Are you planning to sell your villa in Malaga, Spain fast? Malaga has a large British expat community and is one of the most popular regions in Spain.
Malaga is entirely dependent on tourism. The Malaga International Airport is the fourth busiest in Spain and receives millions of visitors every year. Many British expats have put up their properties for sale in Malaga, Spain because of Brexit and other reasons.
Indeed, British expats suffered greatly in Malaga in the aftermath of the 2008 Spanish real estate crash, which was brought about by the subprime mortgage crisis in the United States. Many British expats invested a lot of money in off plan property developments, which were built without the appropriate permits.
Many of such developments did not see the light of the day because they were left midway by the developers who were totally bankrupted when banks called back on their loans in the aftermath of the economic recession.
This was a complete disaster for the expats who paid good money for these properties as neither were they able to get the ownership of their homes, nor were they able to get their money back. So many expats were stuck in Spanish courts hoping for compensation.
One expat for example, who prefers to remain anonymous, says that he put down a deposit of £130,000 on an apartment in Malaga just before the economic crash. Unknown to him the apartment was built without the correct Spanish planning permissions.
He has since fought and won four court cases against the property developers but wasn’t able to get his money back until recently. What happened was that a recent court judgment in Spain has reinforced an old Spanish law that makes banks jointly liable with developers in situations when deposits made on off plan properties are lost.
What this means is that in case the deposits were paid to the banks, the banks are directly liable to pay them back to the home buyer and share a joint responsibility in this with the developer. In the event of the developer going bust the original investor has the legal sanction to pursue the concerned bank for compensation.
So the person we spoke about was awarded an equivalent of £200,000 under the new law. He was able to get this amount because of the favourable exchange rate situation, with the pound sterling falling to historic lows following Brexit.
There are today many British expats who are keen to get their money back through legal money. Estimates are that there are as many as 130,000 British expats who have invested in off plan properties in Spain and are owed anything between £15,000 and £600,000 from such off plan property developments that failed to materialize.
So this means the total compensation to be paid by Spanish banks can work out to over £5.3 billion. That is big! So if you can learn anything from this, make sure to check and double check the paperwork before you decide to buy a property in Malaga, Spain online.