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A holiday home in Portugal

Monday, July 27th, 2009

From Porto to the Algarve, Portugal has some fine property for sale. Graham Norwood picks some of the best

Head to Portugal for your holiday home in the sun

Friday, July 24th, 2009

Prices in Portugal are down less than in neighbouring Spain, but pick your spot carefully. Graham Norwood is your guide

Britons seeking a bargain holiday home in the sun may look to Spain or France, but they shouldn't ignore one of Europe's more salubrious locations. If you reckon Portugal is merely an upmarket version of Spain, think again; it has a different philosophy to its Iberian neighbour.

In 1993, laws were passed to restrict overdevelopment in designated coastal areas, mostly on the Algarve in the south, so demand sometimes exceeds supply. Although prices have been on a rollercoaster, they have fallen less than in any part of Spain.

By far the most popular holiday home area is the Algarve, due to its 280 days of sunshine a year and because large numbers of budget flights access nearby Faro airport. But that makes it Portugal's busiest region, too.

The Estoril coast south of Lisbon is also popular, while the northern coast is increasingly in favour.

Foreigners tend to buy new homes, which are generally of a higher quality than in Spain. Expect to pay €120,000 (£104,000) for a small apartment (twice this for a sea view), and €1m for a family-sized detached villa near a beach.

Brits considering the Algarve should bear in mind that, historically, it is a region where property prices have seen much more dramatic ups and downs than the wider national market.

Go back to the 1960s and the Algarve was visited only by small numbers of Portuguese holidaymakers, but by the end of that decade, luxury hotels and golf courses began springing up. In the early 1970s it was popular with British holiday and retirement home buyers.

All development came to an abrupt halt after the 1974 revolution, according to Dr Michael Ball, the author of an annual Royal Institution of Chartered Surveyors review of European housing markets. "Investors lost a fortune and tourism to the Algarve practically ceased by 1975," he says.

The pace of development went back into overdrive in the late 1980s, with well-heeled British buyers flocking there. Algarve prices plummeted in the early 1990s and shot up again at the end of the decade, before another dive in 2003.

The Global Property Guide website reports prices in the Algarve fell 4.4% over the 12 months to last September, after a tiny rise in 2007 and a 6% increase the year before. Looking at Portugal as a whole, prices slid 4.8% in the year to last September, with the Alentejo and Centro regions hit hardest. "With the economy hurtling into recession, the Portuguese housing market is expected to continue its downward price spiral until end-2010," says the site. Some potential buyers may see that as good news, others as a reason to steer clear.

Buying in Portugal remains more complicated than in much of mainland Europe. First, you need a tax card and number from the local council in the area where you wish to buy, and you must nominate a Portuguese address for documentation; usually the selling agent will act as this contact. Second, very few Portuguese finance houses lend to foreign buyers, so most Britons must arrange a mortgage at home. Third, many flats – especially those built before the legal changes of 1993 – are run by residents who set up committees to organise services like cleaning and maintenance; so it can be hard for foreign-based buyers to get involved. Set aside 2% of the purchase price for legal fees and 1% for Portuguese land registry charges. Add 1% each for turning on utilities and arranging a Portuguese mortgage. Stamp duty can be 7.5% if you buy at an auction, and there is transfer tax on secondhand homes of up to 10%.

The Portuguese estate agency profession is regulated, so individual agents are more qualified and more professional than in Spain, but charges are unregulated – when you come to sell, the commission can be a whopping 10%, though you can haggle.

Most agents list properties by square-metre floor size; some include outdoor patios and some don't, so check to make true comparisons.

All mortgage debts and local taxes are property specific. This means the previous owner must clear them before you buy, otherwise you inherit them.

Anyone wanting a pure investment and long-term tenants (professional renters, not holidaymakers) should furnish their properties, but remember there is little demand in resort areas, so stick to Lisbon and Porto.

Gallery: Homes in Portugal

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End of the dream for British expats in Spain

Friday, July 24th, 2009

Hundreds of thousands of Brits have headed to the sun seeking a Spanish idyll. But the economic crash has left many facing disaster

The British butcher has gone and the karaoke nights at Jack's and the Big Ben bar are all but dead. You can still get all-day British breakfasts and John Smiths on tap in San Fulgencio but a row of dusty, unkempt shop windows is all that remains of the internet cafe, the installer of pirated British TV channels and the Property Choice estate agent.

"It's like a ghost town," says Dennis Conway, 76, who is thinking of joining the exodus of Britons from this once bustling estate of bungalows and modest two-storey houses a few miles from Spain's eastern Mediterranean coast. "It's devastating. My pension is slowly disintegrating and there is nothing we can do about it. It is bloody frightening to think what might still happen."

Dennis has been here for 15 years. He has seen the La Marina estate in San Fulgencio go from a sleepy outpost of retired Brits to a boomtown of holidaymakers, second home-owners and young families trying to make a go of it in Spain, to the current bust. "I've never seen it this bad. I'm thinking of going back."

Britain's fevered obsession with the Spanish good life is over. Once, ex-pat bars up and down the Mediterranean coast heaved with happy talk about cheap beer, low council taxes and why it was so much better to be in Spain. Now the drinkers are more likely to curse the pitiful pound, discuss who missed the last outing of the British pensioners' club, and swap stories of friends who are moving home. There are whispered tales, too, of repossessions and of people packing up, dropping their keys at the bank and trusting easyJet to save them from Spanish creditors.

San Fulgencio is not alone. The removal trucks are busy in all the "urbanizaciones", the vast housing estates that Brits now call "urbanisations". They are places like La Marina, Ciudad Quesada, La Siesta, El Raso and all the others that line the dual carriageway inland from the beach town of Torrevieja, 35 miles south of Alicante. The trucks are also grinding their way up the narrow, twisting roads to the small hillside villages colonised by the last wave of Britons to catch Spain fever and come looking for sunshine, property and independence.

Removals companies confirm the tide has turned. "I'd say 70% of our work is now taking people back," says one of the many cash-in-hand British "white van men" working without licences outside the Spanish tax regime. He did not want to be named. "We've had retired people calling us and saying they are going to Bulgaria or places like that," explains Angie Russell, whose Union Jack company near Benidorm has been moving Brits – legally – for 22 years.

Television shows such as Channel 4's A Place in the Sun promised adventure, swimming pools and the good life. A collapsing pound and the credit crunch have brought a harsher reality: homesickness, financial hardship and something those who call themselves "expats" rarely take into account, that they are immigrants – often with all the problems of not understanding the language or the rules. Interestingly, a surprising number of them list immigration as one of the things they dislike about Britain. Few, indeed, come from Britain's own ethnic minorities.

For some, Spain has become a nightmare. Judy and Bill are going back to the West Country this month. Both served in the armed forces, then ran a fish-and-chip shop before coming to a rented villa with a swimming pool and views of the beautiful Jalón Valley in northern Alicante. That was two years ago. Frustration, boredom and their own naked prejudice are driving them home. Encounters with Spanish housing developers and their British estate agents – who scare them so much they do not want their real names used – have left them bitter. "This is a country with no law," proclaims Judy. "We in England abide by the rules but here they don't bother. Even the Brits here rip you off. I think most people would go back if they could. It'll be a relief to get home. It's not as cheap as people think."

"We're unsettled," admits Barbara Moseley, who is selling her house in San Fulgencio and moving to Lancashire. "I miss the grandchildren. I'm on the phone every day to them. I'll miss the easy pace of life here but the family comes before that." Her ex-policeman husband Terry does not want to go, but admits the winters now feel chillier and their unsteady pensions dwindled by up to 30% as the pound lost value dramatically last year. The rollercoaster exchange rates saw them losing €500 a month at one stage. The Moseleys will have to wait to go home. The market is flooded with unsold homes. "We've only had two people come to view it in 12 months."

A million Britons live for all or most of the year in Spain, according to the British embassy, although only 375,000 have registered formally at local town halls. Many would rather the Spanish authorities, especially those who collect taxes, did not know they were there. The one million figure makes them Spain's biggest immigrant group.

Brits in Spain are usually associated with the southern Costa del Sol, near Malaga. It has glitzy, corrupt Marbella and once boasted Sean Connery, Barbara Windsor and glamorous East End gangsters among its denizens. Even Princess Diana visited. The biggest population of Britons, however, lives in Alicante province, along the long stretch of coast from Denia to Torrevieja. There is little glamour – and no princesses – here. Incomes are low, and the black market, English-speaking economy has attracted a legion of ill-prepared chancers trying to live off their – sometimes invented – skills as plumbers, electricians, hairdressers, gardeners, pool cleaners or labourers. "It's the younger people who are moving back to Britain," says Barbara Chadwick, at the Home 2 Home removals firm near Javea. "They just can't make it here."

But even the true Spanish devotees are finding the going tough. Phyllis and Ron Hillman, both in their late sixties, have found two state pensions no longer fund the good life they once had in San Fulgencio."It sounds shocking, but we never had to budget before," says Phyllis. "We are down €300 a month. What do you do? You cancel your gym membership and you don't go out nearly as much. And we couldn't afford the British butcher any more."

Penny Lapenna is another of the genuine Spain-lovers. She and husband Joe sold their house in London's East End nine years ago, and bought a house outright in the charming inland village of Parcent. They learned Spanish, got jobs, put their three daughters into the local school and enjoyed life. "We swapped our grey clothes for bright clothes," says Linda. "I have loved living in Spain."

Then her husband's computer business folded and Linda lost her job on an English- language newspaper. Now she is applying for jobs in the UK. Her sister and at least three other British families from the village have already gone. "We've seen many families come and go in nine years. They fall into two groups: one lot with crazy notions and no command of the language who ended up having an extended holiday; and the other lot who made quite a go of it and set up businesses. But, like any immigrant, if your business struggles you have no fall-back."

A Spanish bank manager in San Fulgencio confirms that people are dropping off their keys. "They are wrong to do that," she says. "That does not cancel a mortgage in Spain." Already banks are hiring lawyers in Britain to track debtors down. "I'm getting calls from people who are having houses repossessed almost twice a week," says Michael Wroot, at the second-hand furniture store he has run in Javea for 26 years. "It's probably the worst it has ever been."

While the young move home, the old have few options. "Some people are having real problems paying the bills," explains the owner of a private old people's home for expats in Alicante. Even the dead try to save money. Seventy percent of the corpses donated for science to Alicante's Miguel Hernández University belong to Britons – in some cases simply to avoid the expense of a funeral. "Some of those who have approached me don't have much money," admits Lionel Sharpe, who helps the university recruit future corpses.

In contrast, Helen and Len Prior actually found the kind of Mediterranean paradise promised in the glossy brochures. Orchards of lemon trees line the road to their home at Vera, inland from the spectacular, volcanic coastline of Almeria. A garden, built up over six years, contains an acre and a half of palm trees and exotic plants. There is a heated swimming pool and a workshop-cum-garage area. There is, however, no house. That was bulldozed 17 months ago by the local authority, five years after they had moved in.

Where there was once a two-storey, £300,000 home – built with money from the sale of their old home in Wokingham – there is now just a large slab of concrete. "We'd be standing in the hall now," says Len, beside the workman's metal shed that now serves as their outside loo. Their dog Bonzo, traumatised by the men in big yellow machines, cowers from strangers.

The Priors, both 64, live in their garage while Spanish courts argue whether the local authority was right to declare their home illegal and knock it down. They won the most recent case, but will not get compensation any time soon. The glory days of gardening, swimming and relaxing in the sun have given way to worry and ill-health. Unlike others who bought illegally built homes without asking questions, the Priors did their homework and got their licences. "It was a dream," says Helen. "We were really happy here."

What they did not count on, however, was different levels of the Spanish administration, run by opposing parties, using them to wage a political war. The Priors admit that their Spanish is "awful" and so depend completely on their lawyer. To them the regional government is not socialist but "communist".

Their case has sent shivers through the British community, where fear of the demolition man is spreading. The letters pages of the Benidorm-based Costa Blanca News bubble with angry rants against Spanish tax authorities, police officers, town halls and, occasionally, Spaniards as a whole. For everyone who moans, though, another one leaps to defend the country they have all chosen to live in.

The Priors, who have more reason to complain than others, have not joined either the exodus or the anti-Spanish chorus. "People came and helped us who we had never seen before. We've had little old people hugging us and asking whether we have enough to eat," says Helen. "Spain is a wonderful country. We will still stay. We would never go back" •

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Credit crunch reaches world’s most expensive streets

Wednesday, July 22nd, 2009

The global financial crisis has squeezed property prices, but how has it affected those at the very top?

Avenue Princesse Grace in Monaco is the most expensive street in the world, with each square metre in an apartment setting you back £73,000 – or about the same as a 70-square-metre apartment on the seafront in Hastings, according to Dow Jones' Wealth Bulletin.

But the palm-lined street, named after the Hollywood star Grace Kelly and popular with Russian oligarchs, is suffering from "la crise du credit" like everywhere else. The bulletin shows top prices paid for apartments, are down by 37% from 2008's peak of £116,000 a square metre.

Overall, prices paid for prime residential property in the world's fanciest locations have fallen by 12% over the past year, although Europe fell less sharply than the US and Russia.

Via Suvretta in the Swiss ski resort of St Moritz was the only street on the list where prices for top properties have risen since 2008. Prices are up by 18% to around £27,500 a square metre.

The world's second priciest street, the Chemin de Saint-Hospice, is a 20-minute drive along the coast from Monaco, snaking through on Cap Ferrat. It numbers just 15 houses, commanding beautiful Mediterranean views.

According to Wealth Bulletin, local estate agents say there is one property for sale on the street, but it is being sold privately and its price a closely guarded secret. It estimates that property on the street goes for an average of £61,000 a square metre.

New York's Fifth Avenue pips London's Kensington Palace Gardens to third place in the survey, with apartments selling for around £44,000 a square metre. Although a 400 sq/m apartment overlooking Central Park on the Upper East Side of Fifth Avenue sold for $29m in June, local agents say the market has come off the boil, and remains affected by a lack of supply

Fourth-placed Kensington Palace Gardens is Britain's most exclusive address, best-known as London's embassy row, including the Russian delegation. Prices in the street are estimated to have fallen by 15%-20% over the past year.

The world's top 10

1. Avenue Princesse Grace, Monaco, £73,000 per sq/m

2. Chemin de Saint-Hospice, Cap Ferrat, South of France, £61,000 per sq/m

3. Fifth Avenue, New York, £44,000 per sq/m

4. Kensington Palace Gardens, London, £40,000 per sq/m

5. Avenue Montaigne, Paris, £33,000 per sq/m

6. Via Suvretta, St Moritz, Switzerland, £27,500 per sq/m

7. Via Romazzino, Porto Cervo, Sardinia, £26,000 per sq/m

8. Severn Road, The Peak, Hong Kong, £24,500 per sq/m

9. Ostozhenka Street, Moscow, £21,000 per sq/m

10. Wolseley Road, Point Piper, Australia, £17,000 per sq/m

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