Advise wanted about group ownership of a Spanish property

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This topic contains 11 replies, has 6 voices, and was last updated by Profile photo of Anonymous Anonymous 10 years, 8 months ago.

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  • #51695
    Profile photo of Anonymous
    Anonymous
    Participant

    Can anyone tell me what are the possible ways for a group of individuals to own a property in Spain? Ideally I would like a UK company to own the property with each individual owning shares in the UK company – is this possible?

    Thanks
    Emma

  • #61595
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi there

    Have done some transactions like this lately. Only issue that always rears it ugly head is the mortgage issue. Are you intending to finance the acquisition? If so then your ownership options would be different to a straight cash purchase.

    Pls post reply and I’ll answer accordingly.

    Kind regards
    Sarah

  • #61596
    Profile photo of Anonymous
    Anonymous
    Participant

    Sarah

    Thanks for your reply. There would be no mortgage involved, the property would be bought outright. When you say you have done a few transactions like this, do you mean in a personal role or in a business role?

  • #61598
    Profile photo of Anonymous
    Anonymous
    Participant

    Sarah

    I’m new to this and just realised I could read your profile, so have been on your website. You mention setting up a Spanish Company on there, but I want a UK company – any basic advice would be much appreciated, or a pointer as to where I can get the advice. The whole point of setting up a company would be to easily facilitate the joint ownership.

    Thanks in anticipation…..

    Emma

  • #61623
    Profile photo of mike
    mike
    Participant

    @EmmaF wrote:

    Sarah

    I’m new to this and just realised I could read your profile, so have been on your website. You mention setting up a Spanish Company on there, but I want a UK company – any basic advice would be much appreciated, or a pointer as to where I can get the advice. The whole point of setting up a company would be to easily facilitate the joint ownership.

    Thanks in anticipation…..

    Emma

    Emma, did you know that the Gordon Brown is now allowing people to put shared property in SIPPS? He changed his mind at the last minute.

    There are restrictions, one of which I believe is that it must be part of a club of at least 10 people. I don’t know your circumstances but it may be something to consider. I’m sure that there will be some UK pensions advisors who could give more information.

  • #61626
    Profile photo of Anonymous
    Anonymous
    Participant

    @mike wrote:

    Emma, did you know that the Gordon Brown is now allowing people to put shared property in SIPPS? He changed his mind at the last minute.

    I thought that was only on business premises, not residential?

  • #61631
    Profile photo of mike
    mike
    Participant

    @hillybilly wrote:

    @mike wrote:
    Emma, did you know that the Gordon Brown is now allowing people to put shared property in SIPPS? He changed his mind at the last minute.

    I thought that was only on business premises, not residential?

    This isn’t the article I read but it details how people can still invest in residential property through a fund, which is the same thing.

    http://business.timesonline.co.uk/article/0,,9560-2092061,00.html.

    The chancellor obviously thinks this will stop the abuse that he expected from the original suggestion of owning a complete property yourself in your SIPP.

  • #61637
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi EmmaF

    Sorry for delay in responding – out with clients.

    For group ownership using a UK Limited company then you would have to revert back to a UK lawyer to structure a private shareholder’s agreement of sorts. However, it is also still perfectly feasible to buy in Spain as a group of owners without using a UK Limited.

    If you are not taking a mortgage then most consortium ownership needs fine-tuning with regard to:
    1) if one or more members want to sell – normally their percentage is offered to the remaining consortium at a mutually agreed price or bank valuation paid for by the member wishing to sell. It is very very difficult to sell a part share of a Spanish property on the open market.

    2) Annual independent revaluation of the consortium purchase is recommended to keep issue 1) under control.

    3) Inheritance tax + potential marital separation issues need clarification. You don’t want the property forced into a sale because one member is getting divorced for example.

    4) Also clarification regarding joint and several liability for maintenance, electricity, community fees, IBI, basura, etc. Often easier to ask for each quarter or 6 month approximate payment upfront.

    5) Just a suggestion, but we find that 4 or 5 consortium members maximum is ideal. If you start with 5 having 20% each and one wants to sell then remaining 4 can pick up 5% each without too much strain and shareholding remains equal at 25%. Also works with 8/10 but is administration nightmare.

    Hope this helps and good luck withyour search.
    Sarah

  • #61648
    Profile photo of mariadecastro
    mariadecastro
    Participant

    For the constitution of the UK company in order to own a property here in Spain: 2 pieces of advice of International Law:

    1.- The UK company´s documents ( deeds and registration) must be internationally legalized or authentified by Apostille.

    2.- The corporate purposes must be broader than just owing a property in Spain, because you may find difficulties when registering the property in the Land Registry here in Spain.

    Best regards,

    Maria de Castro

  • #61661
    Profile photo of Anonymous
    Anonymous
    Participant

    Thank you all so much for your help, I have only just found this website and find the shared knowledge a breath of fresh air after the total blank wall from our Spanish solicitor dealing with the purchase, the agent that sold it to us and anyone else involved so far in fact!! Like many, we never planned to keep our apartment but find we can’t sell it either. Luckily as we already have several holiday homes that we rent out in North Devon, the concept of doing the same in Spain is not too big a deal, just awkard with two young children in tow as well!

    Regards
    Emma

  • #61669
    Profile photo of Anonymous
    Anonymous
    Participant

    I stand to be corrected but the Finance Act containing the provision is yet to be passed. HMCR guidance does suggest investment in residential property can be included in a SIPP so long as it is via a “genuinely diverse commercial vehicle” or an “indirect investment”.

    Until the legislation is published what this means is uncertain but it is generally reported it will mean they will have to be the new Real Estate Investment Trusts or Unit Trusts and the like.

    Best

    Loco

    @hillybilly wrote:

    @mike wrote:
    Emma, did you know that the Gordon Brown is now allowing people to put shared property in SIPPS? He changed his mind at the last minute.

    I thought that was only on business premises, not residential?

  • #61672
    Profile photo of Anonymous
    Anonymous
    Participant

    One way is to use a UK Company but this is rarely the best option. For example as a non resident a UK Company will be liable for CGT at a rate of 35%.

    Better alternatives are

    1. Using a UK Company and registering an official branch in Spain as it will then be treated as fiscally resident
    2. Using a Spanish S.L. company
    3. Using a Spanish S.L. company with the shares owned by a UK company
    4. Using a Spanish S.L. company with the shares owned by an Offshore company not blacklisted.

    The best option will depend on the circumstances of the beneficial owners but in all cases it is important the SL or Branch “trades” and is not solely used to hold the property.

    It is worth noting that since a House of Lords ruling UK taxpayers owning property abroad via a Company run a real risk that HMCR will treat them as receiving a “benefit in kind” and thus tax will be due on the notional rental value even if the property actually lies empty. At 7% a house valued at 300,000 would result in a tax bill for higher-rate taxpayers of 8,400 a year and for lower-rate taxpayers 5,250 a year. YIKES!

    Best

    Loco

    @EmmaF wrote:

    Can anyone tell me what are the possible ways for a group of individuals to own a property in Spain? Ideally I would like a UK company to own the property with each individual owning shares in the UK company – is this possible?

    Thanks
    Emma

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