Foreigners advised to reclaim Spanish property tax.

Foreigners advised to reclaim tax.

Foreigners not resident in Spain who sold a property in Marbella Spain between 2004 and the end of 2006 could be entitled to a 20 per cent tax rebate from the Spanish Government claim the Marbella based, independent advisory service The Overseas Living Group.

Foreigners who sold their Spanish properties before 2007 paid a Non Residents’ Income Tax rate of 35 per cent on any capital gains, compared to a rate of 15 per cent paid by Spanish residents. This contravenes European Community Treaty rules on discrimination and anybody who has paid the tax is encouraged to make a claim.
A change in the law at the start of 2007, which saw the standard Capital Gains Tax for non residents being brought in line (a reduction from 35% to 15%), passed by largely unnoticed. As a result, thousands of people who had previously sold property in Spain are entitled to a 20% rebate. Due to stringent legal restrictions people who bought at the end of 2003 have already missed out, as claimants must register within four years.
Estimates state that some 4,500 Britons could be affected and are owed an average of more than £8,000 each, plus interest, taking the total up to as much as £11,000.
Anyone choosing to make a claim can expect a long process, as taking this sort of case through the European courts can take three or four years.
Spanish lawyers Costa, Alvarez and Manglano are offering to assist people with their claims on a no-win, no-fee basis, taking 35 per cent of the amount gained if the claimant wins. They have set up a helpline for British residents (0845 680 3849) and a website (www.spanishtaxreclaim.co.uk).
View OLG coporate video on Youtube Villas Marbella

The Marbella property market

The Marbella property market – the truth behind the headlines and an independent view on whether or not it’s a good area to invest in.

Marbella has been in the news consistently since the 1950’s. For most of those 50 plus years it’s usually been good news – the place to be seen, the place where the rich and famous set up home, great beaches, fabulous night life, all year round climate etc. However, the news lately has been rather more negative – corruption, oversupply of property in Marbella, planning issues etc.
In this report I attempt to get behind the news, explain the facts and offer suggestions as to what might happen over the next 50 years of Marbella’ s life and what has, and will, happen to property prices.

Firstly, Marbella has, indeed, been in the spotlight for over 50 years and property prices have, in the main, consistently gone up.
Now, on one hand, 50 years is a relatively long time for a holiday destination to be at the top of most people’s wish list when it comes to buying a home in the sun. In Europe, maybe only the French Riviera can boast such long term popularity.

On the other hand it is a short period when you consider what has happened to this once small town.
In the 1950’s the Marbella area was a series of fishing towns and farm land, with no hotels, dust tracks for roads and very few properties. Marbella had its Old Town and a few fishermen cottages near the beach but not a lot else.Puerto Banus andNueva Andalucia did not exist, nor did the now exclusive residential areas of
Elviria,Guadalmina,
Las Chapas 
Cabopino andThe Golden Mile etc.


Back then, if planning permission for an extension or a new build fishermen’s house was required, it was a case going to meet the local Mayor, usually over a glass of fino and getting his permission. The Mayor was the most important man in the town and everything that happened had to be agreed by him. This is still the way it works across Europe in all but the established areas of Northern Europe and the large cities. It certainly, still works like this in the Spanish inland towns and it works perfectly OK. For an Internationally known and wealthy area (like Marbella became), this clearly can not work and it is this rapid change in Marbella’s fortunes that created some of the problems seen over the last few years.


So what exactly are the problems of recent years?
Well let’s start with corruption.


The system of the local Mayor making all the decisions has not really changed very much until recently. So, from the early 1990’s Marbella had a series of Mayors being approached by large, international developers wanting to build multi million euro (or pesetas as it was then) properties. The “pleasantry” of a glass of fino had changed into bribes of hundreds of thousands of pesetas and quite frankly the temptation for the Mayors, who would have been on a very average salaries, was just too much.

Jesus Gill was the first of a series of very corrupt Mayors, attaining office in 1991. He was arrested and put in prison and subsequently died in 2004. His alleged crimes included diverting hundreds of thousands of euros from the Marbella Town Hall to his football club Atletico Madrid.

Gill was followed by Julian Munoz who was arrested in 2003 and then Mariscol Yague who was arrested in March 2006. By this time, so much money was involved and controls so lacking, local property corruption had expanded into money laundering and general misappropriation of town hall funds.


The local government have put in some controls over the years to try and stem the corruption and as each Mayor is arrested and a new one appointed the problems seem to be solved. However, as the values of land and properties have increased the temptation for fraud has increased and none of the measures have really worked.

The arrest of Yague and most of her close associates in 2006 was the final straw and following a massive, Government lead operation called Malaya, the Regional Government have stepped in to control matters. A new Mayor is now in place, but with far less power, and during the last two years great strides have been made to clean up the problems.

During the last 2 years priority has been given to assessing buildings that have been built with a view to pulling down any illegal one’s (built with permission that should never have been given from a corrupt mayor). The fact is, very few buildings look like being pulled down and to the credit of the Spanish authorities, great efforts have gone into ensuring any innocent purchasers are protected. Basically, a line is being drawn and most of what has been built, either legally or illegally, will remain.
Very few new building licences have been granted during the last 2 years and it looks like that situation will continue for some years to come.


Oversupply of property.

Much has been written about the oversupply of property in Spain and the effect
that it is having on property prices. Lets look at the facts regarding, specifically Marbella.

There is no doubt that there is presently an oversupply of property in Spain and
this includes the Costa del Sol. This has been created following an exceptional period of property building between the years 1998 and 2003.
As discussed above, Marbella and Spain generally has enjoyed property price rises since the 50’s and 60’s. Things really picked up post 1975 when Franco was disposed and Spain came out of a dictatorship regime and entered a new era.
Steady growth was seen throughout the 80’s fuelled by prosperous Northern Europeans buying 2nd homes but in 1998 an ceptional period started peaking in the years 2001 to 2003. This happened due to a number of factors:-

1. The Peseta was phased out – this left millions of Spaniards looking to dispose of their life savings which in many cases was literally, under their
beds. As in most countries where a currency is phased out in favour of a new one, inflation increased generally and the property market was no exception.

2. Spain had become very prosperous after the Franco years and a second generation of affluent and well educated Spaniards were investing in property. This was similar to the post war baby boom period Britain and other Northern European countries experienced in the 1960’s.
3. A strong economy in Northern Europe coupled with the fact that “normal” people rather than just the very wealthy were buying second homes. This was when TV programmes started showing how to buy property in Spain.

4. Entrance to the EU – freedom of movement and favourableExchange rates for Brits etc.


5. Off plan Investing – this phenomenon really pushed prices through the roof. Due to the factors above, prices were increasing and investors saw this as an opportunity to make money. They would buy 2, 3 or even several apartments off plan with a deposit of just 20%-30%. Before the property was finished it would have risen in value and the investor would sell it on making substantial profits on the original deposit.

This situation encouraged more investors which encouraged more developers and an unprecedented period of building ensued.
This could not continue indefinitely. There has to be end users to sell to, and whilst the demand for property in Spain was still extremely high, there was no way it could have been high enough to soak up the thousands of apartments that were being built. The investors moved on to other “developing” countries at the end of 2002 leaving thousands of unsold properties and thousands more still under construction.

Summary and what does it all mean?

The Regional Government has taken control of the situation regarding corruption and Marbella now has the sort of planning controls seen in most developed
countries. With very few new building licences granted recently the oversupply of properties has gradually been diminishing and we now have a situation where oversupply is really only seen in poor secondary locations where buildings have gone up far away from the beach or facilities. In good locations near the beach, on a golf course or near the towns demand exceeds supply.

Some experts say that Marbella, because of its high profile and the attention of the Regional government, is possibly the safest and least corrupt area in Europe to invest in. It still has all the attractions that have made it such a popular place for over 50 years, including the best climate in Europe but nowadays it has the best infrastructure of any holiday resort in Europe. New motorways have been built courtesy of the European Union, the airport is being expanded, a fast train service linking Madrid has just opened and numerous 5 star, international hotel chains such as the Crowne Plaza group and Hilton group have chosen to open new hotels in the area.


There appears to be a growing feeling that some of the so called “emerging markets hot spots” like Bulgaria and Turkey are losing their investment appeal and people are returning to Spain – a country known and loved by so many for so long.

The Marbella area is truly unique and I believe is entering yet another era – one of controlled development and sensible planning.
Demand is still high. In fact with a growing international demand as Europe expands and demand from people, who with the advances of technology, can work from anywhere demand is increasing. This is at a time when supply is decreasing and some commentators believe that we are not far away from another bout of significant price rises. I feel that, more likely, is a period of sensible and sustained price prices but what is certain is that Marbella remains a fabulous place to live and to visit.

Villas Marbella Costa Del Sol

Marbella Property Market

The property market in Marbella has been affected by the global “credit crunch” and much of this has been blamed on the US subprime mortgage market. The fact is there is a lack of liquidity and cash in the markets and this has been caused, in part, by the US mortgage market but also, in part, by Sovereign Wealth Funds sucking cash out of the US banking system.

The new Federal Reserve Chairman Ben Bernanke blatantly got it wrong when he hiked US interest rates to 5.25% and has been forced to rethink and cut rates massively to 2.25% - that is some turnaround and one can only conclude that they got is severely wrong and many US home owners are now suffering. As they say when America catches a cold we all sneeze and we are still sneezing.

The issue for the bankers is not a simple one as they have to get some cash back into the market but just printing money carries a risk of stimulating inflation especially if the SWF start buying stocks, which will add impetus to the stock markets. The difficulty is that the SWF do not need to publish their policy or pending actions which kind of leaves the bankers fumbling in the dark.

How does this effect the property market in Marbella? Well Marbella’s economy is based on the tourists and real estate markets and with the real estate markets stalling and the Euro getting stronger the cost of buying villas in Marbella, or just a holiday has soared due to the exchange rate. Will this continue, well I think the Euro/Pound exchange rate has suffered as most everyone believes that Gordon Brown will do what ever he can to take Britain into the Euro and therefore the finance community is, as always, forecasting the future, which they believe will see the pound disappear. Of course Brown may disappear first, in which case we will see a strengthening of the Pound.

The property market goes in cycles and we are currently experiencing a dip but history tells us that this dip will, at some point, become a surge. The fact is Marbella and the Costa del Sol is a real destination and one that has a end real user; all the people from Northern Europe escaping the cold and retiring in the sun. The same phenomenon happened in Florida and in many ways Marbella is the Florida of Europe and therefore the future is very secure.

So once Mr Brown moves on and the liquidly returns to the markets, which it surely will, we will see return to growth in Marbella.