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General: Overseas property problems: Planning - Simon Conn

Introduction

For many, buying a home overseas is the realisation of a dream or the path to a better quality of life, but it needs careful consideration before the dotted line is signed. Every week there seem to be media reports of how people get carried away, or have their fingers burned because they haven’t followed the same ‘due diligence’ that they would if they were buying a property in the UK. You should never let your heart rule your head and the principles you would stick to in the UK also apply when buying overseas. Many people make rushed decisions, not taking enough precautions or not investigating fully other alternatives, disadvantages or pitfalls.

There are numerous things to consider and many problems which can be encountered, but it’s important to realise that most of these can be avoided if you take the right advice at the very beginning. We’re going to explore the main issues which British buyers have been facing recently, along with some advice on how to evade these.

Problem: lack of planning permission/property illegally built

According to recent reports, Spain is still top of the list for people who are thinking of buying property abroad. In addition, more than a million Britons now call Spain home. Having escaped dreary weather and the daily grind in the UK for a life in the sun, many have moved looking for the good life of rest, recreation and retirement.

But unfortunately, it hasn’t turned out like that for everyone and Spain seems to be the location where most problems are encountered by British buyers. There are many examples we could feature but we only need to highlight a couple in order to set the scene.

Take, for instance, the case of several British families who bought homes in the mountains of Almeria, thinking that they’d found their dream location. During Spain’s property boom it became common to build on rustic or green belt land, with the expectation that planning permission would be obtained from local town halls at a later date. Recently, however, the regional government has cracked down on this practice and is now threatening to demolish up to 5,000 homes in the area, built – mostly for incomers – without proper planning permission. Unfortunately, this situation applied to Almeria and, last year, the Chief Prosecutor ordered swift demolition of the properties.

Another example is the Albatera Golf and Country Club, about 20 minutes from Alicante. It was pitched as a new La Manga – an upmarket resort combining golf with some 1,100 homes and two hotels. It couldn’t be more different. Last year, the developer was placed into administration. The company had failed to secure full planning permission for Albatera and other sites and its bank stopped lending.

Sadly, there are several cases like this. Many homes in Spain were built on the nod of corrupt mayors, but then refused retrospective planning permission by regional administrations under pressure from the green lobby. Many properties are blighted by illegality and are now effectively worthless; others have simply been demolished.

And it’s not just Spain – one of the biggest developments in the region of Calabria in southern Italy, with many UK investors, was blocked last year for environmental reasons. And in the same region earlier this year, a number of illegally built flats worth millions of pounds, were sequestered by police. There have also been problems in the emerging markets of Eastern Europe – Bulgaria for example, where some resorts being offered to UK buyers now face the bulldozer after building work was deemed to have broken EU environmental laws, and planning permission to build in the affected areas was revoked.

Rich and famous not immune

Many people are unaware that their property is at risk, but it’s a harsh reality. Even the rich and famous are not immune - the Spanish film star Antonio Banderas and his wife Melanie Griffith have recently been ordered by planning chiefs to hand over part of their beachfront property on the Costa del Sol as part of a campaign against illegally built properties.

According to media reports, the couple has been told part of the gardens at their £5 million mansion near Marbella is to be made public land, under attempts by the local authorities to reclaim land which was illegally classified as private. The reports suggest that more than 14,000 square feet of land belonging to the couple will be seized to allow public access to the beach.

And it’s not the first brush that the couple has had with the town council – in 2008, Banderas was ordered to demolish part of the six-bedroom property because it was built with a licence wrongly issued to the previous owner. The actor appealed that ruling and a decision is pending.

Thousands of homeowners, including many Britons, risk losing their property in the region after finding themselves the victim of corrupt town hall officials who issued planning permission to builders after illegally reclassifying land. Authorities are now attempting to revoke building licences issued on green belt land across 500 miles of coastline.

How to avoid this situation

Do your homework
It’s understandable that stories just like these have made many potential buyers wary of some overseas markets, especially Spain. Let’s face it - no-one wants to invest in a property which could have been built without the proper planning permission and may be at risk of being demolished. And whilst these issues are the exception, not the rule, it’s also true that no market is 100% safe, and that applies to any country, not just Spain. However, if buyers 'do their homework' before purchasing an overseas property, then matters should go much more smoothly and they’re unlikely to encounter problems further down the line. And this is the case whichever country you’re buying in, as illegal building and planning permission issues are certainly not confined to the Spanish market.

Importance of legal advice
The biggest piece of advice we can give is that you shouldn’t try to cut corners. Bitter experience has taught thousands of overseas property buyers that scrimping on independent legal advice can effectively cost them their holiday home. You should always go through the same process that you would follow if you were buying a property in the UK. Take independent advice from an English-speaking lawyer who is not connected to your seller, estate agent or property developer. Ideally, they won’t be located in the same area as the property in question and it may be best to use a solicitor in the UK who has offices in the country where you’re planning to buy. You can also check with similar professionals such as surveyors or architects. Do not take advice from a lawyer who is recommended to you by the developer – they are certainly not going to admit to any problems.

Your solicitor will examine all the documentation thoroughly with a view to ensuring that a legal title to the property exists, that the seller has the legal right to sell it, and if there are any legal or financial burdens registered against the property for which you, the buyer, would be responsible. It’s also paramount that an independent valuation is carried out, which will highlight any problems such as subsidence and damp, plus any potential boundary disputes.

Track record of developer
If you’re buying from a developer, you need some information about their track record and how long have they been trading. Try to obtain references from previous buyers and check comparable properties in the area and any re-sales offered on the same development. It’s also advisable to check that a ‘habitation certificate’ had been issued, which will tell you if full utilities are in place. It’s highly likely that a property has been built illegally if this certificate has not been granted and therefore it would be advisable to stay away until it has.

Finally, before making any commitment, try to give yourself a `cooling off` period if you see a dream property and are tempted to put down a deposit there and then.

More pages

Page 1: Introduction
Page 2: Simon Conn

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