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The retirees snapping up cut-price Spanish property



Cheaper housing and a strong pound are luring some British buyers back to Spain

Alicante: the town where 'el tomate' is king

Alicante: the town where 'el tomate' is king

The quiet life: the lure of the climate on the Alicante coast, left, proved too much for the Hayes family, below Photo: ALAMY
By  Nicole Blackmore

Swarms of British expats, who were drawn to Spain in the Nineties and early 2000s, found they could no longer sustain their life in the sun and packed up and returned to Britain. Nearly 90,000 abandoned their Mediterranean dream last year alone.

But some Britons are swimming against the tide, determined to forge a life in Spain despite the tough economic climate. Typically they are retirees who have no need to find stable work and many are snapping up homes at big discounts.

The stagnant economy has created a glut of cheap homes on the market, many of which are bank repossessions that lenders are keen to shift quickly.

Estate agent Your Viva, which has offices on the Costa del Sol, said 42pc of its buyers were British in 2013, up from 31pc in 2012, and most were aged between 40 and 60 years.

Martina Heynemann, managing partner at Your Viva, said property prices have fallen 50pc to 60pc from their peak a decade ago. She said prices are now starting to pick up, particularly at the cheaper end of the market. The average property the firm sells is worth around £180,000.

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British buyers are also being tempted by the strong pound. Last week sterling rose to its strongest point against the euro since December 2012. Over the past 10 months the sterling to euro exchange rate has improved by 7pc.

Moneycorp, which provides money transfer services for property purchases, said it has seen a 37pc increase in the volume of purchases in Spain in the last year.

John Hayes, 52, and his wife, Mandy, 50, of Northampton, have just taken the plunge. They bought a three-bedroom, two-bathroom villa in El Pinós, a rural village about 40 miles north-west of Alicante, and moved in last week.

The couple paid £127,000 for the property, which has a large pool and more than two acres of land. The total came to £144,000 once fees were added. The newbuild property was recently completed and was put on the market for £137,000.

Mr Hayes, who worked for a number of high-street banks in the UK, said: “My wife and I have been working hard since we were very young and we decided to get off the hamster wheel that is life in the UK and enjoy ourselves. Spain appealed because property is cheap, the weather is fabulous and the currency is moving in our favour.

“We know so many people who have worked into their mid-60s and beyond and don’t live much longer than that. We want to enjoy the rest of our life.”


Mandy and John Hayes, far right, with their Spanish property finder, builder and solicitor.

The couple sold their five-bedroom, three-storey house in Northampton for £366,000 to fund the move and used the remaining equity to help their son buy a house in the UK.

Mrs Hayes has retired from her council job in adult education and Mr Hayes plans to work part-time as a financial adviser to expats in Spain. He said they plan to live there for at least 20 years.

“My wife is looking forward to creating a garden and we plan to make the most of the outdoor lifestyle that Spain offers,” Mr Hayes added.

Marc Elliott, a mortgage broker based in Marbella, said couples like the Hayes are starting to return to Spain.

Mr Elliott, who is half-British and previously worked for brokerage John Charcol in the UK, said: “If you want to buy property purely as an investment, don’t look to Spain.

“Property here is not going to make the same kind of returns that you can find elsewhere. But if it’s a lifestyle choice – if you want to live here or come for holidays – you won’t be disappointed.”

Mr Elliott warned buyers they will need at least a 30pc deposit and another 14pc of the purchase price on top to cover fees.

The local mortgage market has dried up over the past few years and it has been very difficult for foreign buyers to secure a loan with a Spanish bank. This is starting to change, but foreign buyers who take out mortgages in Spain are typically charged more than double the rate given to locals.

Mr Elliott said Spanish buyers can typically get rates of around 1.99pc for a tracker – the most common loan type – while British buyers will pay between 4.5pc and 5pc.

Taking a mortgage abroad means you lack some of the protection that applies to UK mortgages and mortgage advice. It is possible to borrow from a UK bank to buy abroad but the choice of lenders is limited.

The majority of buyers remortgage their UK property to buy abroad. This can be a good option, particularly if you built up a lot of equity, but you will have to make repayments in sterling so this won’t suit those who plan to live and work abroad, where they will earn euros or another currency.

Cut-price Costa

While some high-end Spanish properties are typically being reduced by around 15pc, prices at the other end of the market are being cut by twice this much.

Research by the Telegraph shows sellers in the Costa del Sol, one of the most popular parts of the Spanish coastline with British expats, are still cutting prices.

A four-bedroom, four-bathroom duplex penthouse in Marbella is on the market for just more than £1m, down from £1.2m. A budget of just more than £170,000 will buy a two-bedroom, two-bathroom apartment in Torremolinos, with ocean views, reduced from £235,000.

Bank repossessions are also coming to the market. Many need work, but some are new, repossessed from failed developers. A four-bedroom, four-bathroom town house near the coast, cut to £196,000 from £362,000, has a roof terrace and a communal pool.

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