Valencian Government sets up commission to sell more homes to foreigners

The Valencian Government (Generalitat) is setting up a commission to study ways to sell more homes to foreigners.

Earlier this year, the Department of Housing in Madrid organised a European road-show to promote Spanish property to European markets. The initiative was a flop, confirming that the business of selling property is best left to agents and developers.

Now the regional government of the Valencian Community, home to the Costa Blanca and Costa del Azahar, is setting up a commission to study ways to sell homes to foreigners and establish “new sales formulas,” whatever that means.

In recent years, 23pc of homes sold in the region have been bought by foreigners, whilst “the purchase of homes by Spaniards is going down,” explained Isabel Bonig (pictured above), the Valencian minister responsible for housing, quoted in the Spanish press. Hence the Generalitat’s interest in stimulating foreign demand.

The commission will study the market and ways to stimulate foreign demand for both purchase and rent. “We have to find out where the housing stock is and who the potential buyers are,” said Bonig. “30pc of all sales to foreigners take place in the Valencian Region, led by Alicante province, with 85pc.”

The commission, comprised of government officials and representatives from the notaries, registrars, and chamber of commerce, will also look at ways to stimulate demand and promote property with a website, permanent information points and marketing activities.

Some abuses

The priority is to let the world know about the high “technical quality of building” and “legal security” of buying in the Valencian Region, says Bonig, exploiting a European judgement earlier this year that, she argues, gave Valencia’s town planning laws “the thumbs up” in the face of criticism from the European Parliament. She did, however, concede that there have been “some abuses.”

Her comments are bound to sadden critics of Valencia’s so-called “land grab” town-planning laws, who argue that the European judgement only concerned a technicality of public tender laws and did not justify Valencian land laws that allow corrupt developers and town halls to take land from private owners and make them pay for subsequent development.

Tripping over the same brick?

The overarching goal is to stimulate the economy and create jobs in the construction sector by selling and then building more homes. But over-reliance on construction during the boom is one reason why Valencia is in such a big hole today, even by Spanish standards.

In response to the news, the Spanish daily ‘El Pais’ noted that the Valencian Government is the only administration to “trip over the same brick twice”.

Comments

comments

16 thoughts on “Valencian Government sets up commission to sell more homes to foreigners”

  1. Roy Hayes

    Sounds like another “head in the sand” initiative and intends to completely ignore the problems surrounding illegal homes and the land grab laws that the Valencian Government now say are completely acceptable. Anyone like to bet that they WONT be asking any of the Estate Agencies for an opinion?

  2. Chris Thorpe

    I had to check the date – thought it was April 1st!
    What planet do these people live on? It doesn’t need a commission of corrupt individuals whose
    self-interest is their prime motive, to find the answer. Why was the road-show a flop? Because nobody is interested in buying in Spain – it’s as simple as that.
    Do they think that they can change the entrenched view that investors hold of illegal homes being demolished, rogue builders and corrupt officials dominating the industry, overnight? Would they risk buying property in a foreign country that has no set rules and a fair chance that they will loose their money and/or their homes?
    Do they realize that the banks are underpinning still very high property prices because they can’t or won’t sell their (mainly repossessions) houses at a price the buyer will be prepared to pay, which in turn affects the whole property sales industry. The property pricing structure in Spain seems to be a total mess with prices nowhere near the levels that will attract buyers. There needs to be a price adjustment and then a transparent property valuation system put in place that can be relied on.

    The comment
    ‘The priority is to let the world know about the high “technical quality of building” and “legal security” of buying in the Valencian Region’

    Really, it makes these people a laughing stock – ‘technical quality of building’? In any other country, few of these buildings would get past damp course (if of course Spain used them!!!). No building control anywhere else would allow such awful buildings to be constructed, let’s not kid ourselves.

    Modern Methods of Construction allow developers to construct very high quality homes that meet the toughest ecological and sustainable codes and can be built at a much lower cost and in a fraction of the time it takes to build a ‘concrete meat locker’

    And as for ‘legal security’ …………….. ‘nuff said.

    The only way to attract buyers back is:
    Change the laws nationally and let foreigners see that investing in Spain will be a safe option.
    Promise – No more Land Grab
    Establish a transparent valuation system.
    Make lawyers, banks, builders and local authorities take responsibility and provide proper PI and warranty insurances.

    A large investment manager told me last year that he wouldn’t look at Spain as he had a duty of care to his clients and would not put their money in Spanish property as he was an investor and not a gambler.

  3. García

    There are excesive negative comments, instead they
    should come up with good proposals instead of criticism, after all, tose critics, most of them, were benefited by charging high commisions to their
    countrymen in the sales of the past years.

  4. Nick Snelling

    At least it is a move in the right direction, which may lead to a genuine recognition that abuses must be stopped and severe sanctions imposed upon those responsible. Certainly, the Valencian region must be made a place in which it is really safe to buy property in Spain and, unless this becomes the case, then the efforts of the Generalitat will be a waste of time. They must concentrate upon this before attempting to sell the region abroad…

  5. Chris Nation

    As well as the removal of corruption and abuses noted by others, it might loosen things up a bit if they transferred some of the tax take from capital cost [puchases taxes] to income [annual property taxes – ‘rates’, for us grizzled ravers]

    I made a calculation that the purchase tax on a Spanish property would be the equivalent of stamp duty plus rates on my house in UK, over a period of 10 years. So in year 11 and on, the Spanish property would be earning the local authority a fraction of the UK property.

    But I guess the Spanish politicos are as likely to grasp that nettle as the Brits are to go for a sliding scale of tax on ‘profit’ on the sale of a principal residence.

  6. Brian Rowlands

    First they must clear up the old mess!Illegal homes which were first approved at the local level and then delcared illegal
    Bank who did not issue bank guarantees when they took the deposits of buyers-the generic bak guarantees issue has toi be sorted which means banks accepting full liability and repaying deposits with interest-they have after all already made provisions in their accounts for this liability [if they have not then the Spanish banks are in a worse mess than everyone thinks!!]
    Then they can move forward with a clean sheet and sell houses to the British and other northern Europeans who are currently put off by the ‘old mess not being cleaned up’

  7. JOHN McCANN

    I have been waiting to buy in Spain now for 4 years
    but there is no confidence to do so. I think next
    year is going to be even worse for Spain and then
    prices will have to come down, they are still
    inflated by people trying to get there money back
    and its just not going to happen?

    I would rather have 40% of something than 100% of
    nothing?.

  8. carlos

    Spain is the most attractive country in Europe,
    not only for the weather…
    It is in fact by analogy the new California.
    If I were a dutch, danish or swedish I would like to spend my last days in company of the sun.

  9. Brian Fisher

    Valencia needs to put the house in order. Some builders and estate agents need regulating and some need eliminating from the market as they add to the problems. Some of these estate agents and builders are British and they operate in a way that would not be allowed in the UK. In Gandia, Valencia for example we do not have sufficient high quality estate agents who are capable of marketing good quality homes.
    Of course the Valencian government needs to ensure that foreign buyers can purchase a house safely and rely on this purchase to be a safe investment.

    The desire for foreigners to buy in Valencia is still there as are the natural advantages of the region – what is missing is a pragmatic approach to cleaning up the problems and sensible marketing.

    Brian Fisher

  10. john

    Hi
    I have been looking to buy in Spain for a while and this GAMBLE of investing my hundreds of thousands of euro in a property that at some time can be taken away or knocked down. And all because of corruption/back handers/brown envelops does not seem worth the risk.
    I also agree that the property sector seems to have no solid base of rules and laws to protect me the buyer/owner and especially if I am non Spanish

  11. Peter Forbes

    High quality construction??? What are they on about. The quality of Spanish construction is notoriously very poor. No thermal insulation or any other energy efficiency, pathetically low powered electrical supplies – can’t even plaster a wall flat – shoddy construction by largely unskilled labour. The philosophy is do it as cheaply as you can get away with and the lack of regulations means that that is a very minimal specification. It is one of the greatest tragedies of Spanish construction that during the boom years, there was so little environmental or other regulation. The huge pile of unsold properties will in many cases the buildings will deteriorate so much that they become un-sellable and have to be pulled down. The land grab was scandalous – people rightly have no confidence of buying there and what are they doing to restore trust??? Sad.

  12. Craig Jenkins

    Having lived in Spain for over a year, I plan to stay and am enjoying it but there are a few things that just don’t add up and often it’s to do with prices! I agree that house prices are over inflated. Some agents tell me that only investors are buying in Valencia capital at the moment. Investors who are picking up properties available from the few vendors who have adjusted their price expectations accordingly.

    I don’t know to what extent many foreigners interested in a place in the sun know well about the so called land grabbing in Valencia, bank deposit guarantees, illegal planning permissions etc. Obviously the people who comment here but I imagine there are many who aren’t so well informed who are maybe interested in buying. So depending how they market Valencian properties and what the buyers learn, it might have some impact.

    Apart from the obvious end to corrupt land grabbing and making purchases more secure and transparent I would like to see:

    The fee commission charged to buyers by estate agents dropped. Or can someone tell me where the value is in 3%. Similarly when renting a flat – the tenant has to pay 1 month rent to the agent – for what? – for opening the flat for the viewing! The fact that agents often charge both parties I find hard to swallow.

    Availability of recent sold prices.

    Ease of getting an independent valuation report and survey before buying. With info on likely future costs eg updating the plumbing or communal improvements.

    Better marketing, and more info on the properties.

    There seems to be less movement of people in Spain, buying and selling, less urgencies to sell at the price which would attract a buyer. Many cultural factors.

    The banks perhaps can’t liquidate losses at the moment by selling off stock at attractive prices so are trying many strategies to sell off stock at still over inflated prices.

    Perhaps some of the experts here in this forum, through experience or otherwise should offer their services to the commission. Perhaps a team should be offered.

    I don’t know if there is anything similar to ARLA, NAEA, or Ombudsman Scheme for estate agents but perhaps a voluntary association membership scheme could be set up whereby the good agents can sign up by passing set criteria. Then with good marketing to foreign buyers, they can be directed to the best agents.

    Craig

  13. Vernon White

    It would be of great help if any of the various autonomous Goverments actually reduced the onerous Stamp Duty that is way over the top !
    More resales would almost increase as would new builds , but to ask for another 16000 Euros on top of a sale price of 160,000 is plan robbery , what does the Govt do with the money anyway , how about sorting out the mess of very old houses with no Habitation Licence , never had one so cant sell or buy such a place unless it has one, for Gods Sake Spain, get your bloody act together , its not as if you havent had lomg enough to examine the problems your greed has created , if you are serious about saving your country then respect the people who entrust their savings in Spain by having homes there instead of ripping them all off , Spanish as well as foreign home owners !Sort out the so called Agents` too, most of which could not sell a house anywhere other than Spain , the UK Agents who set up in Spain do not have any experience other than ripping off fellow Brits , its all a sick joke and no one does anything about it !!

  14. John

    Spain really does not appreciate that you have to respect your buyers or they will turn their back on you. As a nation Spain has lost respect internationally, especially in Valencia with its Land Grabbing exposer getting so much media attention. Change your laws, show respect and you may win international buyers back!

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com.