Mortgages - Is Buy to Let a Dream or a Nightmare?


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Buying Overseas Property - Spanish Properties

Last year Philip had concluded the purchase of his first apartment in Dulwich East London for 225K Sterling, and like many of his peers, was now considering the purchase of an Apartment in Spain.
In May this year he set off on an independent trip to research his ambition of finding investment property in Alicante southern Spain. The agent he had contacted on the Internet met him at Alicante Airport.
She drove a silver BMW convertible similar to the model of his own dreams. Perhaps he would think of changing his old Mercedes coupe for the latest model? Or maybe not,

Property in Spain was on his mind and this was the current ambition. They drove fast along the A7 and were soon drifting into the suburbs of Torrevieja.
Philip was surprised and excited by the urban sprawl that now appeared to surround him, full of new-build and construction cranes towering above the settlements like guardians of the night, but he was not ready for the effervescent pink lake that was now in full view. The estate agent explained that it was the action of the Sun on the salt content of the Lake and then only at certain times of the day, which created this well known local wonder. He was very impressed with his arrival into this foreign, but somehow familiar world of commercial business.

Dealing with a Spanish Property Developer

Madame Elisha sat him down in her office and smiled benignly at the young man now sitting in front of her.
She showed him the artistic mock-ups of several new and exciting developments currently displayed in her office.


Price for price she knew which one he was going to select and she smiled inwardly at this pleasant thought as a warm feeling grew inside her stomach. One block of apartments was significantly cheaper than the rest and this was what Philip chose. They discussed prices in general for a while and the state of the current market. According to Elisha certain developments were in great demand and some were selling out fast.


Any overdevelopment was occurring in the new Golf resorts where prices were dropping but she knew Philip was not a Golfer and she had checked this out previously in her initial Email exchange. This was contrary to the reality of the Spanish Property scene but who was there to contradict her? Off they went in her BMW to the site office of Philip s choice, to look at the show apartment. It was an excellent development which was well over halfway completed. Jose Manuel the Developer, fully intended to complete all the promised facilities before handing the site over to a Residents Association and moving onto his next site. His two bedroom apartments normally sold for 150,000 Euros. and his quality of finish was excellent.


The Developer was quite used to Elisha turning up and making her sales pitch. He thought she was an enthusiastic agent, well she seemed to have plenty of clients, and really that was all he was concerned about at this stage. He had changed his sales policy of late and invited more agents in to the fray due to fierce competition from other developments.


The market was changing rapidly in southern Spain where overdevelopment was finally catching up with slowing sales. Instead of promoting off plan sales developers now had finished stock to sell for the first time in recent history and some of them were feeling the heat from Bankers who were looking for repayments on construction loans. It was his good practice policy in developments of this size, not to take deposits from clients. Cleverly Jose Manuel offered this as an honest incentive to his potential clients to purchase from his Company and not the opposition. Jose Manuel would simply accept their details, and a statement from the agent stating that funds and or a Spanish Mortgage were available to this client to complete his purchase.

This had suited him well over the past two years and he had made good sales with this sensible practice. This morning he was feeling even more pleased with himself, as Alisha, one of his newer agents, was bringing potentially her 15th client this month!


The tour was duly completed; Philip was impressed with the quality of the finished product he had been shown, he had been taken around many of the pre-sold apartments as well as the show flat, and was even more impressed when he learnt he could choose any tile for his kitchen and bathroom from the display available. The promised in house facilities, swimming pool, health centre and BBQ area all promised to be the real icing on the cake and good bragging material back home.


He had met the Developer personally, another good practice exercised by Jose Manuel whenever time allowed. Philip was a very happy young man, if he stretched everything, he could just about afford it. He would sleep on it as was his normal habit. Indeed Philip thought long and hard that night and decided that it was indeed an excellent investment opportunity. The next morning he was at the Bank arranging a 35,000 deposit to pay to Elisha and her Developer.


Wait a minute! I hear you say, I thought the Developer did not want a down payment?


You are right! He did not, but Madam Alisha did think it was an excellent idea and had decided 35,000 Euros was easy to extract from unsuspecting high earning Yuppies from England who, under normal UK conditions would not have been so easily seduced, but this was no Mrs. Robinson. She had seduced 14 before him into parting with 35K and she was delighted with her days work. Even more so, because she did not pass on one penny to the Developer.


Philip signed a contract and gave all his employment details for the Spanish Mortgage he would need for the balance. Promising to return in six months when the development would be nearing completion and his final payment would be due. Of course a few months later a few more deposits had been taken from hard working upwardly mobile young men, Madam Elisha had taken 46 times 35K Euros. In fact she had single handedly Sold more than her allocation, and had actually sold some apartments twice! Madame Elisha walked off one day with some 1.6 million in cash! Yes the folding kind When 46 upwardly mobile young men appeared in October to complete on their purchases there was a big stink.


There were no legal contracts in place which stated that any deposit had been paid. The Developer had never received any money from Madam Elisha who was talking to Spanish Police on the Costa del Sol. Of course she denied everything and said she had never received any cash from anyone. Fraud squad detectives are still trying to trace large amounts of cash from a mesh of bank accounts but to date they have found nothing! The money is obviously in an account or accounts that they have not yet traced. She blamed it all on corrupt staff but somehow Jose Manuel could not believe that and was astounded by the news because he had received nothing and unlikely now to realize the 46 missing sales as they had lost their money.


The moral of the tale which is based on a true story, is never to give an agent a deposit. Should you wish to give a Developer money which may or may not be a great idea, at least get a solicitor to check out the terms of the contract. At the present time there are hundreds of Apartments for sale in Spain, an over production in the market place has now occurred, which will produce a realistic softening or price correction over the current period as more product is built from historical developments already begun. The bonus for buyers now is that most developers have to fight for market share by producing better quality finishes at more reasonable prices and Accredited Agents take smaller commissions. An Apartment in Spain today will still be an excellent value for money purchase. Investment property opportunities will be good for some years to come for the long term investor (10 Years)

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