Off plan problems overseas

News on Spain

Legal experts have reported that the market slump has served as a catalyst for overseas property owners to sue developers, especially in Spain where the over-supply of property has led to values decreasing over the last three years.

Delays in completion dates means values are below predictions as prices continue to fall. Furthermore, some agents offered buyers 12 months guaranteed rental income for the first year as an incentive to buy. Now, the oversupply of property and change in market conditions means they can’t rent them out and so in some cases agents do not have money to pay the buyers this rent. This is causing buyer outrage.

Adrian Taylor, residential and foreign property partner at national law firm, Lewis Hymanson Small, advises clients on Spanish and Portuguese property. He says: "A few years ago when the property market was flourishing, investors were being advised to buy overseas properties off plan rather than make traditional investments. The theory was people would pay a deposit for the property and sell it on at a profit prior to formally completing.

"However, the market has changed dramatically. Supply outstrips demand and investors are now finding they have to complete, something which they were not necessarily anticipating they would have to do."

Taylor continues: "Those trying to get out of their contracts must take legal advice and get their legal representative to go over contracts with a fine tooth comb to see if there’s a way out. Contracts can be ambiguous and involve foreign jurisdictions, which can put people off. However, in some cases, depending on the wording in the contract, it may be possible to issue proceedings for recovery in the UK.

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Information provided by Homes Overseas | © PropertyIndex.com 2008 | Last Updated: 16 October 2008