New construction boom threatens Spanish coastline

Sandwiched between the crystalline blue sea and green pine trees lies Aiguafreda, one of Spain's last largely unspoiled Mediterranean coves, which is threatened by a new building frenzy.

New construction boom threatens Spanish coastline
Earthmovers clear a construction site in S'Antiga overlooking the beach of Pals and the Montgri Massif in Begur in Costa Brava. Photo: AFP

From Catalonia to the Balearic Islands numerous building projects which came to a halt during Spain's 2008 economic crisis have been restarted as growth returns, raising fears among green groups of a new “construction fever” along the country's already heavily built-up coastline.

On the Costa Brava, a nearly 100-mile (160-kilometre) stretch of rugged coastline in northeastern Catalonia, some 20 projects are in the works, according to environmental group SOS Costa Brava.

READ ALSO: Barcelona vetoes 'capsule housing' plan for low income workers 

Among them is a 260-home residential development at Aiguafreda which had been stalled for 15 years due to bureaucratic hold-ups, divisions among investors and then the economic crisis, which was sparked by the collapse of a decade-long property bubble. The project was relaunched by new owners recently.

Only a few houses nestled among pine trees currently surround the tiny cove of crystal clear waters, in the municipality of Begur.   

“There are very few places left like this, that are so green and with so few houses. The idea of losing it terrifies us,” Estel Rumbau of lobby group Save Aiguafreda told AFP.

The municipality says it is impossible to stop the project since the land where it will be built has already been zoned as residential. Expropriating it would cost €50-70 million ($60-81 million) — money the municipality does not have.   

“I would like to build zero homes, but our hands are tied. We will try to ensure that they are as little as possible,” Begur mayor Joan Manel Loureiro told AFP, vowing that no more than 100 homes will be built.

A protest sign at a construction site in S'Antiga near the beach of Pals and the Montgri Massif in Begur in Costa Brava. Photo: AFP


'No more capacity'

It is not the only project in Begur. On the other side of a hill overlooking the Aiguafreda cove six excavators are preparing land to build 26 luxury apartments with sweeping views of the Medes Islands, a protected area.

About 60 apartments are also planned for the neighbouring Sa Riera cove. And in the adjoining municipality of Pals the mayor is poised to give the green light for the construction of a thousand homes in a centuries-old pine forest.

In the picturesque fishing port of Cadaques further up the Costa Brava where surrealist Spanish painter Salvador Dali once lived, a hotel and about 100 homes will be built near a nature park.

Local residents in Begur complain the area is already saturated in summer, with cars jamming the small road leading to its tiny coves.   

The municipality, which is home to 4,000 people, sees its population swell to over 20,000 during the peak holiday months.   

“People will buy a house and they won't be able to go to the beach because there is no room, they will want a boat but they won't have a place to dock it, they won't be able to have a beer in town because there is no parking. There is no more capacity here,” said Begur resident Miquel Collado.

'Same trap'

Similar projects are springing up everywhere along the coast of Spain, which surpassed the United States last year to become the world's second most visited country after France.

Greenpeace has sounded the alarm over the construction of a hotel at a protected beach at El Palmar near the southwestern city of Cadiz and two 30-storey towers in Roquetas de Mar near Almeria in the southeast.

“There is a renaissance in construction,” said Pilar Marcos, one of the authors of a Greenpeace report on the building frenzy on the Spanish coast published in July.

The amount of coastal land that has been built on in Spain has more than doubled since 1988, with some areas already 90 percent built-up, according to the report.

A symbol of this building excess — the 21-storey complex on the Algarrobico beach in the Cabo de Gata natural park in Almeria which never opened to the public — remains standing despite a ruling from Spain's Supreme Court that it be torn down.

“We are falling into the same trap,” said Marcos, who called on Spain's new Socialist government to adopt a stricter law against building on the coast.

   By AFP's Daniel Bosque 


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How to change from a variable to a fixed mortgage in Spain

The rise in interest rates has increased the price of variable mortgage rates by hundreds if not thousands of euros, causing panic among those who have this type of plan. So, what are the best ways to change to a fixed mortgage?

How to change from a variable to a fixed mortgage in Spain

With the rise in inflation, the price of daily goods going up and the increase in energy bills, residents in Spain are definitely feeling the squeeze on their wallets.

The cost of the Euribor (the basic rate of interest used in lending between banks in the European Union) has increased too, putting a further strain on people with variable mortgage rates and increasing their monthly payments. 

According to the latest data from Spain’s National Statistics Institute (INE), 28.4 percent of homes have a variable rate mortgage and 71.6 percent have a fixed rate.

What has the rise in interest rates meant for variable mortgage rates in Spain?

If for example you have a mortgage of €150,000 for 25 years, the increase in the Euribor could mean that you will be paying an extra €120 per month or an extra €1,400 per year.

READ ALSO: What the Euribor rise means for property buyers and owners in Spain

This is why many people on variable mortgages have been looking into the option of changing it to a fixed plan instead. 

What is the difference between a variable and a fixed mortgage?

A variable interest rate mortgage is where the interest charged on the outstanding balance changes based on factors such as the Euribor.  

A fixed interest rate loan is a loan where the interest rate on the loan remains the same each month for the amount of time you’ve taken out the mortgage for. 

Will variable mortgages keep rising to keep up with the rise in the Euribor?

The increase in the Euribor reached a daily rate of 2.5 percent last week, its highest level since January 2009. This means that if you have a variable mortgage rate, your payments will be subject to change to reflect this. When the interest rate is updated once a year or every six months, the price of your mortgage will go up.

How do I change from a variable rate to a fixed rate mortgage?

According to Miquel Riera from the finance website, there are three different ways to do this in Spain.

The first way is called novación and is a way to modify the conditions of your current mortgage by going to your bank and signing a new agreement, however, it’s up to the bank if they will accept the new proposal and the terms and conditions for doing so.

The second way is what is called a creditor subrogation, which is when you transfer your mortgage from one bank to another one, so that you can modify the price or the terms. This involves contacting many different banks in order to find one that will agree to take on the loan and accept the change in interest rate to a fixed one.

Finally, the last way is to take out a new mortgage at a fixed rate and use the money to pay off your existing variable-interest loan. In this case, you can take out the new mortgage with the same bank or a different one.

According to the housing website Idealista, if you’re going to change banks and find better conditions, it’s best to hire a mortgage broker, so you can get a broad perspective of the different loans available, as well as the various banks that offer them.

How much will it cost me?

This entirely depends on what type of agreement you organise with your bank, but according to Riera, if you switch to a fixed rate via one of the first two ways, you may be charged for an additional assessment on your home.

This could cost around €300, but by law, the amount cannot exceed 0.15 percent of the outstanding amount of the mortgage. But, if it’s after the fourth year since you’ve taken out your mortgage, then this extra commission can’t be charged.

If you choose the third option and take out a new mortgage, then your costs will be significantly higher because you will have to pay property tax, possibly fees for taking out a new loan, as well as other associated fees, which could be between 0 and 1 percent of the amount. There are also cancellation fees to pay off your existing mortgage, which could be around €1,000 on average.

So, although contracting a new mortgage may seem like the best idea at first, it can actually be the more expensive option.

Are banks willing to negotiate?

According to the Association of Financial Users (Asufin), this will depend on the type of loan you have, the amount that remains on your mortgage and your personal situation. They also stress that banks are not obliged by law to offer you an alternative.

The president of the Spanish Mortgage Association, Santos González states that “Families are not going to find a lower offer in the market… There is not a strong likelihood that you will be able to make a big negotiation that would ease the rise in costs.”

What are the pros and cons of changing my mortgage?

The main advantage is of course changing to a rate that is more stable, so you know exactly how much you will be paying out every month.

One of the disadvantages is that if Euribor falls again in the future, you will not be able to benefit from the decrease and will have to continue paying the same amount.

Asufin also warns people that the costs of exchanging the mortgage may work out more expensive, so in the end, it will not be advantageous for you to do so.

According to Idealista, it is really only worthwhile changing your mortgage from a variable to a fixed rate in the first half of the life of your mortgage. For example, if you have a 30-year mortgage, it’s advisable to only change it during the first 15 years. This is because the majority of the amount of the loan is paid during this period.