Vaccine for sick Spanish housing market

Spain is a great country with a great culture, nature, hospitality and of course the wonderful climate. It is not without reason that so many people dream of their own home under the sun. You are unnoticeably blinded by its beauty and therefore buyers are easily seduced and misled when buying a house.

People who bought a problem house in Spain, that is no longer news. But there is definitely news. You could see it as the continuation of all previous articles in the media about the theme, namely: the cause why people get into trouble and how many people are involved? Are buyers naive or is there something else going one? What appears in the media turns out to be just the tip of the iceberg. There is something structurally wrong in the Spanish housing market. The housing market is sick, but there is also good news, a solution has been found by homeowners and buyers themselves.

Culture of silence, fear and shame

There is a pattern in how buyers are misled. That never surfaced, because until now the victims had never united and exchanged experiences. So far, because Casa Propia, the online community for foreign buyers and home owners in Spain, comes to a very sad conclusion: the Spanish housing market is dominated by a culture of silence among real estate agents and lawyers when buying a property and once the owner is afraid of it measures by the municipality or shame on family and friends. It is these ingredients that enable deception in the Spanish housing market and can go on like a perpetual motion machine for years to come, simply because the problems are concealed. Please, let’s hope the press will not remain silent.

Should sellers of problem homes be helped by concealing essential information or should we be honest and make sure buyers know what they are buying? And what about homeowners who don’t know their situation because they are not well informed, but should know.

Pyramid game

In a way, the housing market is a pyramid game in which buyers unknowingly participate. How does it work? When a property is completely legal and in order, very little can go wrong. But it is no secret that building and reforming without a permit is the rule rather than the exception in Spain. In Andalusia alone, over 300,000 properties have been built completely illegally. If we add the properties that have been built or renovated without a permit, then there are millions of homes throughout Spain, of which buyers and current owners are unaware of the consequences.

It is often trivialized or even concealed that an illegal extension or renovation, even if it is time-barred or tolerated, can cause serious problems. “You no longer have to demolish the buildings and you will not receive any fines. Don’t worry” is what a buyer is told. Unfortunately, we learn from the experiences of Casa Propia members that real estate agents and lawyers are much less talkative about the consequences. That’s why most homeowners still don’t know their situation. On Facebook groups, they recommend professionals not knowing they have bought a problem. “Contact broker x or lawyer y, who has helped us tremendously, honestly and reliably”, which means that the next buyer may face the same risks. In fact, professionals unintentionally allow buyers to speculate with large amounts of money, sometimes even the full savings or pension of people who want to enjoy their old age in Spain.

In reality, trading in trouble until a (new) owner experiences the consequences is a pyramid game.

Say for yourself, who buys a house where you would know in advance that (1) no permit for renovation or rebuilding will be issued, (2) you cannot insure, or you are supposedly insured but not covered, and (3) you are troubling to not be able to sell in the future due to an oil slick law “residence permit” that is slowly spreading across Spain. These are the possible consequences of illegal and tolerated construction. Exactly, no one, so there is something strange going on so that these houses are still being bought!

Because homeowners have only recently been united, Casa Propia puts its finger on a very sensitive place for the first time. We have not been able to find any real estate agents or lawyers website where it is explained that illegal, even if it is tolerated, is not without risks and also names the consequences,” said Ralph de Jong initiator of the community. But the seller also keeps to the silence, of course, because he knows that mentioning the consequences makes the sale of the house impossible. A very annoying double moral for sellers who once bought in good faith and now have to lie to sell their property. A terrible double moral for sellers who once bought in good faith and now have to lie to get rid of their home and hire a real estate agent for that reason. That is why these properties end up property websites and are buyers referred to specific attorneys in the interest of the transaction.

Ralph de Jong in front of his Majorcan finca

Ralph himself has been misled and misinformed when buying his finca in Mallorca, despite being accompanied by a Dutch-speaking lawyer to avoid risks. “Just like anyone who buys a house abroad, I wanted to know what I was going to sign for”. He did not give up and investigated, published some posts on Facebook and soon other homeowners with problems reported.

In a short period of time, the Facebook community has more than a thousand home owners and buyers and the team has been expanded with Belgian, German, English, Spanish and Swedish coordinators to assist buyers, home owners and sellers from various countries. Not as an estate agent but as a confidant. Ralph de Jong: “This is something that concerns all nationalities”.

The government is helping

The enormous competition, the high commissions (commissions of 5% are normal for a real estate agent and 1% for a lawyer), the fact that a professional is almost impossible to be held accountable and the limited control by the government open the door wide open to deception.

As long as government agencies such as Registro de la propiedad and the Land Registry even register completely illegal properties, it is very easy to make buyers believe that everything is in order and to mislead them.

And so every year tens of thousands of buyers, despite the intervention of professionals, unknowingly buy a problem, from small apartments to million euro villas. The hope that owners can hold on to is the arbitrariness of a municipal official who is benevolent to you and of course that major damage to the house will not occur.

Not popular with everyone

Casa Propia is received positively, but not by everyone. For the time being, communication only takes place via Facebook, and then it soon becomes apparent that real estate agents are looking for customers there and do not like to change the current the fraud-sensitive system. Buying safely at a lower cost does not seem like something you can be fiercely against. Nothing could be further from the truth, instead of approchement we seem to be diametrically opposed to each other. Our presence is seen as threatening or fear-mongering and after a few months of discussion it became clear why. The initiatives of Casa Propia may have an effect on the sale of problem houses and, as we now know, there are quite a few. The noise that this can create is not can not count on aplause from everyone , we understand that very well. But if every professional who advises buyers and sellers were to put into practice the proverb “Do not do unto others what would not want done to yourself”, then we would not have had to have the discussion and a community like Casa Propia would never have been founded.

The vaccine against deception and fraud

So don’t buy? On the contrary, we recommend buying and enjoying all that Spain has to offer, but do it safely and with your common sense. Casa Propia, the online community, was created in January this year from a group of homeowners who were misled in the purchase. “If the control by authorities is limited, then we have to come up with a safe solution ourselves”, we thought at Casa Propia. By sharing experiences, a well-functioning “vaccine” has been developed to prevent scam; an independent purchase inspection. This is carried out by architects, economists and lawyers who work according to a fixed format. This way, every buyer knows exactly what he is buying and can make the right decision, because the consequences and risks are not concealed in the purchase inspection.

The professionals sign a statement of integrity and are supervised by an arbitration committee consisting of members of Casa Propia, which enforces ethics among professionals. That’s why this is the safest way to buy a house and make the Spanish dream come true. A nice side effect of the inspection is that the costs for a buyer are lower than under the current system. Lawyers normally charge 1% of the purchase price for an average of four hours of work in a sales transaction. Few realize that this amounts to € 600 to € 6,000 per hour. The lawyers who work through Casa Propia charge a fixed rate of € 700 for all activities. That equates to € 175 per hour and for that money you have a very good and reliable lawyer. So two birds with one stone.

Now a medicine, or a structural solution, for anyone who has bought a problem house in good faith. Because Casa Propia also wants to play a meaningful role for that group.