Tag: Andalucía

malaga, costa del sol, sewage, properties

MALAGA AND COSTA DEL SOL: GREAT TOURIST AREA, WORRYING WASTEWATER PURIFICATION

malaga, costa del sol, sewage, properties
The wastewater purification in Malaga, financial and environmental consequences

With this article, I am detracting from the usual ones of a more legal nature, aimed at foreigners, resident or non-resident, who own a home in Malaga. In this post, I attempt to analyse the situation of wastewater purification in terms of the most significant tourist municipalities in Costa del Sol, as well as the financial and environmental consequences that lack of purification entails for municipalities like Nerja and Coín. I also focus on properties on rural land and the purification required for homes wishing to obtain a DAFO.

Introduction wastewater purification

With environmental sustainability or the environmental impact of our lifestyles being such an important issue in our times, I would like to speak my mind about the great problem of faecal water purification in the province of Malaga in general, even through it is sadly extensible to most regions in Spain, in population centres both large and small. However, Malaga, as a top tourist destination and due to its population density, especially along the coastline, should have an infrastructure that mitigates the environmental impact caused by all of us who live on the shore.

Many of our clients, both resident and non-resident, who are thinking about purchasing a home in Andalusia and that we provide advice to, are attracted by the Mediterranean Sea that bathes our shores but on which we indiscriminately dump millions of litres of unpurified wastewater. A recent article in La Opinión de Málaga on 5 January stated that Malaga dumps 123 million cubic metres of wastewater into the sea every year, a real atrocity.

National problem, million-euro fine 

On 15 February, El País national newspaper published an article informing that, until that date, Spain had paid about 32.70 million euros in fines due to not complying with the wastewater treatment directive in municipalities with over 15,000 inhabitants. This has been the highest fine paid by Spain to the EU in history.

This breach of the directive led to a conviction from the European Court of Justice and the resulting fine being imposed by the European Commission. This fine continues to grow for as long as those 17 municipalities fail to treat their wastewater, an obligation that came into force in 2001, which means almost 19 years have passed since that directive was enacted.

Nerja, beautiful beaches with faecal waters

One of the many municipalities that have been fined and do not have a sewage treatment plant is Nerja. It is striking that this municipality, which such beauty  and such great beaches and cliffs, in 2020, is still dumping the sewage it generates directly into the ocean, through a collector located 1,200 metres from the coast.

Nerja has spent over 20 years on the project for its sewage treatment plant and even though it seems that this year may finally mark the end of the works, according to an article in Diario Sur on 6 January (fingers crossed), this does not detract from the sloppiness and lack of interest of the local and regional government have displayed about this project.

The situation is so obvious from an environmental standpoint that, following several complaints, the prosecutor’s office brought judicial proceedings against senior officials of the Nerja City Council for the illegal dumping of this untreated wastewater. One of the toxicology reports certified that all samples taken from five beaches in Nerja contained faecal organisms according to their tests.

Construction of the Nerja treatment plant was declared to be of public interest by the Government in 1996 but, 23 years later, it has not yet been completed. If you visited Nerja and the surrounding areas in 1996, you could see the large number of works that did get started and completed because there were many years with large capital movements but the faecal water purification plant was not so lucky. Other municipalities on the eastern coast, such as Torrox, Vélez Málaga and Rincón de la Victoria, do have a sewage treatment plant in operation.

Mouth of the Guadalhorce, a natural site with a “faecal” river

Another area that also presents a high degree of pollution due to illegal dumping is the mouth of the Guadalhorce river in the city of Malaga. This enclave is the last unspoiled beach in the city of Malaga and is home to a very significant ecosystem of flora and fauna, with a network of trails to move through it. However, in this river, municipalities as large as Alhaurín el Grande and Coín dump their untreated faecal waters, which also led to a fine being paid by the government of Spain.

The city of Malaga has reinvented itself as a multicultural European city, currently highly appreciated by foreign tourists due to its many urban development projects, mostly in real estate. But Malaga is unable to commit to a project in the mouth of the Guadalhorce, which could affect this unique space –as it is the last unspoiled one– to preserve its environmental value.

It is non-profit associations that are reforesting and trying to preserve this space altruistically, as our firm was able to witness during the conference we held with some of them last November.

The municipality of Coín, a peculiar case

For the town of Coín to be able to connect to the treatment plant in the lower Guadalhorce, it is necessary to build the 3 kilometres of collectors that were destroyed by the torrential rains in autumn 2018 but the Andalusia Council, along with the contracting company, continue to fight to decide who will pay for these repairs. Coín is also immersed in legal proceedings due to its failure to treat its wastewater. While the administrations argue, this collector continues broken and the faecal water from Coín is dumped directly into the Guadalhorce river.

Isolated homes and their regularisation through DAFO, a bad focus of faecal waters

Even though compared to large population centres, the impact of these homes is lower, it should be noted that there are many isolated homes existing in Malaga. In La Axarquía, municipalities such as Alcaucín, Viñuela, Competa, Periana and Torrox have thousands of rural homes, as well as towns in the Guadalhorce valley, such as Coín, Alhaurín el Grande and Alhaurín de la Torre. Likewise, municipalities such as Mijas or Ronda also have many houses on non-urban land.

Among the positive aspects of the DAFO these homes are required to have an individual and autonomous treatment system. It should be noted that this procedure is important for foreigners who buy and sell homes in the province.

What is the problem?

I see that one of the negative aspects is the requirement from the Andalusia Council for properties subject to DAFO to have a watertight septic tank, forbidding septic tanks with a biological filter. This guideline is a serious mistake and its effect is contrary to what is intended, which is to prevent these homes from polluting the land on which they are located.

Properties with a watertight tank habitually require (monthly or more frequently, depending on their use) a tanker to visit the property and empty the contents of the tank, which are then transferred to an authorised waste facility.

What is the alternative?

Allowing the use of septic tanks with a biological filter as a treatment system, as it would not be necessary to empty the tank and water would come out clean and purified. It may be necessary to request authorisation for the discharge point of this clean, filtered water, which could even be used for irrigation but, with this treatment system, a company would only need to clean the tanks once a year, which represents significant savings for owners.

What is happening?

The problem that we find with watertight septic tanks is the economic cost of each emptying, which leads many homeowners to resort to other illegal methods, to avoid inconveniences and economic costs. In many cases, they choose to install a watertight septic tank and, once the technician certifies it, a small hole is drilled at the bottom, through which faecal water is poured into groundwater, thereby dispending with the need to have a truck empty it and making it very difficult for this to be sanctioned.

It is appalling that, in some cities, it has been accepted or assumed that owners will not empty their watertight septic tanks and will drill a small hole in them. I would even dare to say that owners are given such a “solution” to prevent the inconvenience of emptying, as the DAFO only requires having a technician certify the installation of the watertight septic tank and, if a hole is drilled later, no one will notice.

However, with thousands of homes in the countryside, thinking that a truck would need to go empty the septic tank in each of them on a frequent basis, requires being naive or means that the Andalusia Council cares little about these discharges (I lean more towards the latter). I am also not very sure of where these trucks discharge the faecal waters they do collect.

Do not pollute the environment if you process the DAFO for your property

To prevent the situation above, which is absolutely filthy, in some of the DAFO we have processed, we have found this problem and, to prevent faecal waters from being discharged directly into the ground, we have advised owners that, once the watertight tank is installed and certified to process the DAFO, they install one with a biological filter next to it. This way, at least, the water they dump will be clean and not pollute the ground, while the owner will avoid all the financial cost and disruption entailed by emptying the tank periodically.

At least, with the second option, despite not being accepted officially by the Junta of Andalusian and many municipalities, faecal discharge is prevented, which is the main goal when it comes to the environment.

Conclusion

As you probably understand, this issue goes a long way but I believe that, with these few brushstrokes, you can see the general lack of environmental awareness in the administration as well as among many citizens. This is the sad reality.

Tourism in Malaga and the entire Mediterranean area is also not viewed with a perspective for the future, as we live in the short term and do not care for essential things for investors and tourists to continue to come to Malaga, as well as foreigners wishing to purchase a home to enjoy a high quality of life or just spend their holidays in Span.

Meanwhile, those of us who reside and live here most of the time are unaware of the large amount of pollution we generate and the damage we cause to the sea, rivers and streams (which are increasingly polluted). I do not see many complaints or movements among citizens protesting this situation.

Some of the damage is already irreparable but there is some that can be fixed.

Author: Gustavo Calero Monereo, lawyer at C&D Solicitors Torrox (Málaga, Andalusia)

 

 

Köpa hus i Malaga

MORTGAGES IN SPAIN TO BUY PROPERTY

Mortgages in Spain to buy property
Mortgages in Spain to buy property

Fixed rate, variable rate interest & Euribor

If you want to buy a property with a Spanish mortgage you should know that the standard in Spain is the variable interest. The Euro Interbank Offered Rate, also called Euribor, is the reference rate for variable-rate mortgages and is currently at very low levels. Most mortgages in Spain are established according to the Euribor plus the interest rate offered by the bank.

Some banks offer fixed-rate mortgages but the number of fixed-rate mortgages obtained in Spain is very low compared to that of variable-rate mortgages.


A mortgage in Spain or another country?

If you are non-tax resident in Spain and you are thinking of getting a mortgage to buy a home in Spain, it is very likely that a bank in your tax-residence country can offer you a better interest rate than a Spanish bank. Therefore, you should try to find out which banks in your country give mortgages in Spain.


Ways to reduce the interest rate 

In Spanish mortgages with variable-interest usually offer a series of extra products are offered that may reduce the interest rate of your mortgage loan. Each of these financial products / conditions can reduce the interest rate between 0,25% – 0,50%, with a maximum of non residents of 0,75% en 1,00%.

Some of these products / conditions are:

  • Setting up a direct credit of your salary or pension
  • Keeping a minimum monthly balance in the account linked to the mortgage
  • Signing up online banking or a virtual mailbox
  • Direct debits of service companies (water, electricity, taxes, etc.)
  • Having a debit/credit card
  • Having a pension plan with a minimal yearly contribution
  • Taking a life insurance and a house insurance / contents insurance


Starting the procedure with the bank

If you already know the bank where you want to apply for your mortgage, we suggest that you apply for the financial approval of the mortgage.

At this stage you will provide the bank with a complete list of your income and loans as well as your employment status and the amount of the mortgage loan you need. The bank will enter all these details into the system and tell you if they would approve the mortgage at your income level.

Through this, you can save time and money since you can find out, right from the start, that the bank will not give you a mortgage and it will not be necessary for you to provide all the financial documentation at the beginning. Besides from this it´s not necessary yet to pay the taxation of the property by the bank. This documentation for the bank, by the way, needs to  include an extract (´nota simple´) of the Land Book Registry, the Registro de la Propiedad, of the property you are interested in buying. If the bank analyses your financial details and cannot grant you a mortgage, you always have the possibility to go to a different bank.


Extra costs of the Spanish mortgage

Updated information due to the sentence of the Supreme Court in October 2018 as well as the change in the Spanish law based on which the banks pay most of the initial costs of the mortgage. 

  • Legal expenses:

These are usually between 3% – 4% of the amount of the mortgage, but are since October 2018 paid for by the banks (and they can be claimed back for mortgages signed since October 2014). They refer to taxes, the notary´s invoice (the Mortgage Deeds are different from the Title Deeds and so they are charged separately), the invoice from the Land Book Registry and processing fees. These expenses are the same regardless of whether the mortgage is obtained from a Spanish or a foreign bank.

  • Solicitor fees:

Even though you can negotiate your mortgage directly with the bank, it is advisable for your solicitor to help you with this process as you will obtain professional advice. Besides of this his work with the bank will be more efficient because he knows the different conditions of the banks, the can check the Spanish general Terms & Conditions and he can negotiate on your behalf.

  • Extra bank expenses:

Opening fee (usually 0,5% – 1% of the mortgage), obliged home insurance (contents insurance) and life insurance for each mortgage account holder.

On this point, I would like to make a special mention about the life insurance policy that most banks usually require to obtain. This insurance policy is obtained for the mortgaged amount and guarantees that the bank can collect the amount due to the bank from the insurance company in the event that the account holders die.

Life insurance is an interesting product for mortgage holders but it may involve a high premium, especially if the insured people are elderly or have any health problems. This is because, in these cases, the premium will be higher as the risk that the mortgage holders die increases. It´s important to know that after the first year you can switch from insurance company to one that offers you better conditions on your life insurance.

It is also common for some banks to require you to pay a single premium for this life insurance policy, i.e., when the mortgage is granted, the bank already charges you for the total insurance premium for the entire mortgage period.

It is important for you to have a summary chart of ALL mortgage costs, so you can know the net amount of the mortgage (after deducting expenses) you will have available to pay for the property.


Legally binding mortgage offer

Once the bank confirms that your mortgage is approved, the legal document that guarantees this is the binding offer (´oferta vinculante´). This bank document functions as a contract and binds the bank to giving you the mortgage under the terms established in the document. The binding offer is usually valid for one month but it may not be valid for less than ten days.


Recommendations when buying a property with a mortgage 

Since the final approval of the mortgage by the bank will take 2 or 3 weeks. Therefore it´s wise to start the mortgage procedure as soon as possible, even if you haven´t selected a definitive property yet.

Have you already decided on the property you want to buy, but you do not yet know if you are going to obtain a mortgage? In this case you could try to negotiate with the seller that the reservation document and/or private purchase contract are ´subject to mortgage´. This clause avoids that you would lose your reservation fees and/or down payment if no bank in the end doesn´t grants you a mortgage loan. However, most (Spanish) sellers do not like to sign contracts that are subject to the mortgage so the best thing is to have everything prepared with the bank so that it takes as little as possible to receive a reply.

Also please keep in mind that not all banks are willing to grant mortgages for house in the countryside, or only for a limited percentage.


Saving money by subrogation of a mortgage

If you are a home owner with a Spanish mortgage than -after one year- you have the right to subrogate your mortgage to another band with a lower interest rate of better conditions. In this case the new bank will pay the rest of the loan plus the transfer commission (if this exists) to your current bank and you will pay your mortgage from that moment to the new bank according to the new conditions.

The subrogation cost is very low compared to the cost of signing a new mortgage. Therefore, if the interest rate that the bank offers you is lower, it is very likely for subrogation to be beneficial to you.

 

Read the extended information about this subject in our pdf-file: Mortgages in Spain to buy property For general information about buying a house in Andalusia you can also watch this video:

 

Author: Gustavo Calero Monereo, lawyer at C&D Solicitors Torrox (Málaga, Andalusia)

DAFO-AFO-Andalusian-property-purchase

DAFO UPDATE: OBLIGATIONS, INSIDE REFORMS, MORTGAGES & RTA/VTAR RENTAL LICENSES

DAFO
DAFO UPDATE: Obligation, interior renovation, mortgage & RTA/VTAR rental license.

New information on the DAFO certificate: in June 2017, we posted an extensive article on the legal situation and the legalisation of homes in non-urban land in Andalusia –DAFO / AFO–, outlining our opinion about positive and negative aspects of this legal precept. Almost a year and a half after this article, we would like to use this post to provide new information to owners and buyers of homes on non-urban land.

This information, which we believe may be useful, does not represent a fundamental change from what has already been stated, as there have been no legislative changes to the DAFO during this year and a half. This information, however, is based on our experience with different Councils in the province of Malaga and the approach they have been using for DAFO, as well as the questions we have seen among our clients.

Are Councils required to issue a DAFO/AFO?

Nowadays, we have found that a growing number of Councils, whenever there is any notification relating to a rural home, automatically open a file and start proceedings to start the DAFO process. This could be for example for the notification of:

  • Sale of a home
  • RTA (VTAR / Vivienda Rural) rental registration
  • Opening License Casa Rural / B&B
  • Registration of a property in the Land Registry
  • Applying for an urban certificate (for example for a purchase)
  • Change of account holder of the water supply

In other words, a growing number of Councils have been taking advantage of any information or request related to a property located on non-urban land to demand owners to start the DAFO process and legalise the rural homes built in the municipality. That said, if you wish to rent your property seasonally and you intend to register your home in the RTA -Andalusian Tourism Registry-, or you would like to register a pool or storage in the Property Registry, we recommend that you first analyse whether your home could obtain a DAFO.

As we have explained on many occasions, the DAFO is a procedure created to regularise homes on non-urban land that have been built illegally –most of them–, over which legal liability can no longer be claimed due to the passage of time. When the Council issues the first notification, it does not really require the owner directly to start the DAFO process. This first notification is about “telling” the owner to submit evidence whether the home complies with the legal requirements to be eligible for DAFO. This means that, if it does not comply with these, it is very likely that this is because there is some illegal situation in the building. This issue may still be subject to penalties from the Council and, in this case, the Council must open a sanctioning procedure against this unlawful situation, with the legal consequences you can imagine.

It is for these reasons that it is very important that, before you do anything or apply for anything at the Council that may entail the opening of a file against the property, you confirm that the home is eligible for DAFO and whether there is any building or work that may give rise to penalty proceedings. In this case, it is best to do nothing until enough time has passed. This in normal countryside is 6 years. Likewise, if you are thinking of buying a rural property, you must know that, when the Public Deed of Sale is executed and submitted to the Property Registry, the Council will receive a notification of this transfer and may later require you to legalise the home through a DAFO process.

Can I carry out internal refurbishments and renewal works through DAFO?

In accordance with Decree 2/2012, which governs DAFO, in this type of buildings “… only repair and preservation works required by the strict maintenance of the safety, habitability and sanitation of the building may be authorised”. Having said this, it is obvious that the works that may be carried out in properties of this type are limited and must be very clearly justified, always thinking about preservation and maintenance and never on improvements or additions, as renewal works as such are not possible. Since all rules are subject to interpretation, it is possible for some Councils to authorise certain types of refurbishment works that others do not. For this reason it is best to inquire at the Council to see if you could get planning permission before the work begins.

However, having said this, the desired internal refurbishments must always be justified from a point of view of habitability and necessity in terms of health and safety in the building, such as:

  • the opening of windows,
  • replacement of the roof,
  • replacement of floors,
  • substitution of sanitation equipment,
  • extension of the surface of a room that may be considered too small (without increasing building surface), etc.

The important thing is to evidence the need to carry out such works. Most likely, for the council to issue planning permission, it will be necessary to have completed or applied for the DAFO. Along with the technical project from an architect for the DAFO, the need to carry out such works should be justified due to the safety, habitability or sanitation of the home, applying for the corresponding licence. It will be very difficult to obtain permission without having completed the DAFO process.

If the home you intend to purchase already has a DAFO certificate, it is possible to apply for planning permission for the refurbishment works mentioned above but it is necessary to take into account the date the DAFO was obtained. It would not be very logical to apply for permission to refurbish a home for which the DAFO was approved only a few months prior, as the DAFO is supposed to certify that the home was in perfect conditions of habitability, without problems in terms of its safety or sanitation. Needless to say, if there has actually been some sort of unforeseen breakdown or accident in the property, permission may be requested for such repairs.

Can properties with a DAFO/AFO be mortgaged?

This question arises because a Spanish Royal Decree from 2009, regulating the mortgage market, contains an article that specifies that properties not meeting the legal requirements may not be mortgaged. Despite the existence of this rule, we must state that rural properties or homes on non-urban land have been, are and will continue to be able to obtain mortgages. There may be some banking institutions that do not provide mortgages for rural properties but there are many that do, which is logical as, in most cases, these properties are consolidated and are not subject to penalties, for which reason there is legal certainty over these.

We have submitted a query/test to one of the largest appraisers on the national market for mortgage valuations. In our query, we sent the land registry information – nota simple – of a rustic property with a DAFO certificate registered in the Property Registry and the response from the appraiser was unequivocal: homes with a DAFO are being appraised on the mortgage market. It should be taken into account that the appraisal value of a property for mortgages issues on non-urban land –a rural property– may be 20% to 40% lower than the purchase price, as the mortgage is given over the valuation price of the property. Nevertheless, a mortgage can be secured for these.

Can I have a RTA / VTAR rental licence for my rural property?

It is possible to rent and register a home on non-urban land in the Andalusian Tourism Registry -RTA- for short-term rentals (less than 2 months). This home would usually be registered as a tourist home for rural accommodation -VTAR-. As clarification, it should be said that it is possible to register rural accommodation or B&B as a country lodge or “casa rural” but this is designed for owners who are engaging in economic activities and operating such rental as a business, with at least one of them being required to register before the Treasury, pay VAT and register for Social Security.
The registration of a rural property in the RTA is subject to two approaches, depending on whether we talk to the Regional Government of Andalusia or the Council.

a. Regional Government of Andalusia

A few days ago, we had a talk with an inspector of the Regional Government in Malaga, who is in charge of inspecting homes of this type. Among other things, he told us that the Licence for First Occupation –Licencia de Primera Ocupación or LPO– is necessary to register homes on non-urban land in the RTA. As some people know, very few rural homes have an LPO. However, it is possible to obtain “legalisation” through the DAFO. The Inspectorate of Malaga have told us that a DAFO certificate would not be deemed to replace the Licence for Initial Occupation. In my legal opinion, I think that the Inspectorate are wrong and I clearly deem it arguable that, in the absence of a Licence for First Occupation, if a property has a DAFO certificate, this document should be accepted. Among other things, the DAFO certificate is the council recognition of the habitability of the property on non-urban land. In fact, Councils interpret this as a licence for the occupation of the property.

b. Councils

The Regional Government of Andalusia will notify the Town Hall when a home is registered in the RTA and this will lead some Councils to automatically call upon the owner to legalise the home through DAFO. It is also possible that a Council form will need to be completed before the home can be rented. Ultimately, at the municipal level, it is necessary to notify that you intend to rent your home and, if you lack an LPO, you will probably have to obtain a DAFO so that you can get this document, which recognises the habitability and occupation of the dwelling.

What should I do if I want to buy a rural home?

You can select the one you like best, without fears or concerns. Take the time you need and, once you have made a choice, you can start the buying process and negotiation. At the start of the process, do not hesitate to hire a lawyer specialising on this matter, who is familiar with this aspect of the law. As we have stated on many occasions, the cost of a lawyer is very small in comparison to all the money you will spend to buy a property in Spain. Saving money by failing to hire a lawyer during the process to buy your home in Spain may be one of the biggest mistakes you ever make. I know you may think what I want to do is to sell you my services –and this is true, this is why I work. But if you think about it carefully, you will understand the importance of having sound legal advice while buying a property in a country different from yours.

Author: Gustavo Calero Monereo, lawyer at C&D Solicitors Torrox (Málaga, Andalusia)

RTA, andalusian, taxes, occupation licence

RTA FOR HOLIDAY RENTALS IN MALAGA: FINES, TAXES, FIRST OCCUPATION LICENCE AND RURAL PROPERTIES

RTA, andalusian, taxes, occupation licence
RTA registration property rentals

It’s been two years since the entry into force of Decree 28/2016 regulating RTA FOR HOLIDAY RENTALS for properties in Andalusia.Half of all holiday rental properties in Andalusia registered before the Tourism Registry of Andalusia are located in the province of Malaga, according to the information published by Diario Sur in February 2018. This means that, in Malaga, there are over 18,000 tourist apartments registered.

It is important to remember that property rentals are subject to taxation

RTA FOR HOLIDAY RENTALS: inspections and penalties

The same newspaper has published that, in Malaga alone, there have been 1,354 inspections and 250 properties have been fined.

One of the most important requirements to be met by these properties is that they must have an initial-occupation licence as well as cooling and heating equipment. Once an RTA / VTAR number has been obtained, the property owner is required to include the registration number in advertising as well as in the promotional page on AirBNB or similar platforms offering these properties as holiday rentals.

Initial-occupation licence requirement

If the property does not have an initial-occupation licence, it should not be registered before them. I use the word “should” because the registration form is an affidavit, for which reason the property owners submitting it declare, under their responsibility, that the property meets all the legal requirements and the Andalusia Council will register the property automatically, without performing any prior inspections. However, if an inspection later finds that the legal requirements are not met, the owners will be fined.

There are many properties without an initial-occupation licence, due to different reasons, such as the age of such buildings, problems with the housing development, etc. This has driven some municipal councils to implement a specific procedure to obtain an initial-occupation licence solely to register the property before the Tourism Registry of Andalusia. Some of these councils are Málaga, Mijas and Benalmádena.

Nerja Council

The situation of holiday rentals in Nerja deserves a special mention. Nerja Council has paralysed the granting of initial-occupation licences since the entry into force of the Tourism Decree.

A month and a half ago, the council also established a procedure to grant such initial-occupation licences only for the purposes of registering properties before the Registry of the Andalusia Council (RTA). The website of the municipal council now includes the form necessary to file this application.

Over one year ago, our firm requested a copy of the initial-occupation licences of different properties in Nerja and, two weeks ago, we started receiving responses from Nerja Council.

Fortunately, the situation of these holiday rentals in Nerja seems to be in the process of being brought in line. This is definitely good news for all interested property owners as well as potential property buyers who will have the ability to obtain the initial-occupation licence necessary for registration.

Properties located in towns with fewer than 20,000 inhabitants

Another significant change that took place recently in the regulations set down by the Andalusia Council is that affecting holiday rentals located in towns with fewer than 20,000 inhabitants. These are towns such as Torrox, Viñuela, Alcaucin, Frigiliana, Competa, as well as most towns in La Axarquía.

Properties in these municipalities are not eligible for the 2016 Decree due to the properties being located in towns with fewer than 20,000 inhabitants. However, since February of this year, it is possible for them to be eligible for the 2016 Decree as they will no longer be considered rural properties, which, until now, was the only way to register these properties as holiday rentals.

RTA list of holiday rentals registered in Malaga

Due to the boom in holiday rentals in certain cities, such as Malaga, the Council has published a list of the registered holiday rentals.

This tool seeks to inform tourists about accommodation possibilities in the city and is also a tool to control the tourism boom affecting the city.

It should be noted that Malaga city is currently experiencing a significant boom in tourism, especially around the historic city centre. This has led to the emergence of plenty of tourist accommodation options, which has resulted in price rises for long-term lettings due to the low property supply as owners opt to offer the properties to tourists instead.

Over the last year, the historic centre has lost residents to holidaymakers. The Malaga Council is already debating the measures that should be taken to limit or regulate holiday rentals and make residential and tourist use compatible, so that residents are not lost and it is possible for people in the community to access rental homes, taking into account the average income in Malaga.

You can see the case of Palma de Mallorca, a city that recently approved a norm prohibiting holiday rentals.

Tax payable on the profits obtained

It is important to remember that property rentals are subject to taxation, for which reason owners –whether resident or not (IRNR)– must declare the profits obtained from such rentals.

Non-resident owners must declare such profits through form 210, which is submitted quarterly. Fortunately, since January of this year, the procedure has been simplified to make it possible to declare, in form 210, all the earnings obtained from renting the existing or new build property as a holiday rental over the quarter, even if they come from different occupants.

If the non-resident property owner owns several properties, a separate form 210 must be submitted quarterly for each one, and 19% of the total earnings obtained will be paid as tax, with the ability to deduct certain expenses according to the period of rental during that quarter.

It is interesting to note that, if you are tax resident in Spain, holiday rentals are taxed at a higher rate than rentals of usual residences –residential rentals–. This is the case because the Tax Agency allows these residential rentals used as the tenant’s usual residence to apply a reduction of 60% over the positive net return obtained from the rental. However, this deduction is not allowed for holiday rentals offered by tax residents.

Currently, there are still many property owners who do not declare rent but, if the Tax Agency devoted some attention to this matter, it could start inspection proceedings ex officio, by simply visiting a few websites and comparing them to the list of properties registered in the Tourism Registry of Andalusia.

Author: Gustavo Calero Monereo, lawyer at C&D Solicitors Torrox (Málaga, Andalusia)

The purchase of a property in Spain

ARE YOU THINKING OF BUYING A HOME IN SPAIN?

The purchase of a property in Spain
Buying a house in Spain or Andalucia?

When thinking about purchasing a property in a different country, there are many doubts and uncertainties that may arise.

We’ll try to give you the basic information you must take into account as well as a few tips.

WHAT ARE THE EXPENSES WHEN BUYING A HOME IN SPAIN?

The legal costs of a sale are usually around 10-12% of the purchase price for a secondhand home or 13-14% for a new home.

The highest cost is the tax on the purchase of properties: The property-transfer tax for secondhand homes –8% in Andalusia– or VAT at 10% plus document duties at 1.5% when purchasing a new home. Other costs to be taken into account are notarial fees and the Property Register.

The fees of the property agency are usually paid by the seller and included in the purchase price.

I ALREADY FOUND THE PROPERTY I WANT TO BUY. WHAT NOW?

Once you have selected a property, the agency will ask you to pay a deposit, usually around 5,000 euros, to remove the property from the market and provide enough time to sign a private sales contract where the seller will be paid 10% of the purchase price.

This holding document is usually a simple document that must include: the details of the sellers and buyers, the purchase price, the payment terms, the date of signing the private contract and the deed of sale.

For more information about the entire purchase process, click here or have a look at this video:

HIRING A LAWYER

If you’re thinking about spending a significant part of your savings on buying a home, it seems logical to hire a lawyer to advise you and make the sales process less stressful.

Beware of people who advise against hiring a lawyer to save costs or those who seek to provide legal advice and are not lawyers. If what you’re looking for is a lawyer, you can ask for a certificate accrediting his recognition and/or a professional liability insurance policy.

You should take into account that the average cost of a lawyer is around 1% of the purchase price plus VAT. Is it really worth saving 1% considering all the money you’ll be spending?

The lawyer you find should be independent and be very familiar with property law, being able to demonstrate some experience in this sector is always important. It may be helpful to review the public information available on the lawyer’s website as well as customers’ reviews.

WHICH DOCUMENTS SHOULD I HAVE IN MY POSSESSION?

The most important ones are:

  • “Nota Simple”, this is a short information of the property from the Property Register
  • Copy of the IBI or property tax for the home
  • Utility bills

If they also provide a copy of the licence or deed of the property, even better.

REGISTRATION IN THE PROPERTY REGISTER AND CADASTRE

The short information from the register – nota simple- and the cadastral reference appearing on the property tax bill can be used to verify that the property is duly registered in the property register and the cadastre, as well as that the persons selling it are its owners.

STRUCTURAL SURVEY?

It doesn’t seem unreasonable to have an architect visit the property and carry out certain checks, such as measuring the built area –this way you’ll know that the register and cadastre are accurate– and you’ll also get a professional opinion about the state of repair of the property.

Obviously, the architect will only be able to see defects that are apparent but at least you’ll be able to rule out certain flaws within the property.

URBAN PLANNING INFORMATION

If you’re going to buy a home on urban land, it is important that you ask the council if it has a licence for construction and first occupation licence. The licence of first occupation is requested from the council once construction work on the home is completed.

It is important to keep in mind that older homes –built before 1977– did not have a first occupation licence as this did not exist. It is also true that some recently built properties do not have that licence either for different reasons. Even though, in theory, the property cannot be occupied and used without that licence, this is actually possible and this is not necessarily an obstacle to buying the property.

Verify that the development where the home is located is free of debts towards the council and has been completed, in order to avoid paying additional costs in the future.

COUNTRYSIDE HOMES

If you’re going to buy a home on rural land, in this case the urban-planning situation is very different from the one explained for properties on urban land. The most important thing is to get information about when construction ended, whether the land has any type of special protection or if the council has started proceedings to re-establish lawfulness. In Andalusia, a regularization process has been created.

CHECK FOR POTENTIAL DEBTS WHEN BUYING A HOME IN SPAIN

With the information from the Property Register, the one received from the Council and the community of owners, you can see whether there is a debt on the property that could affect you as its new owner. This refers to debts such as a mortgage, liens, property taxes, community fees, etc.

If there are any debts, the best thing to do is to have the seller pay them before signing the Deed of Sale or withhold the amount of the debt from the seller so that you can pay it yourself.

DEED OF SALE AND YOU’RE THE NEW OWNER

For you to become the new owner of the property, you’ll have to sign a Public Deed of Sale before a Notary and pay the seller the rest of the price agreed, receiving the keys to the property.

Once you sign the deed, you need to start the process to record the home in your name in the register and cadastre, as well as pay all taxes.

After this, we hope you enjoy your new home.

Author: Gustavo Calero Monereo, lawyer at C&D Solicitors Torrox (Málaga, Andalusia)

SPANISH INCOME TAX RETURN FOR NON TAX RESIDENTS FILING BEFORE THE 31st OF DECEMBER

SPANISH INCOME TAX RETURN FOR NON TAX RESIDENTS FILING BEFORE THE 31st OF DECEMBER

Spanish IRNR tax return non-residents
Spanish IRNR tax return non-residents

If you are a non-resident in Spain and own a property there, you are liable to Spanish Income Tax for Non-Residents payment (Spanish IRNR). This issue was already considered in former articles on our website in November 2010 and October 2013:

When a property is owned by a married couple or several persons, each of them becomes an independent taxpayer, so that they should file tax returns separately according to the ownership interest they have on this property.

Depending on the property final use, the income subject to tax payment may be distinguished between:

1.- INCOME FROM LEASED PROPERTY: when the property is leased, the income to be declared will be the whole amount received, excluding Spanish VAT.

2.- TAXABLE INCOME OF URBAN REAL PROPERTY FOR PERSONAL USE: as this is the most common case, it will be deeply analyzed below:

The income to be declared is the amount resulting from the application of the following percentages to the property cadastral value:

  • Generally, 2 per 100.
  • In the event of property with a revised or modified cadastral value, 1.1 per 100 from the 1st of January 1994.

Once these percentages are applied, the final payable amount should be calculated for each of the owners pursuant to how long they have been owners of the property during the year.

Tax form 210 is used to pay this tax and it can be downloaded from the official web of the Spanish Tax Authority (A.E.A.T.), including the steps in English to fill it in. It is worthy mentioning that it is not easy to understand them.

Our office is currently dealing with the IRNR season 2012. The deadline to file this tax return expires on the 31st of December of this year. Although if you want to place the payment as a direct debit in your bank account the form must be filled before the 22nd of December. Thus, if you have owned a property in 2012, you should contact your tax advisor to fulfill this tax liability as soon as possible.

If you need our advice, we will be pleased to help you.

 

 

Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

 

 

accommodation in Andalusia

OWNING A BED & BREAKFAST (B&B) IN ANDALUSIA: DREAM OR REALITY?

Bed & Breakfast B&B Andalusia
Owning a Bed & Breakfast (B&B) in Andalusia

Starting a new life with your own B&B in Spain

In recent years, during the course of our work, we have met many foreign customers interested in living in Andalusia Spain, preferably in coastal areas and having their own rural hotel, hostel or Bed & Breakfast (B&B). Many of these customers consider this option due to their attraction to Andalusian climate and culture, with the dream of changing their lives and enjoying life in an extremely charming country.

Taking over a business or starting up yourself?

The main option that customers interested in opening a B&B in Andalusia contemplate is to buy a business already in operation, with fewer people seeking to buy property to build the business from the ground up.

If you look on the Internet, there are quite a few ads for the sale of rural hotels and B&B´s. Many of these ads offer the method of transferring a business that is already operating, along with the rental or sale of the property where the activity takes place.

During the transfer of the business, its assets, such as customer portfolio, fixed assets, provisions, etc. are valued. This serves the purpose of establishing a transfer price for the business, which must be paid by the new owner interested in continuing the operations.

What is a reasonable ´traspaso´ price for buying an existing B&B?

The valuation of the business (traspaso) is usually based on its income during recent years and on net profit, as well as the value of its fixed assets, i.e., all remodelling, improvements and provisions acquired for said business. Obviously, licences and legal permits required for engaging in such an activity are a key part of the transfer value.

In the transfer method, the rental of the property is usually established, most often with a lease option, or the property may be sold directly to the new owner. It seems more reasonable to choose rental with a lease option for the property during the first years of the business as if, for any reason, the business is not what was expected and the profits or workload are not worth the effort, we would lose the amount paid for the transfer but would not have to remain the owners of a property we acquired for a business we no longer wish to operate.

As you may infer, the operational cost of a B&B may be high enough to justify carrying out, prior to its purchase, a due diligence process about it for the purpose of determining whether the asking price (traspaso) is reasonable. I consider three lines of action very important in this regard:

VALUE OF THE BUSINESS.

You should hire an economist, expert, or tax consultant to study the accounting of the business during recent years, including all tax documentation, as well as the accounts submitted at the Commercial Register. With this report, an objective professional, knowledgeable on the matter, will take a snapshot of the financial situation of the business.

BUSINESS LICENCES.

In order to check whether the B&B you are seeking to purchase has all the necessary business licences, it is important for an architect to visit city hall and check whether the business is in order and complies with all the legal requirements for its operation. The architect will visit the property to verify that the infrastructure and installations are those legally required for this business and will issue a report of his or her findings.

PURCHASE OF THE BUSINESS.

Once you have decided to acquire the business, when preparing all the documentation for the transfer and rental/purchase of the property, it is important for an attorney to intervene so as to guarantee all the obligations of the parties, establish the payment method and protect the buyer from potential problems during its execution. If the property where the business will operate is located in a rural area, as is the case for many of these hotels, the intervention of an attorney is even more important, as these areas are subject to a series of legal limitations that must be reviewed.

Professional advice for your investment will pay back

It is obvious that this complete due diligence process for the B&B makes buying the business more expensive as you may spend a significant amount of money on these professionals and you may end up not buying the business. However, you must consider that spending thousands and thousands of euros, often from your savings or a bank loan, on something, before verifying its value, can lead to a very difficult financial and personal situation.

It is also a good idea to get informed about tourism in that area and expectations for the future. There are statistical data about the occupancy rates for rural accommodation that may help you. For instance, the Institute of National Statistics (INE) periodically publishes detailed occupancy surveys for rural tourism and any other type of accommodation and all this information, in detail and broken down by regions, can be accessed from its website.

New business changes after recession in Andalusia

For instance, on the 1 September, www.escapadarural.com published that rural tourism in Andalusia reached an occupancy rate of 36% in July and August. At the provincial level, 49% of businesses in Malaga were fully booked.

Author: Gustavo Calero Monereo, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)

 

solicitor english speaking

HOMEOWNERS ACTING IN GOOD FAITH, MORE PROTECTION IN THE ADMINISTRATIVE FIELD

Compensation Andalucian home owners in good faith
Compensation demolition Andalucian home owners in good faith

Last 24 June, the Senate approved an amendment that provides greater protection to third-party homeowners acting in good faith in administrative proceedings. This amendment was approved with the favourable votes of the main political groups and introduces a third paragraph in article 108 of Law 29/1998, of 13 July, which regulates contentious-administrative proceedings in Spain.

This new third paragraph provides that: “The Judge or Court, in the cases where, in addition to declaring the construction of a property to violate regulations, it issues a reasoned order to demolish the works and restore the physical reality altered, shall require, as a condition prior to demolition and unless a situation of imminent danger prevents it, the provision of sufficient guarantees to respond to payment of compensation due to third parties acting in good faith.”

In other words, with this paragraph, it is guaranteed that the judge ordering the demolition of a building in administrative proceedings must ensure, prior to the demolition, that third parties acting in good faith that will be damaged by the demolition of their homes will receive compensation. This means that, what this new subsection regulates is that a home may not be demolished if the homeowner cannot be compensated in advance, as it is understood that the homeowner has no reason to suffer these damages when the party responsible for the unlawful act committed by building the home was someone else.

The approval of this new subsection equates the handling of the enforcement of judgments on buildings, which entail their demolition, in administrative and criminal proceedings since, as we explained in our article from March, the criminal code has also been amended in this sense.

The amendment in the administrative field, which gives greater protection to third parties acting in good faith, is even more logical, from a legal standpoint, than the one in the criminal field and, needless to say, represents the correction of a regulatory mistake that resulted in great injustice.

It should be noted that, in contentious-administrative proceedings, courts examine building licences granted by the City and which have been unlawfully granted due to being contrary to the plan of the municipality.

Before this amendment, when a judgment nullifying a licence of this type was handed down, usually, one of the consequences of this nullification was the obligation to demolish the works completed under the licence declared null, without compensating homeowners acting in good faith at the time of demolition in these proceedings. The only option for these homeowners was to start different judicial proceedings either against the City or against the seller of the property, which could take years to be solved and provided no certainty of recovering the investment made. We can thus prevent cases as regrettable as that of Mr and Mrs Prior.

We can affirm that, in judicial proceedings related to buildings, both in the administrative and criminal fields, thanks to these legislative amendments, homeowners who purchase or will purchase a property in good faith, not being responsible for any unlawful act, will enjoy greater protection of their assets and property rights.

Part of what we denounced and explained in an article published in 2013 has been addressed by these changes, even though there is still some way to go and more legislative changes are expected.

This legislative amendment, as the one introduced in the criminal code in March, has been made possible thanks to the work of several associations of people affected from many different areas in Spain, including: AUAN, AMA and SOHA. The continued and persistent work of these associations, their representatives and the lawyers involved have made it possible for all homeowners in Spain who are third parties acting in good faith to enjoy greater legal certainty.

Author: Gustavo Calero Monereo, C&D Solicitors, (Lawyers)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

INHERITANCE TAX IN SPAIN: WE ARE ALREADY EUROPEAN!

INHERITANCE TAX IN SPAIN: WE ARE ALREADY EUROPEAN!

Inheritance tax in Spain
Inheritance tax in Spain

In our post of last March on Inheritance and Donation Tax, we discussed about the fact that European non-resident citizens in Spain were experiencing discrimination against resident citizens, because, under the same circumstances, they had to pay more taxes than resident taxpayers.

This unequal treatment happened when the deceased or beneficiaries were non-resident in Spain and they paid taxes in conformance with a State regulation which was more detrimental than the regional one, which was only applied to resident citizens.

This discrimination was confirmed by the European Court of Justice ruling dated 03rd of September 2014, which resolved this issue and established that Spain was infringing the free movement of capital within the EU, because of this separate treatment between resident and non-resident citizens.

On the 1st of January 2015, in order to comply with the aforementioned judgment, the amendment of the State Inheritance Tax regulation has entered into force in Spain. A special scheme has been introduced in regards of the Inheritance Tax, so that non-resident citizens in Spain who are European residents may apply the regional regulation as residents already do, equating their situation.

This new regulation establishes that in the event that the deceased is a European non-resident in Spain, the European non-resident beneficiaries may apply the regional regulation where the most valuable assets are located in Spain. If the beneficiaries are resident in Spain, the regional regulations where they reside shall be applicable.

If the deceased has been a resident in a Spanish region and the beneficiaries are non-resident in Spain, the non-resident beneficiaries shall pay inheritance tax in conformance with the regional regulations where the deceased resided.

At this point, it is worth mentioning that the collection of the Inheritance and Donation Tax in Spain is assigned to regional governments, so that they are free to set forth their own regulations.

The effect of this assignment is that the amount to be paid for this tax by Spanish residents may significantly vary depending on the region where they live. In fact, a fiscal “war” has arisen between regional governments as regards of this tax, because some people have decided to establish their residence in regions with a more favourable tax scheme in order to pay fewer taxes for inheritance and donations, particularly those with more valuable estates.

The most recent and famous case in Andalusia was that of the late Duchess of Alba, who was sentimentally related to Andalusia but not fiscally, because her residence for tax purposes was in Madrid. The main benefit of this fact is that her beneficiaries have had a tax saving of more than 90 million Euros in the Inheritance Tax.

Since non-resident citizens will also enjoy the same Inheritance Tax regulation than resident citizens and considering that the regulation to be applied is that of the region where the most valuable assets are located, this unequal treatment between regions will also affect them.

However, imagine that you are a non-resident in Spain, do not have any property, but you have some money in a bank entity in Spain. In this case, which regulation shall be applicable for your beneficiaries? It seems that the applicable regulation shall be that of the region where the bank registered office is located. Thus, it is not the same a bank entity with registered office in Madrid, Barcelona or Seville, for instance. It has been said “it seems” above, because a definitive answer has not been obtained when contacting the Tax Administration Office in respect of this issue.

In short, these are good news for European foreign citizens and their beneficiaries, and welcome to the regional regulatory “chaos” in respect of Inheritance and Donation Tax.

 

Author: Gustavo Calero Monereo, C&D Solicitors (lawyer)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

FUTURE REFORM IN ANDALUSIA FOR THE OWNERS OF HOMES CONSTRUCTED ON NON-DEVELOPABLE LAND

FUTURE REFORM IN ANDALUSIA FOR THE OWNERS OF HOMES CONSTRUCTED ON NON-DEVELOPABLE LAND

Andalucian houses constructed non-develople land
Andalucian houses constructed on non-develople land

Three weeks ago the Junta de Andalucia (Andalusian Regional Government) announced a reform of the Urban Development Law for Andalusia (LOUA) which aims to provide further legal security for owners of homes that are built on non-developable land (rustic land).

With the current LOUA regulations, for those buildings constructed on rustic land in Andalusia and which are within a zoning plot, the prescription period of six years that the administration has to “attack” these constructions on rustic land does not apply. In other words, no time limit is established, therefore the government leaves open the possibility to begin administrative procedures against said plot and the constructions that are on it, when it deems convenient, even if it has been over six years since the home was built.

The above has the main effect that a building on rustic land, built over six years ago on a property that has not been segregated, cannot be penalised or “attacked” by the government, whereas if the construction is part of a segregation/plot division it could be penalised in spite of being built over six years ago, and demolition of the homes built on this plot could be ruled, as established in article 49 of the Regulations on Urban Development Discipline. Regarding this article, I point out that in spite of it and in my opinion, I do not think that it is feasible to carry out any demolition under this precept due to several legal reasons.

The problem with current regulations since the LOUA came into effect in 2003 is that no serious monitoring or inspection policy has been implemented by the Junta de Andalucia and the Town Halls on rustic land. This has led to the proliferation of thousands of new homes and plot divisions throughout Andalusia, especially during the times of the real estate boom, and more so on the Costa del Sol, where this speculation reached unsustainable proportions.

In spite of the fact that it was feasible to control these constructions, it was not done and this led to the buildings entering the legal level, with many owners purchasing in good faith with all the appearances of legality. This has shown that current regulations in Andalusia on rustic land, and specifically on plot zoning, are pointless, because no one has made sure that they were enforced, making them inefficient at best.

Now the intention is to modify the LOUA and provide the possibility for isolated constructions located on plots of rustic land to regularise their situation through the figure of assimilating it as unregulated, that was introduced by the Decree of 2012. This will be so provided that the period of 6 years has elapsed without the government beginning any penalisation procedures against these buildings, therefore to these purposes the legal situation is considered as equal to those homes that are not located on a zoning plot.

It will take a period of 5 or 6 months for this reform to be approved, and it will be approved by parliamentary proceedings, therefore changes will be included during its approval.

I understand that this initiative by the Junta de Andalucia is a first step towards solving this problem. We all would have preferred for this not to have happened and that rustic land would never have been part of town planning speculation, but this problem started many years ago and the issue is clear; what to do with thousands of homes that cannot be demolished now?

Most of these homes are inhabited and they are still being bought and sold between private persons, therefore it is necessary to regularise them so that third parties acting in good faith have legal security as owners of these properties. Likewise, it is reasonable that those that were built without a building permit, which is most of them, should assume a cost for the regularization procedures and they should contribute the same as any citizen who wishes to build a house, and this bearing in mind that the acknowledgement by AFO is not the cure-all either. From an ecological and environmental standpoint, the legalisation procedure must guarantee that these homes do not cause any further damage to the area where they are located, and that their waste water is completely purified by autonomous installations, because as long as they are fully illegal, and cannot be “attacked” by the government, each owner will do what they see fit and damage to the environment will be higher.

In short, given the current situation and bearing in mind the problem that has been created due to the inactivity and lack of control by the public administrations, from a legal, financial and environmental standpoint, we must establish a regularization procedure for these homes. If not, if we continue with the current situation, it would be a great mistake and it would only continue to aggravate the problem as the years go by.

 

Author: Gustavo Calero Monereo, C&D Solicitors (lawyer)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

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