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New ways to buy in Spain - 6 December 2006

Property agents in Spain are looking to new ways of attracting buyers to the country, as a way of overcoming the various scandals, legal, and political issues which have made this a difficult year. Spain is still the most popular destination for British overseas property buyers.

The Spanish government is currently in the process of putting together new laws to curtail rampant urban development, and the highly built-up and ever-popular Costas are bound to come under scrutiny in this regard. As such, buyers, and therefore agents, are being forced to look at different ways to get a property in Spain.

One way is to look further inland, rather than solely on the narrow strips of land that border the glistening Mediterranean. Inland specialists Spanish Inland Properties have seen a significant rise in the number of people looking to buy away from the coasts. Marketing director Les Edwards says, “Properties are cheaper inland, and are more traditionally Spanish in style and flavour, and people are becoming more adventurous.”

Looking on a slightly different level, overseas property company Assetz has spotted a possible new trend in buying Spanish property. Following the fallout from the so-called land-grab law in the Valencia region, there is now an investment firm which is offering plots of land for sale, ready for development.

This practice aims to take advantage of what is known as ‘planning uplift’, the practice of making heavy returns on land parcels which gain in value upon being re-zoned as residential land, and then built upon. This has been relatively uncommon in recent years, due to uncertainty surrounding the classification of land and its use, but growth of around nine per cent annually are predicted.

The EU recently formally asked Spain to modify Valencia’s law on land and town planning, with the aim not only of making sure investors feel secure in their properties, but also to root out the alleged corruption in local authorities. Allegations have been made against local council members for taking bribes from property developers to build on land which should be classified as rural.

On top of this, a special report from the United Nations has said that the ‘rampant real estate speculation’ in Spain is damaging and ‘unsustainable’. Miloon Kothari has called for urgent government attention to ease the problems rapidly-rising prices have caused Spaniards who want to get on the property ladder. His research shows that up to 25 per cent of the population cannot afford to buy homes, while increasing interest rates have crippled householders into losing up to 60 per cent of their income on mortgage or rent payments.

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