With Spain being one of the most popular investment destinations for British investors, we checked in with David Fuster, a highly respected Spanish property lawyer and founder of Fuster & Associates, for his take on Brexit, the Spanish property market and the new Fuster Standard guarantee.
How are the Spanish and British property markets different, legally speaking? Or are they actually quite similar?
For the off-plan property market, the main difference is that in Spain 100% of the funds paid to the property developer must be guaranteed, either with a bank guarantee or an insurance policy. Another difference is that in Spain there isn’t such a difference between leasehold and freehold – every property is sold as a freehold property.
When it comes to the resale market, the main difference is that in Spain it's a much more secure market; once you see the property you want to buy, it is taken off the market with the right purchase contract. In the British market, you have uncertainty until completion; in Spain there is no “Under Offer” or “STC” – just “For Sale” and then “Sold.”
What is your advice for someone considering buying a Spanish property at the moment? Is it wise to do so during the transition phase, or should they wait until after Britain’s post-Brexit future is clearer?
It’s wise to buy when you find the right property at the right price, regardless of Brexit. When it comes to deciding to buy a property in a different currency, both the price and the exchange rate will affect the purchase decision, so those should be your guiding factors.
The worst-case scenario for the post-Brexit future is that UK buyers will be considered as non-EU buyers are currently – and therefore it would not affect them at all! Brexit will only potentially affect those who are considering living in Spain, where the agreements to be reached on Social Security, NHS costs, etc. could impact their cost of living substantially.
However, I’m positive there will be an agreement with Spain, as there are 175,000 Spanish people living in the UK and 350,000 Britons living in Spain. Would it not be normal to get to an agreement with someone who is taking care of your children, when you are taking care of theirs?
Do you think there will be some kind of reciprocal arrangement between Spain and the UK – so closely tied by tourism and other things – after December 2020? If so, will this make things easier for property investors in Spain?
As I mentioned above, there will be agreements that won’t affect property investors. My view is that there are four main fields in which Brexit might affect the economy:
1) Tourism. I believe there will be an agreement in place that removes any restrictions.
2) Property purchase. As non-EU members, there won’t be restrictions on British buyers.
3) Immigration. There will be restrictions, but they are unlikely to affect the property market.
4) Commercial agreements. This is the key point that might affect the property market. If there are tariffs on products being imported from the EU, that might result in inflation, higher unemployment rates and lack of resources to buy a property. This could then impact the property market.
In the short-term, will Brexit have an impact on the Spanish property market – in particular the holiday home market where Brits make up a decent chunk of buyers?
Brexit already impacted the Spanish property market in 2016, when the uncertainty of what it would entail meant that many of those who wanted to buy a property in Spain put their plans on hold. In the short-term, Brexit will continue to make an impact until the uncertainty has passed.
Tell us more about the new service you’re offering and the guarantees this gives buyers…
The Fuster Standard provides a seal of approval to guarantee that a property meets all the legal requirements for sale. Neither the agency selling it nor the buyer is going to be caught out as a result of purchasing that particular home. The Fuster Standard allows them to avoid complications that might otherwise delay and disrupt the purchase process.
Our market-leading ‘Qualified Approval Process’ sets industry benchmarks for quality, assurance and reliability within the Spanish property market. As a market-leading benchmark for property transactions, the Fuster Standard guarantees that all the necessary legal work has been completed in advance, avoiding complications which may otherwise delay the process and frustrate both property agencies and their buyers.
Our goal is to reduce potential risks for agents and their clients and to facilitate a safe sale for those involved. Buyers can use our intelligent map to search through a wide selection of off-plan properties that have achieved the Fuster Standard guarantee. We cover the Costa Blanca and Costa Cálida.
What was the end result of the fight for British investors who lost big in the Spanish property crash to get their deposits back?
In those cases in which property purchasers were represented by a reputable and knowledgeable law firm, the buyers recovered their deposits. We have achieved a 100% success rate with the 200+ clients that we have helped with such cases.
However, there were some cases where clients didn’t follow their lawyers’ instructions, took their own course of action or weren’t represented by reputable and knowledgeable law firms. In those cases, there were some negative outcomes. Thankfully, there were not many examples of these.
Did most investors receive some compensation?
The ones who did thing right received the deposits they had paid, plus interest and legal expenses.
Does the Fuster Standard mitigate against something like that ever happening again?
It certainly does. The Fuster Standard reduces any potential risk to zero. Both the agency selling the property and the buyer can be reassured that everything is in order in legal terms and that both are protected from delays and complications as fully as possible.
Is Brexit a pain in the proverbial when it comes to British property investment in Spain moving forward, or are there reasons to be optimistic?
In the short-term, there remains some uncertainty. However, I think that in the long-term British property investment in Spain will move forward. I am optimistic. The UK tends to find a way to come out of every political decision stronger than ever!