- This topic has 47 replies, 13 voices, and was last updated 12 years, 8 months ago by
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Serious question to anyone who may have the answers? ❓
It’s well documented that Spain’s property industry has been fraught for many years with:
non regulation, black money, illegal builds, crooked estate agents/developers/lawyers/mayors/town halls, poor build qualities, destruction of landscapes, overbuild, ruined views, phoenix companies, non payment of taxes by agents and developers, high completion and selling costs, land grab, bullying, furniture package scams, time share scams, ridiculous lengthy redress in Courts, and a host of other problems.
Spain has known what’s been going on for years, thanks to websites like this, mass demonstrations in towns, Press reports, TV programmes, intervention by lawyers, other country’s Ministers/MPs and European Court etc
They know they have a massive oversupply of new builds to get rid of plus a huge number of resales before any sense of normality can return to their market.
You’d think all honest estate agents, developers, lawyers, politicians, property websites could bang very large drums and force them to listen if they stuck together.
The question is: Why aren’t they listening and acting, what is stopping them? They’ve all but killed off their sales to the Spanish ‘place in the sun’ dream , yet they do nothing about it. You would think it would be in their financial interests ❗
Someone with half a brain could do it if they let them, so why don’t they appoint someone asap, and get on with it? 🙄
That’s it, easy wasn’t it, rant over, but in Spain’s interest 😉
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I understand what you say shakeel, but we are talking about a vast sum of money not going into their economy, which they are fully aware of without others telling them. To many of us, it is common sense, I think the right persons could help transform a lot of their property problems at a small price comparatively well worth paying.
Is it just Government apathy, ostrich heads in the sand, embarassment etc is it just too big a problem, or are there those within Government and Corporate Spain that are still making too much money with the situation as it stands and therefore don’t want things to change?
Seems loco to me ❗
Mark, what would your views on this be please ❓
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Angie, stubborness & pragmatism are incompatable, when we talk about Spaniards. I can give you another example. Before the attack on Atocha the PP were going to win the election ( according to the polls )as they had a very good period under Aznar or should I say Charlie Chaplin.
As 95% of Spaniards were against the Iraq war. The than PP government decided to blame ETA, while knowing very well the real reason i.e. Aznar taking Spain to War & joining Bush. The voter punished them and the rest is history as they say. Where was the common sense in that ???.
Common sense, pragmatism, building a future, and not living for today is a attribute that is akin to Northern Europe.
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Shakeel it wasn’t just that the PP blamed ETA that caused the 2004 election rurn around, it was that they prevented the Spanish press from publishing reports about evidence linking the attacks to Al Qaeda. These reports were appearing in the foreign press, but nothing in the Spanish press so people drew the conclusion that there was a cover up taking place. If the reports hadn’t appeared in the foreign press until a day later the PP would have won that election. The fact that Rajoy did not resign after that shows how unaccountable politicians are in Spain.
As for the topic of the thread, I’d say the problem was largely due to property/construction being the main form of income for many of the Spanish autonomas, and that those autonomas are largely unaccountable to the central government. It doesn’t realy matter what the Spanish central government says and what laws they make, if they are unable to enforce them locally. It is a fundamental problem for Spain – the central government doesn’t want to interfere too much with the autonomas in general because it might lead to more nationalism in some of them.
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Historically the Spanish are fairly useless at government. Then they had forty years of repression under Franco. The country then became regulation averse, seeing controls and close supervision as a threat to commerce and liberty.
It will take many generations before they truly understand where the balance lies between effective regulation and the emancipation of markets.Investing in Spanish property has always been a risky business. For example the country only created a land registry when they entered the EU. The definitions between urban and rural land were always blurred and title amounted to whoever lived in the property.
Since Franco a property development gold rush started in Spain that has only just come to an end. It was easy to build anywhere with cheap land and materials. That kind of bonanza attracts all kinds of human being on the make.
Politicians as well as entrepreneurs suddenly realised they could become very rich. Why would they want to end it by passing laws, controls and mounting close supervision?I do think now it’s all over things will slowly change, simply because confidence in the market has been shot to bits. Once confidence has gone, it takes a long time for anything to recover.
I agree also with Chopera in that Spain’s autonomous regions is a system of government which creates this very problem. Lack of regulation because central government will not intervene and create a possible constitutional crisis.
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Logan, there are two serious mistakes in what you say and a complete success :
First: The origin of Spanish Property Registry. 1768 XVIII century. It has a mortage purpose. Before this date, there was other institutions/registries but we can not considered them. (for example a tax registry at 1539). The Property Registry as we know now it today, dates from 19th century. You can get a “nota simple” of an old propery and you can read the completly history of it (owners, mortages, burdens over it, dates….) and of course, if you are a good faith purchaser and use this dates, your rights over the property are safe
Second: The definitions between urban and rural land are always tidy and neat as you can see at the planes of the General Plans of any city.With few exceptions, the laws and plans allows you to build only on urban land. You can develop rural land to urban land, but for do it, you need to follow a process regulated that usually take a long time. Laws and regulations governing the subject along with plans and occasionally municipal/territorial plans.
In this regard, the Spanish land law of 1959 (which was considered at the time as an example to other laws in other European countries) regulate these aspects and of course, laws have been replaced it.
The problem, then and now, is that sometimes, those responsible for monitoring the fulfillment of the land laws and procedures to ensure no build where you can not, are the first in default. (Eg municipalities in order to obtain more revenue through taxes on the building, turn a blind eye)You’re absolutely right, when you say that Spain’s autonomous regions is a system of government which creates this very problem.
It´s true but central goverment can not do anything sice 1997, year in which a Constitucional Court ruling said that most of the responsabilities about land laws and control were unique to autonomous regions and central state only could legislate and control about a few general aspects -
@FIRME wrote:
Logan, there are two serious mistakes in what you say and a complete success :
First: The origin of Spanish Property Registry. 1768 XVIII century. It has a mortage purpose. Before this date, there was other institutions/registries but we can not considered them. (for example a tax registry at 1539). The Property Registry as we know now it today, dates from 19th century. You can get a “nota simple” of an old propery and you can read the completly history of it (owners, mortages, burdens over it, dates….) and of course, if you are a good faith purchaser and use this dates, your rights over the property are safe
Second: The definitions between urban and rural land are always tidy and neat as you can see at the planes of the General Plans of any city.I agree with the basis of your post FIRME but an effective national land registry did not exist in the regional parts of Spain until Franco tried to establish it with limited success and later when it was a requirement for EU membership.
I know this from my own experience in Andalucia where I have bought land with nothing more than ancient hand written
letters from one previous owner to another as proof of ownership. There are many desirable properties littered all over Spain that cannot be bought or sold because of title concerns.
In Spain just because an institution existed in name does not means it was effective or even fit for purpose. -
I´m radically opposed to your last assertion (i can be wrong) and I try to explain why.
Spain have two different registries for real state, one called Catastro for taxes and other Property Register for safe on real states sales, mortages, etc.I think you are referring to Catastro when you say ” an efective land registry did not exists…” but Catastro is only for tax purpouses not for property safe. Yes, it contains property data, surfaces, etc. but the purpose of this information is for apply to tax and therefore is not evidence of whether or not is the owner and this information don´t give you security for buy. Notwithstanding the foregoing, any information you can provide about the E Un requirements or where I can find that information, will be welcome and I will look
Catastro is a Goverment registry and now depends on the Ministry of Finance. In this registry are all Spanish real estate but repeat, you cannot use the information for safe bussines.
Property Registry is intended to provide security in real estate transactions. The inscription of properties in this registry is voluntary, there is no obligation to do so. It have advantages for both, buyer and seller (as i said in the previous post, if you are a good faith purchaser and use the registry information and after you buy, you register yourself on it as owner, your rights are safe.)
If you need a mortage on the property in order to buy it, first document that the bank will ask to you is a land report of this registry and after it, if banks gives you a mortage, this mortage will appear in the inscription of your property so, anyone interested in purchasing the property know it.
For these reason (safe and that i will need a mortage to be real state owner :-), I will never buy a property that is not registered. If the property is not registered, in my case, the seller should do it or not sale.
The registry has the mechanism for including in it real estates never registering as your case, but it´s more comfortable, cheap and it takes to much time and troubles don´t do it. I´m sure that the great majority sales of real state between Spanish are always after ask at the registry.
The system in each country is diferent so rules are also different s( I think no better or worst, just different). so everyone who wants to buy in another country, must properly advice.
Some countries have only one registry (All properties registered on it for taxes and true information about mortages, owners, etc. for security), others have two registries in coordination and there are countries like Spain who has two diferent and separate (but there are actions to achieve greater coordination between “Catastro y Propiedad”)
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FIRME.
I totally accept what you say. I in my post was referring to the system in the years after Franco and before Spain entered the EU. I know it’s some time ago but I suggest the culture which used to exist in the buying and selling of property in Spain has contributed negatively to some of the problems Angie is currently campaigning against.
Angie is looking for explanations why the Spanish government will not reform the market or respond positively to so many justified complaints. -
Thanks for the interesting posts FIRME.
I personally have no reason to doubt the integrity of the Spanish land registry system, however I believe it would really help the Spanish property market if they published the data online so people could see what prices have been paid for properties. This would help both buyers and sellers understand the level of the market so they can make a transaction at a price that both parties consider to be fair.
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You’re right Logan, I asked a simple question as to ‘why don’t Spain’s Gov’t clean their act up with property’ and whilst I understand Firme’s reply it’s rather longwinded and not succinct.
I would have expected Mark to at least offer some of his thoughts on this since he’s been asked to, and he runs a website which deals with Spanish Property matters to help people, but not even a response, also, Mark did say in a previous post that he would give his predictions for the Eurozone this year when he was over his cold ❗ It will soon be February no wonder things take so long in Spain, even the so called experts can’t get round to helping the Spanish market 😆
Websites like this and honest agents might actually start to influence successive apathetic and dodgy Spanish Gov’ts, so where are the agents’ views on this question in layman’s language ?:roll:
Quite frankly this total apathy and lack of oomf is one of the main reasons why Brits should not buy in Spain, cos you’re on your own Brits if you do make a mistake, you’ll get no help until those with influence get stuck in 😡
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I focused on responding to Logan and forgot the main theme, sorry.
Angie, i´ll try to give my point of view:The problem has many faces (commercial, legal, quality, corruption, etc. ..) and very different actors (government of Spain, regional governments, developers, owners, municipalities, etc) but can be summarized in one word, security.
Respect your question (Why don´t act Spanish Government) as i said, since 1997, Central Goverment only could legislate and control about a few general aspects, so by this way has importantant limitations. As the autonomous communities control has been ineffective (not been able or unwilling to act on numerous occasions) and the only interest of many councils was money for building taxes, I think that the only possible action involves a change of the current control system about urbanistic aspects but this affect to urbanistic responsabilities that each of the three adminstrations and nobody want to lost their actual power.But i think that Spanish Goverment can perform another type of action to provide security in the Spanish property purchase by foreigners, of course, not only publicity as the regrettable tour of the previous minister. Must fight against the image of Spain as a country unsafe for purchase by practical mesures
Using the information offices of cosulates and Spanish embassies, where not only be informed of the steps to follow to safely buy real estate but also, for example, a list of builders, lawyers, architects, agents , etc. of proven professional ability or establish a procedure by which the foreign buyer may request through these offices a report on the property you intend to purchase or ….Also Goverment must act in order to to expedite proceedings in the courts. Although they act when evil is done, a quick justice gives an image of security, slow justice impunity. Any action in this direction is slow and if it ever have any effect, it will not be felt immediately ( Diferent´s Goverments has spent years trying and still no government has done it).
But I´m saying what Government must do, not Why don´t do.
I don´t think it´s apathy, is rather that after many years where everything was possible, this situation has created a “knot” to be opened by pulling from many places, cutting other …. and will cost too much to start to unravel. We be seen whether the new governancy know and where you should throw hits
For now, it seems it will work on real estate assets from banks, but that perhaps is another issue ….
Sorry Angie, as you said, I think that again my reply it’s rather longwinded and not succinct. 🙂 but your question have not only an answer and unfortunately I am not part of the government to give it to you.
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In the short term I think the only way to go to end this slump is for the Spanish government to introduce a cast iron guarantee. The Government should underwrite to re-emburse anyone who has used a Lawyer and still finds themselves with an illegal property. The only way to restore confidence in the market for foreigners.
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Firme, I think you are saying what I and many others also say, that the Gov’t must introduce legislation and assurances/regulation, as well as a decent P.R. exercise which is what we’ve been asking for years, along with a speedier legal system. 🙂
katy is right also by suggesting Spain introduce a cast iron guarantee to protect buyers against fraud I think, should things like illegal build etc crop up later although I can’t imagine Spain would risk it katy on cost reasons, it would probably bankrupt them if it was called upon 😉
What I still don’t understand is why their central Gov’t don’t over-rule the regional Gov’ts and impose new changes and quickly, (can’t central Gov’t say sod it we’re changing the old ways, it’s a new law now because we’re going broke if we don’t do something) why they take so long beats me! I think I’d like to put myself forward and beat a few of their heads and work with them whilst pointing out what went wrong and how they could address the issues. 😛
Finally, why the seemingly reticence on here to put their views from the experts like Mark and the estate agents and maybe lawyers, don’t they think this is important for their future businesses, do they want to see the market regulated and safer for buyers, are they still pondering the simple question because the answers may not be simple, or is there anything we don’t know but should know, something that’s being hidden maybe? Not one of the experts has proffered any view YET!:roll:
Surely there’s no conspiracy nor a gagging order on them 😆
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Sorry, I’ve been on a business trip around Mallorca and Ibiza and only just got back. There are some exciting things happening there, so it’s not all bad news.
As to your question, there is no easy answer. There are many intertwined, complex problems. There is no magic bullet.
Many of the problems were the result of an insane, credit-fuelled boom. Things got out of control, and yes, greed was a big part of it, but it ain’t going to happen again, least not in our lifetimes. It wasn’t just the Spanish who were greedy.
Many horror stories have been blamed on Spanish developers. Sure there were some high-profile dodgy Spanish developers, just like there were in many other countries. But I suspect most of this class of problems were brought about by British, Irish and other foreign estate agents who used hard sell and exaggerated claims to sell to people who should have known better. The agents cleaned up and made off with their commissions, leaving the developer and clients to blame each other. I’ve spoken to lots of Spanish developers who were trying to do their best but were overwhelmed by the boom and then the bust. They might have been naïve and didnt’ know how to manage estate agents properly, but they never set out to screw their clients.
I know of one case where a British agent sold several hundred units off-plan to British buyers, took millions of Euros in commission, and then left the developer to pick up the pieces when boom turned to bust. All the buyers pulled out, none of the sales went through to completion, and the developer returned all the deposits plus interest, ending up more than 10 million Euros out of pocket. The Spanish developer acted with great decency.
Corruption? It was a big problem, but it is being dealt with. High-profile big cheeses like the former Presidents of Valencia and The Balearics are now in the dock, not to mention the King’s son-in-law. I have never had to pay a bribe in Spain in my life.
Slow justice? The justice system is not a vote winner so it doesn’t get the resources it needs. But in my experience it is not corrupt and it gets there in the end.
Land-grab laws? Madird has little or no control over these, thanks to Spain’s autonomous system of government. The Valencian government has failed to see how damaging these laws are to its own interests. I am working on this problem.
These are just some of the problems that need to deal with. But don’t assume that the Spanish are stupid and don’t get it. Of course they do. There are many voices on the industry calling for change, and this year I believe they will start to get organised.
I’m optimistic about the long-term.
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In France and probably Spain as well little positive change takes place because of vested interest groups who have enormous political influence. Trade unions, trade bodies, societies etc. Every profession has a society which monitors and regulates the members and the profession. You cannot join any profession in France without qualify for membership of that particular grouping. Even self employed artisans have them and very powerful they are.
When governments see a need to legislate for change these vested interest groups always come out of the woodwork and try to prevent change which is not in their particular interests. It may be in the interests of the country as a whole but with political power they can succeed to block it.
With this particular subject think for a moment about all the interest groups in Spain who have a finger and interest in the pie of property. The list is long. They have political influence for a variety of reasons over both national, regional and local government. Particularly I would suggest with the PP.
For a government to change anything there has to be an overriding and identifiable need for the population as a whole where the people then have power over the interest groups.
I’m afraid to say that in this case that simply does not apply. The Spanish population and probably government have in their view more pressing issues to deal with that directly affects them. I don’t say that’s right for a moment and probably more foreigners having the confidence to buy property would but the reality is that principal will not carry much weight balanced by the financial consequences of tighter regulation and controls.
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Angie, there are constitutional limitations on what the central government can do in this regards. I don’t see the different regions, Basque, Catalan, Valencian, returning power to the central gov…
The problem in areas like Andalucia, is not bad laws (like the land grab, etc…) but lack of enforcement. Although this is improving alot, the perception is still that you have to be cautious when buying a property.
The only thing I can think of that the central government can do is tighten the purse strings. the Central government could see about more funds going towards the courts and the relevant enforcement agencies.
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” All the buyers pulled out, none of the sales went through to completion, and the developer returned all the deposits plus interest, ending up more than 10 million Euros out of pocket. The Spanish developer acted with great decency “
Mark you must have smoked something in Mallorca that you should not have. If this developer was so decent, why dont you name him or his companies.
” The Valencian government has failed to see how damaging these laws are to its own interests. I am working on this problem “.
I have spoken many Spanish friends including Valencianos or other. They stock reply is that there is no problem & also Spanish people are affected. They seem to justify it by stating that as everyone is affected & not only non Spaniards. They seam to not realise that it is wrong Spanish or not .
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I may be wrong and I didn’t work in Spain during the boom years but have the agents ever handled the deposits when it comes to newly builds? When I worked there we always met up at the developer to sign all the contracts, transfering the deposit etc.
You can blame the agents for many things but if the developer actually handled the deposits thats hardly something you can blame the agents for. In my opinion most of the problems with agents stemmed from them knowing nothing and the buyers trusting them so the buyers ended up with properties with a lot of problems with them that should have been cleared before the transaction. Looking for backed up community fees, taxes, building permits etc.
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Useful information here with useful further links on the ‘land grab laws’. A serious case of the law of unintended consequence.
http://www.spanish-inland-properties.com/index.php?call=gencontent&c=139&s=60&p=57(Q.) Why don’t the Valencia government repeal the law? (A.) Spanish politicians don’t admit their mistakes and interest groups with links in the government would prevent it.
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@shakeel wrote:
” All the buyers pulled out, none of the sales went through to completion, and the developer returned all the deposits plus interest, ending up more than 10 million Euros out of pocket. The Spanish developer acted with great decency “
Mark you must have smoked something in Mallorca that you should not have. If this developer was so decent, why dont you name him or his companies.
Yes Shakeel, I am inclined to agree 😆 Maybe there is 1 developer out of the bush of thorns but it wasn’t the case at all. If Agents were guilty of anything it was having to much faith in the developers and not checking their brochure statements. Many Developers took the cash and didn’t even have planning permission. There are many examples on this forum. Aifos etc. There are thousand of buyers still trying to get their money back.
A for the land grab, it is not confined to Valencia. Anyone remember Estepona Golf when villa residents found a charge had been put on their properties by Developers to put in roads etc.
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“Maybe there is 1 developer out of the bush of thorns but it wasn’t the case at all “
Indeed and as such he/she should be named and given due credit. I dont beleieve he/she exist. It must be the red stuff being offered to Mark on his business trip We all know how a business trip works apart from the food & wine, hunting in the mountains of Cordoba !!!!
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Katie
Without getting into the moral responsibility whose currency is trust, real responsibility in the event that you say and therefore, compensation for damages to third persons in good faith are to:
If construction has a license and it is illegal, being issued for example, on a green area in the General Plan, the administration which granted the license, city council.
If construction has a license in accordance with the general plan. This plan is approved with the approval of the autonomous region and later checked in that area is part of a protected area (a natural park for example), depending on who committed the error, city council or autonomous region.
If construction is not licensed, the developer, builder and technical director of the works.
And the courts finally determine that responsibility and payments (slowness of justice), who must pay.The monitoring is for towns, if they do not act, the autonomous communities. Who, how, responsibilities, control, y, etc … is regulated in Spain. Not go into details then I extend too much, but legislation in this area is old and rich and it was applied with more or less success. The problem here has been one that already I signed up, that those who are requiered to monitor compliance with the law were the ones who failed.
Currently, the regions are as small states. Over time, the central state has been losing powers that have been caught by autonomous communities, losing control of the powers transferred.
The Spanish central government, autonomous regions, municipalities does not work and should be changed (and not just for this). The change can not carry out the government only. It’s about changing aspects of the Spanish constitution and should be done with a great deal.
It really is more complex and with more nuances.Regarding the market, as with any product, the buyer has the responsibility to find out what he wants to buy, Authorities a duty to ensure that the information provided by the seller is true and allow the buyer access to management information available on the product.
One of the obstacles to the foreign buyer and will likely not aware of it, is that in different countries, different rules. In the Spanish case, whose right has its origins in Roman law, probably the biggest differences for the foreign buyers are to Anglo-Saxon countries whose laws have a differente origin.Correct me if I’m wrong (I’m here to learn, understand and try to improve my English ) I think in many cases, the buyer tries to apply in their buying the same habits and customs that he usually apply in his country. I think that this is like if you intend to play a basketball match with football rules. (not a good comparison, but I hope you get the idea). And this extends to when seeking advice.
Angie, I say this because when you complain that no expert puts his opinion, you talk only of lawyers or real estate agents.
In general, pages like this, refer always to this professions but rarely to architects, and when it does, it focuses on the design and control of work. I think that it’s because the functions and preparation of the architects are different in Spain compared to other countries and therefore its role is not known, that this is much much larger (yes, I am an architect)
In Spain architects not only design . In general, we are who headed the teams which make overall plans for urban municipalities, general plans, (in these teams also are lawyers, economists, engineers, etc …), partial plans, detail studies, etc…. who head most of the licenses council departaments. We design and calculate urban development projects ( some engineers can do too) and all types of buildings. We act as expert witnesses in court in lawsuits over property …. That is, act as experts in all aspects, including legal that have to do with the building. Other technicians as well, but the architect in Spain is the only profesion competent in all aspects that have to do with building and urban planning
A long training at the university (six courses of one year plus a final project) and large (construction, calculation of installations and structures, law, art history and architecture, urbanistic and of course, a lot of design)I think that this lack of knowledge is due to what i have been said t “different countries, different rules,” but I would like to confirm or disprove me, although not the subject of your question so, thanks and again sorry, This text is too long
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My problem with the large developers is that they often ran a price fixing cartel. In Madrid you’d see lots of similar new developments next to each other with very similarly priced flats. Which is fine except when very few flats are selling. Then you’d expect the laws of the free market to kick in and developers to try to undercut one another by reducing prices. However when I suggested this to one of the developer reps in one of these developments he described how they all regularly sit down together and agree between themselves any concerted price cuts in advance, to avoid anybody being undercut. I’m sure the banks had a hand in this as well – especially if one bank had financed several developments next to each other. But it prevented any sales from being made – there was no scope for negotiation.
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Chopera.
In Spain that is a regular business tactic and strictly speaking now illegal under the EU rules of fee market competition.
I can remember when I was in business being invited to many lunches in private rooms of local restaurants which would last all day. The local developers, material and service suppliers and lawyers, local politicos who were chummy with each other would sit round a table and fix their prices for the coming year.
It was just how things were done years ago in almost all aspect of commercial and business life in Spain. That culture, I have no doubt still exists today. -
It does seem to be the way in Spain Logan 😉
With Golf for example it seems you can pay 65 euros a round here or 65 euros a round next door, plus shared buggy of 15-20 euros, maybe 70 euros a round, or if you really try and seek out inland maybe 45-50 euros plus buggy. Daylight robbery! 😡
In UK I pay £12 for 18 holes on a very good links course, or £14.95 for 18 holes on an inland course that includes a drink afterwards or soup and a roll. Or, £450 per annum for 5 day membership, no contest really, most clubs are prepared to do deals too if you ask.
More competition in UK.Spanish property has been similarly price fixed for years with new development, and now the greedy buggers are stuffed with their unfinished construction skeletons all over the Costas. Who’d want them now, even the unsold completed ones are outdated, and if you were buying in Spain you’d want an up to date property.
Personally, I wouldn’t buy on an older development even if it was 70% below original asking price, and never on a massive urbanisation, so what will Spain end up having to do to these sites? Ghettos of the future 🙄
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@mark wrote:
… it’s not all bad news.
Far from it, look at the negative graph you posted on another thread, that summed it all up, doesn’t get any lower since records began, so that shows really… the only way is up now!
@mark wrote:
As to your question, there is no easy answer. There are many intertwined, complex problems. There is no magic bullet.
True, and lot of people are working very hard to put things right.
@mark wrote:
Many of the problems were the result of an insane, credit-fuelled boom. Things got out of control, and yes, greed was a big part of it, but it ain’t going to happen again, least not in our lifetimes. It wasn’t just the Spanish who were greedy.
Oh amen to that, t’was greed on a monumental scale, all started by the chaps in the banks no? And at the very, very top of them and who sees them being arrested or charged for their CDS dealings et al?
How was it that the Chief Executives of Goldman Sachs, Morgan Stanley et al paid themselves BILLIONS in bonuses? That today Chief Executive pay is some x 200 the average working man when it once was acceptable at x 6?
Who had the most greed and scammed the most then?
@mark wrote:
But I suspect most of this class of problems were brought about by British, Irish and other foreign estate agents who used hard sell and exaggerated claims to sell to people who should have known better.
Hard to hear, but very true.
@mark wrote:
I’ve spoken to lots of Spanish developers who were trying to do their best but were overwhelmed by the boom and then the bust. They might have been naïve and didnt’ know how to manage estate agents properly, but they never set out to screw their clients.
No they didn’t, many were good businesses washed away in an economic tsunami, started again by our friends in… the banks, mainly over in America I think you will find.
@mark wrote:
The Spanish developer acted with great decency.
Despite Shakeels doubts, I know of many others who have acted likewise, with little to no thanks or recognition.
@mark wrote:
Corruption? I have never had to pay a bribe in Spain in my life.
I have agreed with that before now and do so again.
@mark wrote:
Slow justice? The justice system is not a vote winner so it doesn’t get the resources it needs. But in my experience it is not corrupt and it gets there in the end.
True also
@mark wrote:
But don’t assume that the Spanish are stupid and don’t get it. Of course they do.
They all get it, and the place will ultimately be the far better for it, it already is, every day and as to the future…
@mark wrote:
I’m optimistic about the long-term.
Me too, very optimistic!
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Absolutely wrong. The banks didn’t cause Spain’s property woes. Spain did it all themself. The cracks had appeared long before the credit crunch. Wasn’t it hard sell that the Developers did with their glossy brochures advertising “luxury” apartments with golf courses/pools/gyms that never got built. Their websites showing mock-up gardens etc. Thousands of apartments advertised of having everything for a lifestyle except planning permission. Some Developers hadn’t even purchased the land when they were taking deposits. Don’t try to re-invent history….it’s all on this forum from about 2004, many of the illegal developments date back to then……Remind me when the credit crunch started
Never set out to screw their clients 😆 Come on even if they had delivered what they promised they were still screwing them with shoddy built and overpriced crap which has blighted all the coast(s). New year same bullshit from people who should know better!
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I have to say Chris that the greed and corruption wasn’t all down to the Banks too as katy points out. The developers and so called promoters were working hand in glove with many agents at the time, a feeding frenzy ensued and naive purchasers were hooked well and truly with the promise of quick returns and flipping!
For sure a lot of it was also down to the likes of Ol MacD and his cronies at Ocean (now defunct) and many copycats I could name, along with their in-house lawyers, surely you would agree with that Chris, BTW I’m not including Viva in that and I do realise that they/you’ve withstood the flak and passage of time to still be there and seem to be far more transparent in your dealings. I like to think that Fuengi is another good guy too, but there are still not enough of the good guys.
It really p—-s me off when I read that Ol MacD and his defunct firm still owe 9 million in unpaid taxes and Spain does nothing despite he and his wife and cronies still living in Spain or have property there 😡
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Remind me when the credit crunch started
I don’t believe that Mark was referring to a credit crunch as being a problem. It was cheap and easy credit, credit that banks would have never given it they had followed their own rules regarding the credit-worthiness of the borrower, including their ability to repay, that is ONE FACTOR in this mess. Cheap money allowed the prices to increase. No cheap money, no unsustainable increases in the price of real estate.
As for the illegal developments, the very first hint of this in the press should have resulted in action by Spain AND ALSO by those seeking to purchase. I’ve seen many insulting references here about how “lazy” Spaniards are. After the first news of illegal developments, anyone who proceeded to purchase without doing their due diligence was also lazy. Expecting that everything is going to be as it is in the UK is lunacy.
Due to my cynicism about human nature, I never would have bought into a development before it was finished. And I never would have bought without consulting a bevy of experts. That doesn’t completely eliminate my risk, but I can’t help but to think that SOME people could have avoided these problems.
Maybe this is the difference between me (or Americans) and you all in Europe. I expect that anyone trying to sell me something is a criminal. This is my starting point for negotiations.
Back to the issue, I agree with Mark: There are many causes of this mess.
Sadly, there aren’t many solutions.
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@GarySFBCN wrote:
Remind me when the credit crunch started
I don’t believe that Mark was referring to a credit crunch as being a problem. It was cheap and easy credit, credit that banks would have never given it they had followed their own rules regarding the credit-worthiness of the borrower, including their ability to repay, that is ONE FACTOR in this mess. Cheap money allowed the prices to increase. No cheap money, no unsustainable increases in the price of real estate.
As for the illegal developments, the very first hint of this in the press should have resulted in action by Spain AND ALSO by those seeking to purchase. I’ve seen many insulting references here about how “lazy” Spaniards are. After the first news of illegal developments, anyone who proceeded to purchase without doing their due diligence was also lazy. Expecting that everything is going to be as it is in the UK is lunacy.
Due to my cynicism about human nature, I never would have bought into a development before it was finished. And I never would have bought without consulting a bevy of experts. That doesn’t completely eliminate my risk, but I can’t help but to think that SOME people could have avoided these problems.
Maybe this is the difference between me (or Americans) and you all in Europe. I expect that anyone trying to sell me something is a criminal. This is my starting point for negotiations.
.
We used to operate like this in Europe and the UK too – it was called Caveat Emptor (let the buyer beware). Maybe we got lulled into a false sense of security by consumer protection laws? http://en.wikipedia.org/wiki/Caveat_emptor
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If some agents were guilty then so were they all, they were all selling the same rubbish.
As for naive buyers/investors….this one should get the idiot of the year award! Only borrowed £3.5 million to buy land in Romania 😆
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They look awfully upper cwust Bwitish katy, wouldn’t you say, yah ❓ Fancy losing their lot in Wumania, how very silly ❗
So it wasn’t just the UK masses who made mistakes in Spain etc, it was even those people with bwains and an education 😆
I see further down that the husband is saying the Bank is ‘heartless’, what a plonker 😉
I feel very sorry for many who were duped into buying in the sun, those who remortgaged their UK/Irish homes to buy their retirement/holiday home because that was often the sum total of their lot, but these people really did leave their brains behind, I would not have wanted that story to have gone public if I was them!
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I am not sure why someone would want to splash their private life about in a tabloid, there must be some other motive.
Anyway it’s a load of rubbish.
He states that he could sell his 84 properties to clear the loan but would be bankrupted by CGT charges. That is rubbish. He has just lost over 3.3 million. He can use this loss to write down future gains for a lifetime. So in other words until he makes a profit of 3.3 million he will never have CGT to pay… EVER!!
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@katy wrote:
Absolutely wrong….Remind me when the credit crunch started :mrgreen
I beg to differ.
Back in 2004, when things were in full boom, and I would witness 150 people a weekend in a hotel in the UK, place deposits on Spanish property without a care in the world, or a real thought to the future. Who do you think was encouraging them?
The busiest stand at any exhibition was the FINANCE STAND people would come along, and queue to talk to a ‘financial advisor’ to discover how much equity they could release on their own property, how much finance they could obtain on their Spanish property, how much they could then additionally borrow to make several years payments – then proceed to buy the nearest off plan unit with the longest date to completion.
How do you think the blooming developers managed to build without building licences Katy?
Where do you think they got the money from? It used to be in the 80’s and 90’s that a bank just wouldn’t finance any project but if it did, several things had to be in place 1) You had to own the land outright without liens 2) You had to have paid in full for the architect, all plans, all licences and have full and confirmed approvals from the town halls.
There was no building going on for years because the banks just would not lend to developers – then, then what happened? You get one bank to finance the land purchase, another to finance the build, you tell them, you will fund it from pre-sales whilst waiting for the licence, and everyone says yep no problem, and actually would you like some more money to pay yourself a wage in the meantime.
It was the banks Katy, first and last, and it wasn’t just Spanish banks, it was the UK and USA who fed and began the entire credit boom. Remember Gordon told us, the days of bust were over.
It was the banks, we never could have done any of it without them! And they also paid any introducers huge commissions on top!
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@angie wrote:
I have to say Chris that the greed and corruption wasn’t all down to the Banks too as katy points out. The developers and so called promoters were working hand in glove with many agents at the time, a feeding frenzy ensued and naive purchasers were hooked well and truly with the promise of quick returns and flipping!
No, I already agreed with that in response to Mark’s post – hard to hear but true – British and Irish agents had a HUGE RESPONSIBILITY but it began with the banks is my view.
It ended – well sort of – with the five heads of the main British banks being summoned to parliament to be asked what the hell happened and when did they get approval to just play with other peoples money and believe that they were the entreprenurial masters of the universe? When not one single one of them had a formal banking qualification between them.
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@GarySFBCN wrote:
It was cheap and easy credit, credit that banks would have never given it they had followed their own rules regarding the credit-worthiness of the borrower, including their ability to repay, that is ONE FACTOR in this mess. Cheap money allowed the prices to increase. No cheap money, no unsustainable increases in the price of real estate.
Bang on. If the banks had just stuck to even the most basic of their rules, we would none of us be in this mess.
Instead they broke all their rules, then Paulsen left Goldman Sachs with a personal $500million pay off, to join Bush and run the US Economy – and when Goldman Sachs and the other guys were screwed just a couple of years in, well – he busted Lehman without a thought to the consequences, he then gave them all a bailout which they used solely give themselves reserves and pay themselves more bonuses and pretend like there was no problem here!
@GarySFBCN wrote:
After the first news of illegal developments, anyone who proceeded to purchase without doing their due diligence was also lazy. Expecting that everything is going to be as it is in the UK is lunacy.
Ahh, but you don’t know it all GarySFBCN… It was British banks, sitting in property exhibitions, with British agents, talking to British consumers offering BANK GUARANTEES on pretty much every single development that was built or not built, and all of this confirmed and communicated to them also by British lawyers.
@GarySFBCN wrote:
I never would have bought without consulting a bevy of experts.
What you think everyone over here is stupid? Of course they consulted experts. God help me I was one of them. And when I have a British bank, with a Britsh lawyer and sometimes a British developer, telling my client that with a Bank Guarantee everything is OK, well even I was daft enough to believe that was enough experts for anyone!
@GarySFBCN wrote:
That doesn’t completely eliminate my risk, but I can’t help but to think that SOME people could have avoided these problems.
Sadly not, the banks led us all down the garden path, and as far as I am aware not one single executive in the USA or UK has been brought to account for what had to be criminal negligence and corruption right the way through Wall Street and the Square Mile.
It just could not have happened without that easy, easy money!
What was it? Didn’t Goldman Sachs and the other investment banks have only something like 100 staff in the 60’s and 70’s and end up with some 50,000 staff playing with people’s money in the year 2008?
And how did we end up in a world where a banker, being responsible for the management of someone else’s money – could earn a pay off of $500 million dollars – think about that, then you know where the problem began and ended.
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Still don’t agree. When the UK/USA banks were in trouble who was it who were saying that it didn’t affect them as they didn’t have toxic debt…the Eurozone banks!
Spanish property market was on it’s knees long before bank lending dried up. During the boom our golf club had many new members who were Agents. Most of them were ex-electricians and similar. By 2007 many were leaving, couldn’t afford to pay the fees or some had left the country. Estate Agents were closing down all over the coast. Mortgages were still available but no-one wanted to buy the new 2/2 blocks. Easiest thing in the world for Spain (and other Eurozone countries) to blame the USA banks and say “not me Guv” but they did it all by themselves. The Developers problems began when they couldn’t rob Peter to pay Paul anymore because the deposits had dried up. Heard some agents actually were conned too, offered 15% commission by some developments they then didn’t pay up, although I don’t know if it’s true.
Money is still available anyway for those who are crazy to buy those overpriced blocks from the developers.
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@katy wrote:
Spanish property market was on it’s knees long before bank lending dried up. During the boom our golf club had many new members who were Agents. Most of them were ex-electricians and similar. By 2007 many were leaving, couldn’t afford to pay the fees or some had left the country.
The Spanish market was on its knees simply because prices had skyrocketed to impossible heights and then along came Bulgaria, with its purchase price of €30,000 units instead of a 10% = €30,000 deposit for a Spanish home and… that’s where all the agents went Katy, the all went to Bulgaria, Cape Verde, Brazil, Dubai etc etc.
And the banks were overjoyed and continued to lend to anyone and everyone who had a pulse and a passport, for whatever they wanted, wherever they wanted it. It carried on regardless, just that Spain had priced itself way beyond the rest really
@katy wrote:
Money is still available anyway for those who are crazy to buy those overpriced blocks from the developers.
Different kind of money though you must agree? You can get a mortgage of 100% today where you never could in 2004, because now the bank owns it, it wants you to own it and get it off their books, because while they own it, it is just being written down as a loss every year.
C’mon now Katy, t’was the banks brought us to this mess, no one else.
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@katy wrote:
Not one cheating lying Spanish developer or lawyer has been brought to account either! Look around this forum many used Spanish lawyers and Spanish banks. I agree that most of the dodgy estate agents were British/Irish.
Ah again, c’mon there’s more than a few court cases going on – not against lawyers I grant you, but plenty of developers and town hall officials. Like Mark said it is grinding on slowly but they have been brought to book.
Surely you don’t think they did all of this on their own? Without the complete and utter abdication of the banks own rules and criteria, we would never have all got into this mess.
Off with their heads – c’mon Katy see reason 😉
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I have Romanian friends living in Bucharest. Their house is worth around $4 million. ( price of the land not the house ) Two children both out of Romania. They will not sell the house as thery are afriad that they will be blackmailed/victamised, dont trust the Banks and do not leave the house for holidays etc in case the house gets taken over. They are in late 80’s.
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I have friends in Bucharest. Retired Army General, their house is worth around $4million ( Land ) They are in their middle eighties will not sell as they feel threathened by blackmail, extortion, death threat etc.
They do not trust the Banks ( Who can blame them ), cant go on holidays as they feel their house will get taken over while they are away. Their pension is just not enough to feed while the white the elephant is rotting away.
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Whatever the figure for unsold new homes really is in Spain, 1 million + or -, and now rather dated, tired or poor quality/illegal, what is the answer to this problem before their market can get going again? Is it bulldoze them and start again, or just seriously drop the prices maybe waive taxes on them and just get rid of them?
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