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'Spain's laws may deter expat property buyers'

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'Spain's laws may deter expat property buyers'
Uncertainty about laws could stop foreigner buyers from choosing Spain as their place in the sun. Photo: Martin Robinson
12:34 CEST+02:00
Foreign buyers are helping keep Spain's property market afloat, but new rules including a crackdown on illegal home rentals and a legal requirement to declare overseas assets could hurt the market in years to come.

Foreign buyers continued to take a big bite of Spain's property cherry in 2012 with 26,871 homes — or 8.12 percent of all properties sales  — going to overseas investors in the 12-month period.

Brits topped the list of foreign property buyers last year, snapping up 4,469 homes in Spain, figures from Spain's College of Property Registrars reveal.

Meanwhile, the big movers in Spain's property market were the Russians who snapped up 2,585 Spanish homes in 2012, 48.6 percent up a year earlier.

That saw them move into third place behind the French (2,675 homes) but ahead of the Germans (2,127 homes).

“It’s clear that foreign buyers are increasingly important to the Spanish housing market and economy,” property analyst and consultant Mark Stucklin told The Local.

But while Stucklin hailed the 2012 results as positive, he queried why the Spanish government appears "so keen" on discouraging these buyers.

In his article ‘Foreign buyers kept the wheels on the Spanish jalopy in 2012’, Stucklin referred to two specific new laws responsible for discouraging non-Spanish nationals from buying a property in Spain: worldwide asset reporting and the crackdown on holiday home rentals.

Stuckin told The Local that asset declaration is likely to dampen many foreign retirees’ hopes of buying a home in Spain due to the severe penalties involved if procedures are not met and because of the lack of awareness and information available on the matter.

The new assets declaration rules mean that all tax resident in Spain with property or financial assets outside the country worth €50,000 or more are legally obliged to inform Spain's finance ministry.

Although the Spanish governemnt says the move is designed to fight tax fraud, some people are concerned that those assets may not be protected.

“Spain is receiving very negative press as a result of this law,” Stucklin argued. “It’s posing a huge threat to the Spanish property market.”

The property expert also says new legislation restricting short-term home rentals is also likely to affect purchases in the long run.

The law is aimed at cracking down on the thousands of people who currently rent out their homes independently to holiday makers over the internet, a practice which hotel owners have long criticized for undermining the country's tourist trade.

“Many expats who assume they can rent out their newly purchased properties as a way of paying off their mortgages will have to face arbitrary enforcement on the part of the Spanish authorities to establish whether they can or not,” Stucklin told The Local.

“It’s impossible to predict what will happen in the long term,” the property analyst explained. “You talk to two different lawyers on the matter and they’ll give two contradictory answers.”

Despite the confusion surrounding the new laws, however, Stuckin predicts foreigners will continue to sign off on ten percent of all house purchases in Spain in 2013.

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