Covid 19's Effect on The Spanish Residential Property Market
3rd March 2020
Whether you are residing permanently or own a second home in the likes of the Costa Del Sol, Barcelona, Madrid & other areas in Spain, as part of the Unique Living network we'd like to offer some advice on the Coronavirus & the effect on the Spanish Residential Property Market while the COVID-19 pandemia lasts.
Serge spoke about preparing your future lifestyle & I'd like to give my own perspective.
What a difference a few weeks make. Less than 2 weeks ago, life was carrying on as normal, it was business as usual & the coronavirus still seemed to be a remote threat, even in the worst-case scenario. As I write this, Spain & many other countries are now in what looks like it will be a long period of lockdown, with national borders closed, internal movement limited & everyday life very different from what it used to be.
In the meantime, what I can do is offer some helpful advice for foreign homeowners, whether you live here permanently, as my family does, or reside overseas & have a second or holiday home in the country. Given that different considerations apply, I’ll try to suggest a few ideas things you may want to take into account regarding the property you own in Spain for the next few months &, possibly, years.
Firstly, the property market has almost immediately stagnated & is likely to experience significant upheaval the longer the coronavirus pandemia lasts. So, if you have a home for sale, expect it won’t sell for a good while because buyers are, by law, staying at home. And if you were in the market to buy, unless you like a gamble, the likelihood is that you’ll be waiting to see what happens next before making any kind of move.
As a result, property owners should be prepared for an extended period of paying overheads & no longer receiving revenue from short-term rentals for the foreseeable, possibly at the same time as work &, therefore, personal income dries up. As the owners of a small real-estate agency, this is our case & we have already begun to budget carefully to keep our business afloat & our family protected.
Although the Spanish government has announced mortgage-relief measures for people in real need, this only applies to those paying for a primary residence & who are classed as ‘economically vulnerable’. If you are a resident & work in Spain, & you lose your job, or more than 40% of your earnings if self-employed or a business owner, or your total family income is less than 1,613€ a month, you may be eligible to benefit.
However, many foreigners who live here full-time will not fall into any of these cases & so, as regards mortgage & other payments, you may well be on your own. After surviving bankruptcy in the wake of the global economic crisis by the skin of our teeth, we learned the hard way the last time things went south & I strongly recommend you prepare now to avoid problems later.
For owners who live abroad, it may be a while before you’re able to come back to your place in the sun, so the same advice applies & more so. Aside from covering the cost of any outstanding financing, you should also consider the need to set aside funds for maintenance. In our experience, when a property is not used, that’s when things break, so think about asking a neighbour or friend to look in from time to time. And the growing risk of squatters is something you may wish to take steps against.
While our offices are closed for the time being, we are offering remote & virtual support for our clients both local & international & can provide property management services, if desired.
We have lived & worked here on the Costa del Sol for almost two decades helping an international client find & buy residential property for sale & are in close contact with all kinds of professionals who can help with everything from shuttering a property down to ensuring it remains safe in your absence.
How long the COVID-19 pandemia will last & what consequences it will have, for our societies, economies &, in the context of this article, the residential property market in around the world, is anybody’s guess at this point. I certainly don’t claim to know what will happen next, but can only hope, as we all do, that as many of us as possible come out of this in good health & in a fit state to face whatever the future may bring. For now, stay home & stay safe.