It's a big subject involving thousands of homes in Spain, but we provide a few pointers on what's available and how to go about buying one...
Thousands of Spanish properties are in the hands of Spanish banks, some of which have been pretty hopeless at marketing suitable places to the overseas market. But is it possible to get a great deal on a decently located and good-quality property, and what are the issues to be aware of - and how do you get your hands on them?
Banco Bilbao Vizcaya Argentaria (BBVA), the second largest bank in Spain, is selling more than 60,000 homes from €30,000 to €2 million (£25,700 to £1,710,300). They are developers as well as agents, through their real estate division, Anida.
Kira and Vincent Mason from Peterborough (pictured), who are now retired and living on the Costa de la Luz, bought a two-bed apartment in Ayamonte for €104k three years ago as an investment through Anida.
"We were looking for property to let out, and decided a bank-owned property was the easier option. Not only was it easier to get a mortgage on a property, but also the price is fixed, so you don't have to haggle and worry your offer will be rejected. Our property was roughly 50 per cent cheaper than at the market peak, and on a very Spanish development of 6,000 properties. It initially looked terrible, as no one had ever lived in it, but it was in a good position, near the shared pool, on a well-run complex, and our rentals are going well."
Some examples of properties selected for the UK market are shown below.
Banco Sabadell is the fourth largest bank in Spain, and its real estate arm, Solvia, recently successfully exhibited at A Place in the Sun Live At London Olympia, and have sold 5,946 homes since March (UK buyers lead the way, at 28 per cent of this total; Russians are next at 15 per cent). Their director Alfredo Milla is keen to pass on some advice.
"Few banks have the infrastructure in place for dealing with international buyers, and some agent websites offer repossessions when there is no contract with the bank," he says. "Solvia has a sales network to deal with UK buyers, who can set up an alert to be updated of new entries in the property listings, and an aftersales service. We also offer discounts for cash buyers."
Ian Elcock and Christine Faith from Hampshire (pictured left) bought a three-bed detached villa in the Torrevieja area for €76,000 (£65,000) last December, through Solvia/Sabadell, after selling their previous holiday home in Villamartin.
"We'd banked with Sabadell for nine years, and whilst hunting for a new holiday home came across an agent selling the bank's properties. When we found the property for €76k. We have to pinch ourselves that the price was right. Worth in excess of €200k at the market peak, it was advertised at €106k, but Solvia were offering a 25 per discount for cash buyers - they wanted to shift some of the properties they'd inherited when they bought out CAM Bank [in late 2011]. The property needed a €10k-€15k refurb, including new aircon, but it was in a well-kept community. The buying process was very swift and efficient, taking less than two months to complete."
If you are considering a bank-owned property, it is imperative that you research the property thoroughly, with the help of an independent lawyer, and go to see the home(s) yourself.
A quick look at internet forums on bank-owned properties reveals some issues with squatters so it is essential that you check out who is occupying complexes and how they are being managed.
Tips from Alfredo Milla and his team at Banco Sabadell:
- Research the market and be sure of prices (not just of repossessions)
- Think about the location and property type: A repossession is only a bargain if it has the characteristics that you want
- Most repossessions will need work. Key-ready new builds will need less attention, and a standalone villa will need more work than an apartment maintained by a community
- Think about the costs of refurb and admin (permits, licences, etc)
- Consider the effect of exchange rates, not only on the purchase payment but also on monthly mortgage repayments
- Be ready to act quickly - the better properties go quickly, particularly when banks have a sales campaign (see left)
- Be prepared for the property to sell prior to your visit: there is plenty of demand from overseas buyers right now
- Always use the services of a reputable lawyer - repossessions are cheap, but can be a little more complex (see legal issues, below)
- Contract a specialist in utility connections
- Bear in mind that bank properties are "sold as seen"
- Make the most of bank aftersales services for finding companies specialising in furniture, insurance, removals, etc
- Change the locks!
- If you are hoping to buy to let, study closely the law and tax implications of renting out a property in Spain.
Alex Radford, Solicitor & Abogado, Irwin Mitchell, Malaga offers some additional tips. "Just because they buy from a bank, this does not mean that prospective buyers should not carry out the same due diligence as if they were buying a resale property. In fact, many of these properties have ended up in the banks' hands because certain developers may have overbuilt, and they may have had planning issues with the local town hall."
He adds "buyers should specifically ask if the property has a licence of first occupation (i.e. the town hall has approved the development) and the booklets for water, electric and gas (if applicable), known as boletines. The bank should provide copies prior to purchase and originals upon purchase. The seguro decenal (10-year insurance policy on a new-build) would also be useful if any claims have to be made against the insurer."
Five bank owned properties currently on offer
Almeria €52,800 (£45,150)
On the outskirts of the beach area of Vera and Garrucha, Almeria, these apartments in Lomas del Mar - originally 156,847 - can offer gardens, solariums, and/or sea views. Solvia Real Estate
Costa del la Luz, €58,000 (£49,600)
Located close to the border with Portugal, in Ayamonte, this is Costa Esuri residential complex. Two-bed homes are 78m2 and cost €58,000; 98m2 three-bed versions are €80,000.
Estepona €73,000 (£62,450)
Originally priced at €157,615, these are two- or three- bed apartments on a frontline development adjacent to the Alcaidesa Heathland Golf Course, San Roque, Estepona. Views of Gib.
Costa del Azahar, €35,000 (£29,950)
Located in Residencial Golf Mar, Sant Jordi, northern Valencia, these are one- to three-bed properties, with roomy terraces. Part of the Panorámica Golf Resort, 16km from Vinaròs.
Alicante, €49,000 (£41,900)
New family housing in El Castillo de Bonalba, Mutxamel, north of the city of Alicante, with a shared pool and golf course. Two-bed 58m2 units are priced at €49,000; three-bedders 123m2, at €100,000.
This article appeared in the Summer 2013 issue of A Place in the Sun magazine