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Business Over Tapas

miércoles 22 de octubre de 2014, 11:21h

A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners: with Lenox Napier and Andrew Brociner. For subscriptions and other information about this site, go to http://businessovertapas.blogspot.com email: [email protected] Note: Underlined words or phrases are links to the Internet. Right click and press 'Control' on your keyboard to access.

Editorial:

Spain is famously the second noisiest country in the world, only slightly quieter than Japan (which I put down to the paper walls they have there). So the small town where I live, Mojácar, which is a cheerful and noisy little resort in Almería, has been thrust into the international spotlight because the mayoress, Rosmari Cano, has taken the bull by the horns in an effort to quieten the place down to the levels found in the waiting room at the city morgue. While her twelve page proposal, to be voted in a rubber-stamp town hall meeting next week, is causing worry among the local bars and clubs, the national and international press, from the El Mundo, the ABC, Antena 3, The Times of London and the BBC's Radio 2, are all mining the hilarity of the situation, with headlines like 'Mayoress of Mojácar to Ban Playing Dominoes'.

Unless, of course, we can learn to just slide them onto the table...

Housing:

The average price of housing continues in almost free-fall, although the decline seems to be slowing down slightly. During the month of March, the house-prices fell 10.7% year on year, against February figures of a fall of 11.6% year on year, as reported by the real-estate valuer and appraiser 'Tinsa'. Discounts driven, above all, by the finalisation of the period of tax benefits for purchases made before January 1st.

The adjustment accumulated in the fall of the average price of housing has now reached 36.3% from the maximum amounts achieved in December 2007, before the crisis began... The adjustment of prices since December 2007 reached 41.9% in the Mediterranean coast, 40.3% in the capitals and large cities, 39.5% in metropolitan areas, 29.6% in the rest of the municipalities, and 29% in the Balearic and Canary Islands, based on data from Tinsa. (From an article in El Mundo)

AUAN - 24 associations representing some 80,000 home-owners have joined to form an Andalucian Confederation. Home-owners groups representing some 80,000 families affected by planning issues throughout Andalucía met in Cordoba on Saturday 6th April.

After an intensive exchange of views and problems the representatives of both Spanish and foreign home-owners associations from Córdoba, Málaga, Sevilla, Almería, Jaén y Cádiz agreed to form a confederation of associations in Andalucía provisionally called “La confederación andaluza para la regularización urbanística (“CARU”) or, in English, “the Andalucian Confederation for Planning Regularisation”.

The problems discussed ranged from home-owners unable to rebuild houses destroyed by fire in Mijas to flooding, retrospective application of protected land status, revocation of planning permissions, problems with land division, denial of access to public services etc.

CARU emphasises that it is non political and open to dialogue with all institutions and industry groups.

The next step is to organise an initial meeting to constitute the confederation, to which other groups will be invited. It was also agreed to set up a working party formed of experts with the objective of analysing and promoting legislative change as well as requesting meetings with the planning spokespersons of the various political parties at a regional level.

Francisco León, provisional president of the confederation, stated: “I have attended many meetings with those affected but I have never seen such unanimity and desire for change and progress”. The story also appears in El Día de Córdoba and here in the Diario Sur.

(Taken from Kyero) 'Government Approves Comprehensive Land and Housing Plan':

The Council of Ministers has approved, for submission to Parliament, the Draft Bill on Urban Rehabilitation, Regeneration and Renovation. It also approved the State Housing Plan 2013-2016 which, together with the new Rental Promotion Act, constitute the new model of housing policy.

The Vice-President of the Government, Soraya Sáenz de Santamaría, declared that the plan is a key economic driver and will help generate growth and job creation. In this respect, the Minister for Public Works, Ana Pastor, forecast that 105,000 jobs will be created over the next four years.

The plan has been allocated investment amounting to almost 2.5 billion euros: 1.5 billion euros to facilitate access to housing and 627 million euros for refurbishments, regeneration and energy efficiency.

Pastor stressed that the reforms approved represent a new model in housing policy in Spain, which will facilitate access to housing to those sectors of the population with the fewest resources, support rentals, promote residential refurbishments, lay the foundations for improving the energy efficiency of buildings, and introduce incentives to the private sector to collaborate in the reactivation of the construction sector.

Among the new features of the future Urban Rehabilitation, Regeneration and Renovation Act, Pastor pointed out that the regulations on the Technical Inspection of Buildings will be abolished and substituted by a Building Assessment Report (IEE), that will be compulsory for buildings older than 50 years as from 2019.

Furthermore, the new State Housing Plan 2013-2016 is designed to facilitate decent housing for the most needy. Those people affected by eviction proceedings shall be granted preference in access to rental aid programs.

As regards rental properties, Pastor stressed that the aid granted will be distributed in the fairest manner possible, taking into account the income of those living in the dwelling. The aid program will reach more than 133,000 beneficiaries compared with the present number of 80,000.

Pastor also highlighted that the rehabilitation of buildings constructed prior to 1981 will be encouraged, with aid of up to 4,000 euros per dwelling being granted for conservation projects.

The minister announced the approval of an ICO (Official Credit Institute) line of credit, with an allocation of 1 billion euros, for the refurbishment of private houses and buildings in 2013. The IDAE (Institute for Energy Diversification and Savings) credit line has been allocated 100 million euros, which is destined towards the fostering of energy efficiency measures and the use of renewable energies in residential buildings.

As from 1st June, it will be obligatory to provide an energy efficiency certificate to those buying or renting a building. This document, in addition to the energy rating of the building, must include objective information on its energy characteristics'.

The Supreme Court returns the money to a woman who bought an 'illegal house' The news comes from Málaga Hoy.

'The Supreme Court has sided with the purchaser of a property in Marbella and has confirmed the sentence of a Málaga court that an Irish women, had been misled in the signing of a contract and ordered the vendor to return 108,792 euros, as the property did not have a license of first occupation. In addition, it highlights the importance of give legal security to foreigners who buy houses'...

The Junta de Andalucía is proposing fining those banks and realtors who have empty houses in their care, who fail to offer them for rent to those in need. The novel idea comes from the secretary for housing in the region, the IU politician Elena Cortés. The plan is to force owners to offer homes, where necessary, to those who have had their own residences foreclosed and have been put into the 'street' – around 45 per day in Andalucía – or 86,000 of them since 2007. Furthermore, the Junta has plans to 'temporarily' expropriate homes which are threatened by foreclosure and allow the tenants to stay. In Madrid, the Minister for Justice, Alberto Ruiz-Gallardón, says that the proposal is 'almost certainly unconstitutional'. Story also in El País in English here.

Amnesty for the Ley de Costas home-owners. 'The Popular Party (PP) government is planning to open a little loophole in Spain's strict coastline protection laws. A planned amendment to the 1988 Coast Law reduces — in practice — the protected shoreline area from the current 100 meters to just 20 meters.

But homes that are now located within this 80-meter strip will be subject to very strict controls if property owners want to make structural changes, assuming they get the approval from and comply with the rules of their municipal governments.

To remove their beach-side homes from the present state of legal limbo, owners must demonstrate that they have an access road, water supplies, sewage disposal and electrical power'... More at El País in English.

More Foreigners are buying in Spain, according to The Leader. 'Foreigners living in Spain increased their investment in Spanish property by 13.7 per cent last year, according to new figures released by Spain's Ministry of Development.

Data released recently suggest that foreign residents in Spain completed property transactions on private homes amounting to 6,336 million euros in 2012. This is an increase of nearly 14% from the 5,573.3 million euros spent in 2011.

The Spanish Press reported that Spain's second-hand housing market saw the biggest volume, with 5,265 million euros in 2012, an increase of 15.6 per cent on 2011 volumes.

The number of new house transactions for 2012 amounted to 1,070 million euros for the whole year, an increase of 4.8 per cent on the previous year.

According to the Ministry of Development, Spain's foreign residents bought nearly half (47 per cent) more homes in the last three months of 2012 compared to 2011, with 13,873 private homes bought by foreign residents from October to December 2012'.

'The Russians Buy Spanish Properties now'. Article from Property Marbella apartments. 'It is not enough to speak English if you want to sell your property for foreign investors. First in line for the best properties for over 200.000 Euros stands for Russians and Chinese.

It was last year sold house to 38,000 non-resident, which is almost the same as in 2007, just before the Depression hit.

Although property prices over the past six years has dropped by 35 percent, there is not yet really started in property sales, and many investors expect the prices to be even lower.

An exception is Catalonia, the Balearic Islands and Valencia region, where some places are sold twice as much as six years ago, property Marbella.

This is the case in Catalonia, where Russian investors are ready to take over a large part of the thousands of empty properties, waiting to change hands.

But also in Valencia, there is increasing demand from Russians and Frenchmen who begins to realize the new kind of offers in the property market. And among investors for commercial properties is the Chinese also came good with, although some of their investments not exactly being put in tourist areas'...

An interview with Ricardo Arranz, the President of the Andalucian Federation of builders, on the subject of 'Residential Tourism', begins:         

One of the worst legacies to be left by the current crisis will be our about the inability to learn the lessons provided. 'We make the mistake, as in the past, of complaining loudly during the crisis and yet failing to fix things when the good times return'.

-Why?

-Because we are accustomed to have people come looking to buy, as if we were selling the daily loaf of bread, with a queue outside the door. And that is the biggest mistake that a company, a region or a country can make. Imagine how many agents from the Cannes Town Hall, to take an example, are out there - there will certainly be more than 50 in New York, London, Paris or anywhere else - bringing events, parades and concerts. Here, in Marbella, Málaga or Seville, we do not think about business abroad. We do not think that marketing and sales is what will make us stand out from others...

-What should be done to aid promotion?

-Copy what others do. If you have a brand like Marbella, which is recognized worldwide, or even Torremolinos, if we have these two brands then why not promote them? How can we not be proud of them? We are a self-conscious country ashamed of not looking good. Because ultimately these brands are what we have and what is going to allow us to sell and which in turn helps to market other brands...

Finance:

'Global credit rating agency Moody's warned Friday that Spain's battered banks face a grim outlook even after a European-funded rescue, with high levels of bad assets set to worsen "significantly" in the recession. Moody's Investors Service said it was keeping a "negative" outlook on the Spanish banking industry, imposed since 2008. The banks' balance sheets were strewn with red ink after a 2008 property crash, forcing the government to prop them up with 42 billion euros ($54 billion) in rescue loans offered last year by its euro-zone partners.

Nevertheless, their prospects remain bleak. "Over the next 12-18 months, we believe that the banks will continue to operate in a recessionary economy, burdened by high levels of non-performing assets that are expected to significantly deteriorate further across all asset classes," Moody's said in a report'...  (More at The Economic Times)

'Plans to invest in Spanish property could be put on the back-burner by buyers until the 2014 tax policy is decided. Budget Minister Cristobal Montoro stated on Tuesday (April 2nd) that the government is awaiting the result of European Union negotiations on the budget deficit before setting its tax goals for 2014, Bloomberg Business Week reported.

"Tax decisions for 2014 haven’t been taken yet and will obviously depend on negotiations with the European Commission and other EU partners," he said. "It will all depend on the deficit targets that are established and on their underlying economic assumptions."

Spain is hoping it will be able to increase in deficit target in 2013 to around six per cent of gross domestic product from 4.5 per cent. The country is heading into its second year of recession and its ten-year benchmark bond has fallen by two basis points to 4.92 per cent. Nonetheless, the EU commission said that it will not arrive at a decision on Spain's budget performance until the European statistics agency Euro-stat releases its budget data for 2012 on April 22nd, the news portal revealed'...  (More at Property Show Rooms)

'UK signs tax deal with France, Germany, Italy and Spain'     (From The Telegraph)

'George Osborne has a signed an information exchange agreement with the finance ministers of France, Germany, Italy and Spain in the latest effort to crack down on tax evasion.  Under the agreement, banks in the G5 will be forced to reveal financial details of foreign clients which will then be handed on to the tax domicile to be checked for evasion. The agreement, which is described as a “pilot” scheme, is based on the America’s Foreign Account Tax Compliance Act (FATCA) which has been used to capture US tax evaders abroad since 2010...'

World Asset Declaration:

'Besieged Ex-pats fighting Spain’s draconian new asset declaration law have found allies in Costa Blanca town halls.
Local politicians fear their ex-pat residents will be driven away by the controversial legislation and new immigrants choose other countries for a new home in the sun – hitting the fragile economies along the coast.
And town halls are worried that the legislation, which demands the declaration of overseas assets worth more than 50,000€, is ill conceived and has already spread “havoc and panic” in their communities'... (More at the Round Town News)

Letter to the Costa Blanca News: 'Dear Editor, I bought a place a year ago here in Spain and I love the house, the climate, the people, the area and the food. I don't live here all the time as I run a large company in the UK so my tax and business responsibilities are in the UK.
I have been reading about the demand for ex-pat residents in Spain to list all investments and cash at banks, wherever they may be, with significant 'no appeal' penalties for failing to respond on line using an electronic signature by 30th April.
What a draconian and disgraceful way to treat people who may have retired to this country, bringing investment and jobs. It would seem that even if you have an ISA, a tax-free investment UK product, these too have to be declared. Let's be clear, there is only one reason why the authorities want this information, because they want your money!
We were contemplating eventual retirement to this beautiful country, but now there is not a chance and I know several other UK based people who feel the same. I have no intention of allowing my savings to be grabbed and used to shore up failed banks, a failed currency and a failing economy. Politicians in Spain should wake up and realise that the inward investment foreign property buyers bring to this country is massive and instead of discouraging they should be encouraging by guaranteeing financial security and deregulation, with a big welcome'.
A petition to the European Community is at the bottom of this report.

Politics:

A survey by Metroscopia for El País threw up uncomfortable reading for the newspaper (traditionally a PSOE supporter) after it was found that in an 'intention to vote survey', the Izquierda Unida (the hard left) had moved into second place behind the Partido Popular. The PP leads (in this particular question) with 13.4%, Izquierda Unida takes 10.7% and the PSOE stands at 8.8%. The largest block shows those who wouldn't vote at all if there was an election now – with 27.3%. From Tercera Información. The survey also noted that the old days of a bipartisan state were disappearing, with a future government possibly not even enjoying 50% of deputies from the two main political parties.

David Cameron, the British Prime Minister had breakfast in Madrid with President Mariano Rajoy on Monday in a rare visit. Cameron wasn't talking about the hundreds of thousands of Britons living in Spain, their 'illegal houses' or the incipient World Asset Declaration which is worrying many of the current (and apparently future ex-) residents here. No, David was talking business and high finance with Mariano. Pass the coffee, Old Sport. My, this is good. Later, the Press updated their stories to note that news of Mrs Thatcher's passing which arrived just before a joint press conference - which David Cameron understandably missed. Mariano Rajoy said they had talked about Gibraltar (Yawn!) over the cornflakes but, on being asked about the Scottish and Catalonian independence referenda..., said that the one had nothing to do with the other.

From The Entertainer Online

The Catalonians aren't the only 'nationals' keen on a referendum. The Basque Government, with its 'right to decide'  policy, will include a referendum in 2015. The Basques are working on a document called in English 'Euzkadi, European Nation' to be presented to their Parliament soon, seeking more auto-rule and sovereignty. It also calls for closer relations with neighbouring Navarra and Iparralde and the three areas to eventually become the single entity Euskal Herria with Euskara as the common and legal tongue. At the risk of squashing anyone's fingers, this is palpable madness. The famous dream of a Basque Nation, pretty much invented in the late nineteenth century (Wiki), sees next-door Navarra's capital city of Pamplona as the capital of a Greater Basque Homeland of seven provinces, with the strangely named Iparralde, three French provinces, unwillingly making up the group. 

Tax Havens:

Stashing their cash: How offshore havens attract the Wealthy. A feature from CBCNews. 'From wealthy citizens trying to pay less tax, to savvy swindlers and drug lords with riches to hide, people have spent decades staelthily shifting money via European principalities, Carribean archipelagoes and Pacific islands...'

The ICIJ's investigation into Offshore Banking Secrecy. 'Secrecy for Sale'

'A cache of 2.5 million files has cracked open the secrets of more than 120,000 offshore companies and trusts, exposing hidden dealings of politicians, con men and the mega-rich the world over.

The secret records obtained by the International Consortium of Investigative Journalists lay bare the names behind covert companies and private trusts in the British Virgin Islands, the Cook Islands and other offshore hideaways.

They include American doctors and dentists and middle-class Greek villagers as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.

The leaked files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well-connected to dodge taxes and fuelling corruption and economic woes in rich and poor nations alike'...

Various:

Justice in Spain is slow. An article in La Información recalls some of Spain's worst cases of corruption, greed or political excess and how long they took to be resolved. The state terrorism of the GAL (23 murders, fifteen years in the courts); the Colza Oil scandal (700 dead, eight years in the courts); Filesa (illegal funding of the PSOE, 6 years); Luís Roldan, Banesto, Gescartera, PSV, Marbella's Malaya Case and so on. Now we have the Andalucía ERE Case, the Gürtel Scandal, the Iñaki Urdangarin case, the Caso Fabra... all just in their early stages.

The Government wants Russian tourists to be able to enter Spain without a visa... 'Russian tourism is the type that has grown most on the Costa del Sol during the past year. It has become a strategic market and its importance could rise still further if one of the bureaucratic processes which burdens it could be eradicated. The government wants to cancel the requirement for tourists from Russia to have visas and it is working hard within the European Union to achieve this objective.

This was announced in Marbella this week by the president of the provincial government and the Costa del Sol Tourist Board, Elías Bendodo, who said the Tourist Board plans to carry out 36 promotional activities in Russia this year, 22 of them specifically focusing on Marbella and elite tourism. “If not 100 per cent, then practically all the Russian tourists who visit the Costa del Sol come to Marbella”, he pointed out'... (More at Sur in English)

'The Princess Cristina will not now have to go before a judge later this month to answer questions in respect of the fraud in which her husband is implicated. The Public Prosecutor has told the judge to lay off because he 'considers the summons to be based upon 'mere personal suspicions' and that the circumstances cited as justification were 'innocuous, inconsistent and incorrect'.' As if that wasn't bad enough for the poor judge, the Public Prosecutor has said he refutes every one of his 14 reasons for bringing charges against Princess Cristina. The Spanish government, in the person of the Foreign Minister, has said that 'Anything that affects an institution that has been seminal in the transition to democracy in Spain and is seminal for its prestige abroad is a source of enormous concern.' He added that the PP would respect the decision 'as it does all judicial decisions.' So, it's all just a coincidence that the investigating judge has been slapped down'. (From Thoughts from Galicia)

Iñaki Urdangarín, the man at the centre of the Instituto Nóos inquiry, has been given permission to move to Qatar to train the handball team there for the next two years. The King of Spain is thought to have put in a word with the Emir of the small Arab state. He'll be paid 800,000€ for his troubles. Not so well known, apparently, is that Spain and Qatar do not have an extradition treaty... (More from Voz Pópuli)

An amusing tale of Andalucía corruption from David Jackson: 'Europe has finally decided that, yes, about 219 million euros of FEDER EU funds granted to Andalucía between 1994 and 1997 seems to have gone missing.

Andalucía was one of the largest benefactors of EU funds during this time, receiving about 3.3 billion which went towards roads, motorways, hospitals, schools, farms, etc, in an attempt to drag the place into the late 20th century. As you can imagine, with so much cash coming in, quite a few people.. how should I put it? Filled their boots is the expression I was searching for.

Fill ya boots – Andalucía is with Europe, although it’s still part of Africa

Anyway, the EU tribunal has now fined Andalucía 29 million euros for a multitude of sins, including the awarding of contracts and payment of them without any work being carried out; contracts being awarded without proper process (ie, to the nearest primo), etc etc etc. País Vasco and Valencia are in similar boats. In all, 63 million euros must be returned this year by Spain to the EU. Although El País defensively points out that the UK has to return a whopping 138 million euros.

Anyway, the Kingdom of Spain, which didn’t argue that the accusations were lies, decided to argue that the amounts calculated were extrapolations and therefore inadmissible in court. An argument which the EU supreme court this week cast out. And, apart from the 29 million euros in fines, the 219 million euros should, in theory, be returned in the future, via a reduction in future EU aid to the region.

Rather more amusingly, Andalucía has now said that Madrid must make up this shortfall. The reason being? Incompetent legal defence'.

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