Blog / News

100% mortgages strike back!

Raymundo Larraín Nesbitt, August, 21. 2018

Larraín Nesbitt Lawyers has over 16 year’s conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats acquiring property all over Spain, including Madrid and Barcelona.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21^st of August 2018

If you have been following our articles and blogposts, you are probably already aware that Spain’s real estate sector is alive and kicking. 2018 has witnessed the return of new-build property (off-plan). Cranes can once more be spotted over the horizon dotting the landscape with construction lorries darting to and fro.

It is in this bustling context that lenders, only too eager to jump back into the action after a decade-long hiatus, have joined the fray offering their core business with enticing one-time offers: 100% mortgages.

Five 100% mortgage offers for you

Bank Santander. Hipoteca Altamira-casaktua
BBVA. Hipoteca 100%.
Bankinter. Hipoteca 100%.
Ibercaja. Superhipoteca.
Ibercredit. Hipoteca 100%.

_{Legal disclaimer: mortgage loans are a complex financial product that require unbiassed professional assistance. You should seek advice from a lawyer or seasoned mortgage broker.}

We offer the most competitive fees in the market.

Conveyancing – Buying from €995

We are specialized in conveyancing

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal services Larraín Nesbitt Lawyers can offer you

Conveyancing – Buying from €995
Conveyancing – Selling from €795
Non-Resident Income Tax (Fiscal Representation) from €90/year
Holiday Rentals Accounting Service (HRAS) from €100

Buying property related articles

Buying Resale Property in Spain – 21st February 2013
Buying Off-Plan Property in Spain – 8th of June 2013
How to Buy Property in Spain Safely – 10th October 2014
House Hunting in Spain – Interview with The New York Times. June 2015
Resurgent Spain: Málaga Sees Strong Sales – Interview with Mansion Global (The Wall Street Journal). December 2015
Buying Property in Spain from a Private Seller (Resale Property) – 21st of February 2017
Buying Property in Spain from a developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
8 Tips on Buying Off-Plan in Spain – 8th June 2018
Mortgages: fixed or variable rate? – 11th June 2018
100% mortgages strike back! – 21st August 2018

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

... Read more

We don’t need a lawyer since the bank (or notary) will be doing a check on the Title as they will do the mortgage

Raymundo Larraín Nesbitt, August, 10. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
10^th of August 2018

If I were paid a pound every time I’ve heard this line from someone, I would be a multi-millionaire by now. Now that offplan property has kickstarted again, I am witnessing more and more repeat mistakes from last property’s boom that led whole families to lose their life’s savings.

Some buyers are duped into thinking that only because a lender or notary is involved in their purchase, they are going to run a full due diligence on the Title to make sure it is clean and above board – crass mistake! This is one of the points I raised in my article: Buying Property in Spain – 10 Reasons to Hire a Lawyer.

This serious error of judgement, made by countless buyers who are purposely misled by parties not interested in there being a ‘pesky’ lawyer involved, may lead you to lose ALL your money/savings.

If this were true, we wouldn’t have dozens of thousands of offplan buyers from the previous property boom litigating at courts to claw back their life savings on buying off-plan property. Just read any expat newspaper to pick up on the glossy ads promising you to recover your offplan deposits. I can almost assure you that in 100% of these cases a bank was involved financing the conveyance.

If you think for one moment a Spanish bank (or notary public) does the work of an independent lawyer, you need therapy.

Banks are not going to check if there is a Building Licence issued, they are not going to bother to request Bank Guarantees securing all your stage payments (including the initial holding deposit), they are not going to ask for a Licence of First Occupation, they won’t do a snagging list, they are not going to disclose problems affecting the land, in some cases they don’t even check if the land is owned by a developer, they won’t bother to check if the house (or parking or storage) are the ones you actually signed up to buy, they won’t check if the size of the property, or its characteristics and materials are the actual ones you paid for, etc.

Banks and Notaries each have their own role, and that does not include acting as your own personal solicitor safeguarding your legal interests – that is not their role. Lenders act for profit and notaries are civil servants that ensure taxes are paid to the government. Don't delude yourself into thinking these professionals replace a lawyer's job, because they don't.

If you think lawyers are expensive, just wait until you start dealing with lenders unrepresented – good luck with that!

Bottom line, if you are buying property in Spain, whether offplan or resale, you should retain the services of a competent law firm to help you wade safely through the minefield. My advice is that you need to instruct your own lawyer on buying property, regardless if it is Larraín Nesbitt Abogados (LNA), or any other lawyer of your choosing. You will thank me later.

We offer the most competitive fees in the market.

Conveyancing – Buying

We are specialized in conveyancing

Larraín Nesbitt Lawyers, small on fees, big on service.

Legal services Larraín Nesbitt Lawyers can offer you

Buying property related articles

Buying Resale Property in Spain – 21st February 2013
Buying Off-Plan Property in Spain – 8th of June 2013
How to Buy Property in Spain Safely – 10th October 2014
House Hunting in Spain – Interview with The New York Times. June 2015
Resurgent Spain: Málaga Sees Strong Sales – Interview with Mansion Global (The Wall Street Journal). December 2015
Buying Property in Spain from a Private Seller (Resale Property) – 21st of February 2017
Buying Property in Spain from a developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
8 Tips on Buying Off-Plan in Spain – 8th June 2018
We don’t need a lawyer since the bank will be doing a check on the Title as they will do the mortgage – 10th August 2018

... Read more

What is IBI Tax?

Raymundo Larraín Nesbitt, July, 30. 2018

Blog post explaining the importance of IBI tax and the consequences of non-payment.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
30^th of July 2018

Introduction

Unbeknownst to most non-resident property owners, on buying property in Spain, you become liable to pay IBI tax on the following year. No one will give you the heads up on it, so it is up to you to find out how much you owe and comply with the Tax Authorities. This is Spain’s equivalent of the UK’s Council Tax.

The idea of writing this blog post has come about on filing taxes for expats, specifically holiday letting income tax. We have realized there is a huge number of foreign owners who remain completely unaware of the existence of IBI tax and the grievous consequences of its non-payment.

IBI tax is of crucial importance because it has associated a valuation for tax purposes of your home known as 'cadastral value' (valor catastral, in Spanish) which is used as the benchmark to calculate all your property-related taxes.

Cadastral Value - Definition

Is the assessed value local Tax Authorities give to a property. It is usually well below the market value. This rateable value is used as the taxable base to calculate a series of taxes. You will find the cadastral value of your property in one of your local tax bills (i.e. IBI). Be aware that a store room or garage space may be regarded legally as a distinct separate entity from your main home and therefore subject to their own individual cadastral values. A cadastral value, in general terms, is 30 to 40% below the current market price of a property. So it does not equate to a property's true market value, it is actually well below it (which is good news).

IBI tax, it's relevance

In other words, if you don’t have IBI tax set up, you cannot pay Non-Resident Imputed Income Tax nor Non-Resident Income Tax on your quarterly holiday lettings. Although this may sound good on paper, it really isn’t.

Not paying IBI is a huge bummer from a taxation point of view. But far more importantly, it leaves the door ajar for your town hall to impound your property and sell it through a public auction. You will only be served notice of this procedure on your Spanish home address. So, chances are that if you live abroad, you will only find out when you come over to Spain - which will already be too late.

Bottom line, setting up IBI tax and paying it on time, is of paramount importance and it just cannot be stressed enough; unless of course you fancy losing your property to the local Authorities...

IBI Tax - Definition

The Impuesto sobre Bienes Inmuebles (IBI, for short) is a tax that applies to both residents and non-residents. In some parts of Spain, it is known as SUMA.

This is a local tax levied by the town hall where your property is located. It is paid once a year (normally due in August through to November). It is equivalent to the UK’s Council Tax. It varies from one town hall to the next. It is based on the rateable value of your property (0.4 – 1.1% of cadastral value per annum); for cheap properties it can be as low as a few euros (think rural land) whereas posh pads, in sought-after prime locations such as Marbella, may command several thousand euros/year.

Sample IBI tax invoice

Just follow the link supplied: sample IBI invoice

When is it due?

Town halls are empowered to rule on this, so it varies. Normally, it is payable once a year, typically from August through to September.

Whoever owns the property on the 1st of January is liable to pay this tax, by Law.

Importance

IBI tax is used as benchmark to calculate all property-related taxes.
On selling, a buyer’s lawyer will demand copies of the IBI invoices for the previous 4 years.

(Dire) consequences of not setting up IBI tax payment

It may lead to your property being seized and sold off in a public auction. Spanish town halls, beleaguered by dropping revenue, are becoming increasingly adept at pursuing aggressively this local tax post-credit-crunch; particularly for high-end property.
It is not possible to file and pay NRIT and NRIIT taxes, as it requires for its calculation IBI tax. This in turn will attract fines, delay interests and surcharges against your Spanish property.
On selling, a buyer’s lawyer will practice a huge retention to safeguard against any unpaid IBI tax. Moreover, it may even jeopardize the sale of your property as an administrative procedure may be under way to repossess your property.
If you are non-resident and selling, buyers must withhold 3% of the sales proceeds by law. As a seller, you will forfeit this 3% sales tax rebate (plus legal interests) to which you may be entitled to.

Conclusion

Non-payment of IBI tax is the stupidest fastest way to lose ownership of your Spanish property.

If you haven’t been paying this local tax, you should contact Larraín Nesbitt Lawyers ASAP to get it set up and start paying it. We strongly recommend you set it up as a direct debit against your Spanish bank account.

Non-payment of IBI tax may lead your town hall to impound your property and sell it off in a public auction. Do not expect to be refunded part of the auction proceeds: If you can’t sell it, you can always auction it.

For your own sake, double check and ensure you are paying IBI tax.

We offer the most competitive fees in the market.

Setting up IBI tax from €400

We are specialized in taxation

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance, and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal & Tax services Larraín Nesbitt Lawyers can offer you

Setting up IBI Tax
Conveyancing – Buying from €995
Conveyancing – Selling from €795
Non-Resident Income Tax (Fiscal Representation) from €90/year
Holiday Rentals Accounting Service (HRAS) from €100

Taxation-related articles

Taxes on Selling Spanish Property – 8th December 2014
Taxes on Buying Spanish Property – 8th July 2015
Non-Resident Taxes in Spain – 8th December 2015
Spain’s Non-Dom Tax Scheme – 8th July 2016
Renting in Spain - Landlord´s Taxation – 8th of January 2017
Holiday Home Taxation in Spain – 8th of July 2017
Non-Resident Income Tax – 8^th December 2017
Tax advantages on becoming resident in Spain – 8th March 2018
Holiday Rental Taxation in Spain – 8th July 2018
Holiday lettings: with or without VAT? – 21st June 2018

... Read more

If you can’t sell it, you can always auction it

Raymundo Larraín Nesbitt, July, 21. 2018

Admonitory blog post on the perils of Spanish public auctions.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21^st of July 2018

Crass mistake. Indulging in the idea that if you can’t sell your home, you can always auction it off is a recipe for disaster. If you think for one moment a lender will pay you the locked equity buried in your home, you need therapy. I’ve already had two people making this grievous mistake over the last six months. I thought it was worthwhile writing a short blog post to warn other borrowers.

For illustration purposes, I am going to take a real-life example. Mrs Osiris has a second home, a Spanish property with a real market value of €400,000. She is resident in the United Kingdom. She has a loan for €130,000. Her tenants stopped paying the rent over the last three months which she used to offset her monthly repayments. As a result, she has fallen into arrears with her lender. Unable to sell her property, she decides it best for her lender to repossess and auction it off. She is under the (false) impresssion she will be paid off the balance of the equity post-auction (at least €200,000 in her mind).

The Trials of Osiris

Mrs Osiris is blissfully unaware of the intricacies on how Spanish law works and unbeknownst to her she is in for a rude awakening.

The first mistake she makes is that she (wrongly) assumes that the starting value for the auction of her home equates to the market value (€400,000). I have already explained in previous articles and blog posts that lenders set an auction value in every Mortgage deed. They command their own bank valuations, which are already well-below the market value. The appraisal comes up as €320,000 (or 20% below the real market value). Lenders - ex Art. 682 LEC – can then set a value, strictly for auction purposes, in the Mortgage deed which can be up to 75% of the appraisal report. So, as a recap, this property that had a market value of €400,000 is valued 20% below the RMV and then suffers a further 25% reduction leaving it as a starting auction value of €240,000. More on this here: Bank valuations vs. market value

The starting value for auction purposes set in Mrs Osiris’ Mortgage deed is: €240,000.

The second mistake she makes is that she forgets to deduct all the associated costs, fees and legal interests of a repossession procedure, which easily are in the region of €50,000.
Her third mistake is that she is unaware on the ‘perverse’ auction mechanics. More on this here: Bank Repossessions in Spain. On the first round usually no one bids. So, on the second round – by law – the value drops to 50% because this was her second overseas home (not her place of permanent abode).

Drop of the gavel

After the auction is over, the lender has adjudicated itself Mrs Osiris’ home for only 50% of the initial auction value, that is 50% * €240,000 = €120,000.

But as you recall, Mrs Osiris owed her lender €130,000 as principal of the loan plus a further €50,000 in associated repossession expenses. Total debt = €180,000.

As you can see, there is a shortfall of €60,000.

Meaning she shockingly STILL owes money post-repossession despite having a ‘buffer’ of 200k equity locked in her property!

Lenders don’t lose money, and if they do, taxpayers are always there to bail them out.

Reality check

Mrs Osiris was expecting a fat cheque of €200,000 in the post from her lender...

All she gets is a nasty letter reminding her that she still owes €60,000 post-repossession which interests are mounting up exponentially over time…

Image result for trials of osiris moon of osiris

Of cinders and regrets

Never make false assumptions on Spanish legal matters – you will regret it. Never allow a lender to have the last word, it's a blind perdition.

If you think a lawyer’s advice is expensive, just wait until you start dealing with a lender unrepresented…

Had Mrs Osiris spoken with a lawyer, she could have avoided summoning the above nightmare scenario altogether walking away scot free with at least €77,700 in her pocket. She should have sought legal council when the messenger first notified her that her tenants had started to fall into arrears. Don't Bungie jump with your money, seek legal advice!

She is now being chased for the ‘shortfall’ post-auction. She is being blacklisted in Experian, and other credit-rating agencies, which will seriously hamper her borrowing ability going forward in the UK or elsewhere. Her doctrine of passing is a harsh lesson in life and serves as a stark warning to other borrowers.

"Dura lex, sed lex."

Draconian Roman civil law scholar maxim meaning that, however regrettable the outcome of a legal matter, the law must be upheld.

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal & tax services Larraín Nesbitt Lawyers offers you:

Mortgage-related articles

Lifetime Loans or Reverse Mortgages in Spain Explained – 21st February 2011
Advice to Struggling Mortgage Borrowers in Spain – 8th March 2011
Spanish Mortgage Loans: Beware of Abusive Clauses – 8th January 2012
Spanish Mortgage Loans: An Overview – 21st February 2012
Mortgage Floor Clauses Revisited (‘Cláusulas Suelo’) – 8th December 2013
Bank Repossessions in Spain– 21st February 2014
Bad Debtor’s List (‘Fichero de Morosos’) – 8th April 2014
Spanish Creditors Pursuing Debts Abroad – 8th May 2014
Dación en Pago Explained or How to hand Back the Keys – 8th December 2014
Personal Bankrutpcy in Spain: Second Opportunity Law – 8th September 2015
Limiting Liability in Spain – 8th November 2015
Recap of Legal Actions in Spain against Banks & Others – 16th March 2017
Never act as a guarantor in a Spanish mortgage loan – 10th April 2018
If you can’t sell it, you can always auction it – 21st July 2017

... Read more

Holiday lettings: Landlords must report to the Police all guests aged 16 or over

Raymundo Larraín Nesbitt, July, 12. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
16^th of July 2018

As a general rule, all holiday lettings in Spain must report to the Police all guests aged 16 or over.

Following Spain’s unpopular ‘Gag’ Law, landlords must fill in a registration form on entry of their guests. This registration form must be then sent to the Police or Guardia Civil for every guest aged 16 years old or older within the next 24 hours of the accommodation following Security Laws from 2003 (Orden INT/1922/2003, de 3 de julio, sobre libros-registro) and from 2015. Registration forms must be stored by landlords for a period of up to three years for the inspection of the Security Forces.

You can either do this yourself (good luck with that) or else hire a company to do it for you.

Landlord, have you checked out this mobile app to make your life easier? Check-in Scan.

You are welcome.

Larraín Nesbitt Lawyers offers a 24-hour registration Tourist licence service exclusive to the region of Andalusia: Registration of Holiday Homes (Andalusia). We will set you up and make it very easy for you to start renting out legally in a jiffy.

Why choose us?

Larraín Nesbitt Lawyers has over 16 years’ experience filing taxes for expatriates.

We can reduce your landlord tax bill by a minimum of 40% - or money-back guarantee!

We will save you more money on taxes than what you spend on hiring us.

Holiday Rental Accounting Service (HRAS) from only €100/tax quarter

We are specialized in taxation

Larraín Nesbitt Lawyers, small on fees, big on service.

Legal & tax services available from Larraín Nesbitt Lawyers:

Holiday letting-related articles

Holiday Rental Laws in Spain – 8th of March 2015
Holiday Rental Laws in Andalusia (Decree 28/2016) – 8th of February 2016
Renting in Spain - Landlord´s Taxation – 8th of January 2017
Holiday Rental Home Taxation in Spain – 8th July 2017
Holiday Rentals in Andalusia Made Easy – 3^rd July 2017
New Balearics Holiday Rental Law – 8^th of September 2017
Holiday Rental Accounting Service (HRAS) – 16^th January 2018
Holiday Rental Taxation in Spain – 8th July 2018
Holiday lettings: with or without VAT? – 21st June 2018
Holiday lettings: Landlords must report to the Police all guests aged 16 or over – 16^th July 2018

... Read more

Eight Tips on Buying Off-Plan in Spain

Raymundo Larraín Nesbitt, July, 1. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1^st of July 2018

The sales season is upon us.

Whether you are looking to buy as an investment or for pleasure, now is the right time to dip back into the Spanish market. Low prices and cheap mortgages won't last forever.

Property prices in Spain (confirmed sales) jumped by almost 10% in the 1Q 2018.
The overall number of house sales increased 23% year-on-year in January 2018.
The construction sector in Spain has increased 6% year-on-year on the 1Q 2018. This explosive surge in growth is unprecedented since the year 2001.

Brick is back. Can you afford to miss out on your dream home?

8 Tips on Buying Off-Plan in Spain

Hire a qualified registered lawyer (Abogado)

Don’t be in a rush to hand over your money without having hired an independent lawyer first; do not allow yourself to be pressurized by intermediaries. Rash decisions often turn out to be expensive mistakes in life.

Our law firm has over 16 year’s conveyancing experience at your service. You can read further here: Buying Property in Spain – 10 reasons to hire a Lawyer

Plot of land under a developer’s name

One should never buy an off-plan unit in a land that is still not registered under the developer’s name. There are far too many associated risks to take a gamble with your hard-earned money.

Building Licence

This is by far the biggest mistake that a buyer can possibly make. Many problems could easily be staved off on following it. The Building Licence will ensure that the building is above board and the property is not being built in green belt land, for example.

Bank Guarantees

A bank guarantee is of critical importance, acting as a safety net securing all your stage payments, should the developer fail to complete your property.

Licence of First Occupation

A Licence of First Occupancy is a certificate issued by a town hall that confirms that a newly-built property fully complies with all planning and building regulations and is ready to be used as a dwelling.

In general, I advise you not to complete without a Licence of First Occupation.

NIE number

A NIE number is a Fiscal Identification Number for foreigners and is required, among other things, to buy property in Spain.

You can attain a NIE Number through us in only 3 days.

Snagging list

Before you complete on a newly-built property you should always do a snagging list of the property. You can either draw up a snagging list yourself or else appoint one of the many reputable companies that may carry it out on your behalf.

Post-completion: dealing with property taxes, utilities, community fees & other

Once you have acquired your new Spanish property, you will have to face all the associated running expenses. Make sure you have carefully budgeted for this to avoid unpleasant surprises!

We offer the most competitive fees in the market.

Conveyancing – Buying from €995

We are specialized in conveyancing

Larraín Nesbitt Lawyers, small on fees, big on service.

Legal services Larraín Nesbitt Lawyers can offer you

Conveyancing – Buying from €995
Conveyancing – Selling from €795
Non-Resident Income Tax (Fiscal Representation) from €90/year
Holiday Rentals Accounting Service (HRAS) from €100

Off-plan-related articles

Buying Off-Plan Property in Spain – 8th of June 2013
House Hunting in Spain – Interview with The New York Times. June 2015
Resurgent Spain: Málaga Sees Strong Sales – Interview with Mansion Global (The Wall Street Journal). December 2015
Buying Property in Spain from a developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
Non-Resident Taxes in Spain – 8th December 2015
8 Tips on Buying Off-Plan in Spain – 8th June 2018

... Read more

Holiday lettings: with or without VAT?

Raymundo Larraín Nesbitt, June, 21. 2018

The following blog post has been summarised to avoid unnecessary tax technicalities. The quoted tax rates are subject to change from one year to the next. The advice given is of a general nature and should not be construed as tailored tax advice. Seek professional legal advice on your matter – see disclaimer below.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21^st of June 2018

As a general rule, holiday homes do not invoice with VAT in Spain.

However, if you offer any of the following services listed below, your rental may be regarded by the Spanish Tax Office as assimilated to offering hotel accommodation:

You rent out to a company, which in turn sublets your property or is the end-user. Either way, VAT must be submitted every tax quarter besides also filing NRIT. So, two sets of taxes need to be submitted every tax quarter in this case.
Concierge service.
Daily changing of bed linen.
Daily changing of bath towels.
Daily cleaning of property/room.
Room service (food and beverage), catering.
Bed & Breakfast.
Other ancillary hotel services such as: daily press, laundry cleaning, luggage storage service, accommodation booking (holiday reservation), parking facility, valet service.
Other.

In which case you would need to invoice your guests with VAT, which would greatly impact the profit margin of your letting business increasing its accounting costs. Our advice is to avoid offering any of the above ‘hotel’ services.

Why choose us?

Larraín Nesbitt Lawyers has over 15 years’ experience filing taxes for expatriates.

We can reduce your landlord tax bill by a minimumof 40% - or money back guarantee!

We will save you more money on taxes than what you spend on hiring us.

Holiday Rental Accounting Service (HRAS) from only €100/tax quarter

We are specialized in taxation

Larraín Nesbitt Lawyers, small on fees, big on service.

Tax services Larraín Nesbitt Lawyers can offer you

Rental-related articles

Renting in Spain: Top Ten Mistakes – 8th of June 2011
Tenant Eviction in Spain – 8th of June 2014
Holiday Rental Laws in Spain – 8th of March 2015
Holiday Rental Laws in Andalusia (Decree 28/2016) – 8th of February 2016
Renting in Spain - Landlord´s Taxation – 8th of January 2017
Holiday Rental Home Taxation in Spain – 8th July 2017
Holiday Rentals in Andalusia Made Easy – 3^rd July 2017
New Balearics Holiday Rental Law – 8^th of September 2017
Holiday Rental Accounting Service (HRAS) – 16^th January 2018
Holiday Rental Taxation in Spain – 8th July 2018
Holiday lettings: with or without VAT? – 21st June 2018

... Read more

Mortgages: fixed or variable rate?

Raymundo Larraín Nesbitt, June, 11. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
11^th of June 2018

This question is hardly a good pick-up line – please don’t embarrass yourself, or me, trying it out – you will likely get slapped! However, you will surely be asking it yourself if you need a mortgage to finance your new bolthole under the sun.

With the recovery of the property market, more buyers will be asking themselves this question over the next years.

This blog post is going to explain why – at this particular moment in time – fixed rate is the superior option and why you should opt for it.

Fixed-rate mortgages

Pros

Security. You know exactly how much you will be paying every month. Interest rates are at their lowest point historically in the Eurozone. The only way is up now. If you pick a variable interest rate, you are going to be paying more and more every month which is going to add to your stress levels and mess up with your budget. Interest rates reached 5% in the peak. So paying, for example, a 2% fixed interest now is reasonable.
Cheap. Fixed rates are at their nadir. The moment interest rates rise again in the near future, fixed rates will also rise in tandem. You won’t see again for a long time the great offers that are now available on the mortgage market.
Shielded. Market volatility won’t affect you. You are going to pay the same fixed quota every month over the next 20 years regardless of Brexit, Italexit, Russian political meddling, Korean nuke boy, Trump's tantrums and whatnot.

Cons

Fixed rates are higher in the short-term than variable ones.
Variable rates would allow you to repay the loan earlier.
You pay more interests at the start.

How can our law firm assist you?

Our law firm has over 15 year’s conveyancing experience. Speak to us, we will be very pleased to discuss your matter with you and give you impartial advice. We offer the most competitive fees in the market.

Conveyancing – Buying from €995

We are specialized in conveyancing

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal services Larraín Nesbitt Lawyers can offer you

Conveyancing – Buying from €995
Conveyancing – Selling from €795
Non-Resident Income Tax (Fiscal Representation) from €90/year
Holiday Rentals Accounting Service (HRAS) from €100

Mortgage-related articles

SWAP Clauses: Have You Been a Victim? – March 2010
Lifetime Loans or Reverse Mortgages in Spain Explained – 21st February 2011
Advice to Struggling Mortgage Borrowers in Spain – 8th March 2011
Spanish Mortgage Loans: Beware of Abusive Clauses – 8th January 2012
Spanish Mortgage Loans: An Overview – 21st February 2012
Mortgage Floor Clauses Revisited (‘Cláusulas Suelo’) – 8th December 2013
Bank Repossessions in Spain– 21st February 2014
Bad Debtor’s List (‘Fichero de Morosos’) – 8th April 2014
Spanish Creditors Pursuing Debts Abroad – 8th May 2014
Dación en Pago Explained or How to Hand Back the Keys – 8th December 2014
Bank valuations vs. market value – 8th April 2018
Mortgages: fixed or variable rate? – 11th June 2018

... Read more

My (off-plan) builder says I don’t need Bank Guarantees. Is this safe?

Raymundo Larraín Nesbitt, May, 30. 2018

Admonitory blog post on the importance of bank guarantees on buying off-plan property.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
30^th of May 2018

In short, no.

So why is your developer telling you this fib? Because he’s likely pulling a fast one on you.

In Spain, if you become a self-developer (autopromotor) you don’t need to apply for bank guarantees because YOU are the developer.

I had already warned about this cunning ploy a decade ago in my 2008 article Bank Guarantees in Spain under the heading “Bank Guarantees on Self-Built Properties.” Now that we see once more a massive resurgence in offplan, this ‘trick’ is being used all over again.

Becoming a self-developer effectively neatly circumvents Spanish Consumer Law obligations developers have of issuing a buyer with bank guarantees at their own expense. Bank Guarantees which secure ALL your stage payments. In other words, the developer (builder) offers you this option to avoid huge costs and legal responsibilities. The moment you become a self-developer you are no longer protected by Spain’s Consumer Laws as you are automatically deemed a grizzled veteran. In plain English, you lose significant consumer entitlements - no bueno.

Smart cookies that offer you to become a self-developer will tell you that the land on which the house is to be built upon (which you own) is your best guarantee. Er, no thanks. Playing Russian roulette is probably a safer option.

If you are a layman on how the construction business works, let alone in Spain, this option is not for you. Self-building your own property in Spain is only an option to be followed by those dauntless who have deep pockets (can afford losses) and have the know-how. It is categorically not an option for your average Tom, Dick and Harry gambling with their life savings to save a fast buck. Be smart, don’t cut corners in Spain unless you are affluent and know exactly what you are doing.

Project Manager vs. Builder

Even shrewder cookies will offer you to take on a dual role; acting as both PM and builders. Needless to say, this is neither acceptable nor safe. It’s like putting a fox in charge of the hen house.

If you are mad resolute you want to become a self-developer, make sure you appoint a PM that is totally independent and unrelated to the builder. That way you will ensure he will do his job policing the builder’s work.

If you want to add a further layer of protection, place a lawyer and an architect on top on an overseeing role.

Ten-year warranty: did you know?

Did you know that as a self-developer one of your (many) responsibilities is to attain a ten-year warranty which is fairly expensive?

Did you know you can’t sell on your newly built house for the next ten years unless you have attained said 10-year warranty?

Did you know that to attain this warranty it follows a laborious procedure which requires independent inspections at every phase of the construction procedure?

In other words, it can't be tacked on at the end of works.

How can our law firm assist you?

Conveyancing – Buying from €995

We are specialized in conveyancing

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal services Larraín Nesbitt Lawyers can offer you

Conveyancing – Buying from €995
Conveyancing – Selling from €795
Non-Resident Income Tax (Fiscal Representation) from €90/year
Holiday Rentals Accounting Service (HRAS) from €100

Off-plan-related articles

... Read more

Landlord, careful with tenant’s subletting on your property!

Raymundo Larraín Nesbitt, May, 21. 2018

Admonitory blog post on the abusive misuse of long-term rentals.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21^st of May 2018

Sly tenant gleeing on all the money he's going to cream off you.

Now that the good weather has made a comeback, the rental season in Spain kicks off. Many landlords will be busy these days signing lease agreements on their Spanish properties. Unless you have been living under a rock for the last two years, the holiday rental business in Spain is booming (two-digits growth p.a.).

I though it would be a good idea to write a short blog post on the serious risks of renting out your property long-term and have your tenant subletting it as short-term unbeknownst to you.

Many unsuspecting landlords are falling prey to sneaky tenants who are subletting the property as short-term accommodation making a killing. It is estimated that on average a tenant can make 60% over and above a long-term rental. So obviously there is quite the incentive to flaunt the rules and do it, as it is win-win for them. They cream off the rental money and have zero risk on doing it, as any penalty is footed by the landlord as I explain next.

Who is ultimately responsible for this misbehaviour?

As I cared to explain in a previous blog post (How (not) to bypass regional Holiday Home Laws in Spain) the responsibility falls squarely on the property owner. Some cheeky landlords are renting out their luxury pads in prime beach locations as ‘fake’ long-term rentals to foreign companies in the full knowledge that these are busy marketing and subletting the property offering it as holiday rental accommodation without having attained the mandatory Tourist licence. What these landlords do not know however, is that if they get caught this may attract humongous fines which the property owner will be liable for, not the exploiting company, who is too busy counting the banknotes that roll in. For them, it’s a win-win.

Yet in most cases, landlords are oblivious to this foul practice and are blissfully unaware of what their enterprising tenant has been up to with their property. If the tourist Authorities catch wind of your tenant’s holiday rental business, any fines levied will go against your property, and you, as the owner, will be liable for them. Ignorance will not be accepted as an excuse.

The taxman knows

The Spanish Tax Office has reached an agreement with different property portals (i.e. AirBnb) to be supplied with the full details of tenants, check-in dates, agreed lease price etc in an attempt to combat tax evasion. Any non-resident landlord who hasn’t declared and paid tax on their rental income to the Spanish taxman is going to receive a nasty letter later on this year. You should be smart and pre-empt this scenario unfolding on regularizing your undeclared rental income.

Three telltale signs your ‘long-term’ tenant is stitching you up

You keep receiving complaints from your Community of Owners over the ‘abusive’ use of your property i.e. excessive noise, loud music.
The person/s who open your property door are strangers and are not those mentioned in your long-term lease agreement.
Too many different people shuffle in and out of your property at all times of day and night.

What can you do if you suspect your tenant is cheating on you?

Query the property’s concierge for any suspicious activity relating to your property.
Try searching for your property in popular mainstream property portals such as HomeAway, AirBnb etc
Hire a private detective to monitor (illegal) property use.

How can our law firm support you?

Lawyers can word into long-term contracts clauses that forbid this illegal use of property. In addition, they can assist you on removing the obnoxious tenant who is making a profit on your property at your own expense (tenant eviction service).

Our law firm offers a bespoke tax service, for a very competitive fee, which is tailored for holiday rentals (Holiday Rentals Accounting Service). We can reduce your landlord tax bill by a minimum of 40% - or your money back! We will save you more money than what you spend on hiring us. It pays off to be legal.

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Tax services Larraín Nesbitt Lawyers can offer you

Rental-related articles

Renting in Spain: Top Ten Mistakes – 8th of June 2011
Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
Letting in Spain: The Safe Way – 10th of October 2012
New Measures to Bolster Spain’s Ailing Rental Market – 8th of July 2013
Tenant Eviction in Spain – 8th of June 2014
Holiday Rental Laws in Spain – 8th of March 2015
Holiday Rental Laws in Andalusia (Decree 28/2016) – 8th of February 2016
Decree 20/2002: Andalusia’s Holiday Rural Rental Decree – 8th of April 2016
Urban Rental Law in Spain – Spain's Tenancy Act – 8th May 2016
Renting in Spain - Landlord´s Taxation – 8th of January 2017
Renting in Spain: Non-Resident Landlord's Rental Tax Relief – 14th of January 2017
Community of Owners in Madrid to bar Holiday Rentals – 29th June 2017
10 Questions you Should Ask your Agent on Leasing Office Space in Spain – 24th May 2017
Holiday Rental Home Taxation in Spain – 8th July 2017
Holiday Rentals in Andalusia Made Easy – 3^rd July 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
Holiday-home lettings: Do NOT register with Andalusia's Tourism Registry unless you are fully compliant – 21^st of July 2017
New Balearics Holiday Rental Law – 8^th of September 2017
Seasonal lets: an alternative to holiday home rentals – 8^th of October 2017
Let-to-buy contracts: do not forget to add a clause forbidding sublets! – 20^th October 2017
The magic of lettings in Spain – 21^st November 2017
7 illegal clauses in Spanish rental contracts – 8^th January 2018
Holiday Rentals Accounting Service (HRAS) – 16^th January 2018
How (not) to bypass regional Holiday Home Laws in Spain – 9^th February 2018
Distinction between long-term and seasonal contracts – 21^st February 2018
Tax advantages on becoming resident in Spain – 8^th March 2018
Palma de Mallorca to ban holiday rentals – 25^th April 2018

... Read more

< 25 >