Buying in spain

davholla

We have family in Spain who have financial problems. We trust them 100%.
We are thinking of buying them a flat to live and then sell in when they die
any pitfalls? Should we charge them a peppercorn rent?
As well as helping them out when they pass on in 5-40 years time the flat should be a good investment, I hope - any ideas about that?

BitterAndTwisted

You can charge them what you like but if they ever need to apply for benefits the tenancy could be deemed having been set up purely to extract tax-payers funds. Google "contrived tenancy" for more information. Charge them a "peppercorn" rent and you are probably not going to cover your costs and meanwhile will be responsible for all maintenance and repairs. I wouldn't fancy that sort of commitment for 40 years! Millionaires might feel otherwise.

If you are buying with cash you will just be taking on all of the usual responsibilities that a normal landlord would. Of which there are many.

If you need to buy with a mortgage it will need to be a Buy-To-Let one and many lenders preclude borrowers letting to family.

Never, EVER forget that those things which come to us easily with no effort required on our parts generally don't always continue to have a value.

davholla

BitterAndTwisted wrote: »

You can charge them what you like but if they ever need to apply for benefits the tenancy could be deemed having been set up purely to extract tax-payers funds

If they could get benefits like that in Spain then we wouldn't be thinking about this anyway!

BitterAndTwisted wrote: »

Never, EVER forget that those things which come to us easily with no effort required on our parts generally don't always continue to have a value.

Good point

BitterAndTwisted

Do you already own in Spain? Are you aware of the various forms of local taxation etcetera you might be getting yourselves into?

Amber_Sunshine

davholla wrote: »

any pitfalls?

Yes. Look at what has happened in the Spanish market in recent years.

davholla wrote: »

As well as helping them out when they pass on in 5-40 years time the flat should be a good investment, I hope - any ideas about that?

Do not assume that prices will go up. They are actually dropping, even in the popular city where I live. You could end up with a flat you can't rent out or sell if your family leave Spain.

davholla

BitterAndTwisted wrote: »

Do you already own in Spain? Are you aware of the various forms of local taxation etcetera you might be getting yourselves into?

No I don't earn in Spain but I am researching it.

davholla

Amber_Sunshine wrote: »

Yes. Look at what has happened in the Spanish market in recent years.



Do not assume that prices will go up. They are actually dropping, even in the popular city where I live. You could end up with a flat you can't rent out or sell if your family leave Spain.

Thanks and that is something that concerns me, I would guess Spanish prices will stop dropping and increase but when is the 64,000 Euro question!!!

kwmlondon

davholla wrote: »

We have family in Spain who have financial problems. We trust them 100%.
We are thinking of buying them a flat to live and then sell in when they die
any pitfalls? Should we charge them a peppercorn rent?
As well as helping them out when they pass on in 5-40 years time the flat should be a good investment, I hope - any ideas about that?

Having seen the prices of some of the property in Spain it's fleetingly crossed my mind that there MUST be some good investments out there, even if it's only somewhere to go on holiday. Mind you, it's just been an afternoon pipe-dream for me, but one of the things I always thought of as problematic was knowing the market. Even when property prices are falling, some places will be worth getting as they have fundamental value, i.e. great view, good transport links, nice area etc. but I'd simply never know any of this.

If you have family who can guide you to a place that is a sound place to own then it would be a good bet. Maybe getting somewhere that has rental potential too - a building with two apartments then your family could look after a rental property.

If you do the maths and it works out it could make a great long-term investment, a place where you can go yourself on holiday that you know is being looked after.

As well as having pitfalls, it does have some interesting potential.

DaftyDuck

One problem with investing in Spanish property is, with the collapse of the infrastructure being quite so very dramatic, whole swathes of property may, in the near future, become literally uninhabitable. You could find yourself buying a cheap property for long-term investment, only to find a compulsory demolition order, complete isolation from services, or compulsory purchase. Roads are likely to be abandoned, utilities non-existent.

Prices in some central areas of smaller cities are quite stable, whilst those of more recent developments are in utter free-fall... they are, in effect unsalable. I think they always will be.

I have given them a cursory look from the point of view of having a pleasant pad abroad, mainly interested in Cyprus and Greece, rather than Spain (which I did look at briefly). If I was going to buy, I'd ensure I bought a city-centre, older property, and certainly nothing in a new development. There are heritage properties available in Greece & Cyprus for a pittance, if you avoid the trendier places.

I'd also be slightly wary of compulsory reclaim on foreign-owned properties, should the economy worsen further. You could lose the lot, and you might get little sympathy from the locals. Think Cypriot banks for an example of the "them & us" divide....

Frankly, I've seen many older and wiser heads on here say never rent to family or friends. I'd follow that advice in a heartbeat. Bring foreign parts in, and i'd squeal. Add those with collapsing economies, and I'd rather have an all-over-body-wax followed by a bath in rubbing oil!

ifyouwantmy

Can anyone please advise how to find a reputable solicitor and surveyor when buying a property abroad ?

agrinnall

ifyouwantmy wrote: »

Can anyone please advise how to find a reputable solicitor and surveyor when buying a property abroad ?

I'd suggest you start your own thread with a suitable title rather then resurrect one that is long dead.