money out. Not unknown to count the resale lag in years rather than months ! Also you'll pay Capital Gains Tax on any profit you make on a second home, at the higher of the local Spanish rate or the UK rate (in broad terms).

Obviously long resale lead times and price stagnation problems can hit you in the UK too. Plus all that said, you would have a holiday home to go whenever it's not let without paying hotel bills. This is great provided you want to go when it's not let out (the time when hotels are really expensive (and savings largest) is the same time you'd get the most for renting out your home / Apartment !). Just allow enough out of your income from rents to pay off agents, repairs, uncollected damages etc etc when you cost it all out to avoid ending up bailing out a loan especially if you have shoulder season 'voids' in the letting calendar.. and my own rule of thumb for buying 2nd homes abroad (not advice - just saying !) is put down at least 45-50% as a deposit. Most Continentals I know do this ;)

Can't help thinking sometimes that buying a boat might be considerably more profitable in the end if it got chartered enough ! :lol:
 
kimajy said:
Very much get where you're coming from ... but beware - the Land Registry system and registration of rights is a minefield, as is the legal side of searches etc. The tax you pay (stamp duty equivalent) if I remember right is far higher than in UK so you have to make that back on equity increase before you sell on to break even. Been through a load of grief in and out of Portugal and survived financially (only just !) ... but bear in mind it's not like buying a house or flat over here - far more complex in terms of potential "issues". You have to be very very careful on many fronts especially as a foreigner !

Also bear in mind there's a huge over-supply of properties at the lower end of the price spectrum so the scope for capital growth may not be nearly as much as one might think, especially when you take into account purchasing costs. That translates as you may wait a considerable time to get your initial investment back if you have a mortgage and/or your property sold if you want your money out. Not unknown to count the resale lag in years rather than months ! Also you'll pay Capital Gains Tax on any profit you make on a second home, at the higher of the local Spanish rate or the UK rate (in broad terms).

Obviously long resale lead times and price stagnation problems can hit you in the UK too. Plus all that said, you would have a holiday home to go whenever it's not let without paying hotel bills. This is great provided you want to go when it's not let out (the time when hotels are really expensive (and savings largest) is the same time you'd get the most for renting out your home / Apartment !). Just allow enough out of your income from rents to pay off agents, repairs, uncollected damages etc etc when you cost it all out to avoid ending up bailing out a loan especially if you have shoulder season 'voids' in the letting calendar.. and my own rule of thumb for buying 2nd homes abroad (not advice - just saying !) is put down at least 45-50% as a deposit. Most Continentals I know do this ;)

Can't help thinking sometimes that buying a boat might be considerably more profitable in the end if it got chartered enough ! :lol:
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Cheers man.

Its all something I need to do my homework on really. Its clearly not like owning a few terraced houses (which I dont!) just up the road where I can keep an eye on things:?

50% ???:cry: - better start saving.
 
Can't help thinking sometimes that buying a boat might be considerably more profitable in the end if it got chartered enough !
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the two happiest days in a boat owner's life are the day you buy it and the day you sell it! can't tell you how many times i've heard that here ;)
 
Hi all

I am the author of the original article.

1) Agents will not charge you to view properties, but they may ask for some form of proof of financial standing if you are asking to see expensive/ top end properties. I always advise people to come here and do some research themselves ahead of engaging with an agent - this will help to refine the search - agents will probably not want to spend a couple of days traveling across the island.
2) I don't really understand the comment about corruption. So long as you use a reputable solicitor and ensure that you comply with local law, you will be fine. Many people will tell you that it is possible to reduce your purchase taxes by paying part of the purchase price in cash - this is tax evasion - and as such illegal. Do not consider doing so under any circumstances.
3) N.I.E - Número de Identificación de Extranjeros. A requirement for anyone wishing to buy a property in Spain - the process can be long drawn out and you must have your NIE before you buy, so I advise everyone to get one before they start the process. More on this later.
4) Because of the glut of smaller/ cheaper properties and the relatively high purchase taxes, it is very hard to 'flip' properties for a profit - you should regard a property in Spain as a long term investment/ asset.
5) You may not keep a UK registered car in Spain for more than 6 months. As they are almost worthless here, my advice would be to sell in the UK and buy a Spanish car - long term car rental can be very cheap out of season and can be a temporary solution.

I am going to cover the subject of property search through to completion in my next article but if you want to contact me you can do so through the forum, the spotlight FB page or through my website www.hawkmoorassociates.com phil@hawkmoorassociates.com
 
Thanks for the comments phil! much appreciated.

Many people will tell you that it is possible to reduce your purchase taxes by paying part of the purchase price in cash - this is tax evasion - and as such illegal. Do not consider doing so under any circumstances.
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it also means when you come to sell the house that you need to find someone willing to pay you lots of cash for it as well, otherwise your capital gains tax eats away at your profits. example:

you buy a house for 300,000, of which you pay 100,000 in cash. the purchase price of the house is then officially 200,000. when you later sell the house for 400,000, without finding someone who is prepared to pay you some of it in cash, you are paying capital gains tax on the difference between the official prices you paid and sold at. in the example above, if you don't find anyone to pay you 100,000 in cash, you are going to end up paying 20% tax on it yourself!

apologies if this is oversimplified, i am not an expert :)
 
it gets better. someone from valencia made me a derisory offer on my apartment - about 30% below the asking price in a very 'up' market - and justified it by saying that i should be happy as i would pay less tax.

btw you don't pay any tax at all on a house sale if you are using the cash to buy another bigger house which costs more - not a lot of people know that!

hence i refused the lower offer on my place
 
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