Spanish Bank Banesto withdraws non-resident mortgage lending
Spanish bank Banesto, part of the Santander Group, has recently taken the dramatic step to withdraw all of its own non-resident mortgage lending. The only product it will offer to foreign applicants is a self-certification loan which they are administering on behalf of GMAC.
This news comes just weeks after Caja Mediterraneo (CAM Bank), one of the largest providers of non-resident mortgages in Spain, instructed some of its branches to accept no further non-resident mortgage applications for the time being following a spate of false mortgage applications in Spain.
Wealth tax changes in France to help property investors
New tax reforms just introduced by the French President Nicolas Sarkozy will shake up the way the controversial Wealth Tax in France is calculated, immediately benefiting many French and British property owners.
The Wealth Tax reforms are part of the Work, Employment and Buying Power (WEB) reforms announced, including changes to Inheritance Tax and new tax relief on mortgages, all designed to boost the economy, encourage investment and increase French purchasing power. Crucially, also included in the Wealth Tax legislation are future government intentions to attract high net worth French exiles back to France.
The new change will allow a 30% discount on the value of the property that is eligible for Wealth Tax. So, for example, an un-mortgaged home worth €1m will now be taxed as if it were a €700,000 home.
One local agent said: “Many British homeowners who bought substantial properties in the mid-1990s may now be feeling the pinch of Wealth Tax. In fact, we have been advising clients for some time to take out a mortgage, even if they don’t need it, on property purchases in excess of €500,000. This is because the asset calculation for the Wealth Tax only factors in the equity in the property.”
Therefore, if a property investor has a loan-to-value of 70% or more, they are unlikely to pay any wealth tax at all.
Property prices in Sofia rising fastest in Iztok
In the first six months of 2007, residential property prices in Sofia increased the fastest in the Borough of Iztok, according to Colliers International. The company found that prices in the Iztok residential complex went up by 29% in the first six months of 2007, the Sofia Echo reported. The increase took the year-on-year increase in the Borough to 51%.
As a result Iztok became the second most-expensive residential district in Sofia after Doktorska Gradina, where the prices went up by 19% over the first six months of 2007.
The average residential purchase price in Iztok reached €1,450sqm in the first six months of 2007, compared with slightly below €2,000sqm in Doktorska Gradina (Doctors’ Garden).
The increase in the Ivan Vazov residential district was 11% and in Lozenets 19%.
The highest rental price increase in Sofia was again registered in Iztok, at 7%, followed by Doktorska Gradina (5%), and Lozenets (4%).
The report states that rental prices for the city vary from €3.5-4sqm a month for lower-quality apartments to as high as €15sqm, or even €20sqm, a month for new, luxurious apartments.
ECB keeps interest rates on hold at 4%
The European Central Bank has left the benchmark euro zone interest rate at 4.0%, taking time to assess the impact of recent trouble on global credit markets.
A sharp tightening in euro money market conditions since the ECB’s last meeting on the 2 nd of August had persuaded analysts that the central bank would postpone a rate rise which they believe ECB President Jean-Claude Trichet had previously signaled.
Highlighting tensions in money markets, the ECB lent banks an extra €42.2bn in temporary overnight funds on the day they made the decision after noting that money market volatility had increased, its first such emergency operation since mid-August.
However, many economists still expect the ECB to raise rates later this year because of underlying economic strength in the euro zone and inflationary pressures, unlike in the US where the Fed is expected to cut rates at its meeting next week.
Worldwide News
New property laws introduced in Egypt
Egyptian investment bank Naeem Holding is setting up a $200m mortgage finance company to fund the growing demand for Egyptian investment property. Egyptian law has now been changed to accommodate financing and the demand for mortgages has been driven further by the countries economic growth and rising property prices. The legal changes will include reduced fees for registered properties and clarity to the foreclosure laws all of which are increasing the competition within the mortgage industry.
By the end of this year the mortgage law should be fully in place. Most of the new real estate developments in Cairo, such as the residential compounds built by many UAE firms, cater only to Egypt’s wealthy. Once the law is passed developments will be able to serve more people, which will help to develop the middle class. Changes to Egyptian law allowing funds to buy property, in addition to listed companies, will also boost investment in the sector.
Cambodia under pressure to implement foreign ownership laws
Cambodia ’s private sector has urged the government to allow foreign ownership this week saying an open-minded real estate market would promote economic growth.
The Cambodian investment law was amended back in 2005 to allow foreign ownership of permanent fixtures, but as yet has not been enforced. The non-implementation of the act has in fact rendered the amendments as a forgotten law, and as such has now become out dated. In the current legal understanding, the old law will only allow a property investment in the name of a Cambodian national.
Chris Green, head of research at Obelisk International says: “The key improvements to the property investment law would open up a whole new economic world to the country of Cambodia. These measures would not only further develop Cambodia’s property investment market, but the new interest from those investors who want to take advantage early, will not only create a boom putting Cambodia on the map, but will also make the country more competitive with its neighbours .”
Property transfer tax being abolished in India
The government of New Delhi has become the second state in India to abolish the transfer tax charged by developers to property buyers at the time of sale. The fee is varied for different properties located in different locations and ranges from Rs100-700 (£1.20-£8.50) sq ft in the capital.
The Maharashtra government has already banned the transfer fee. The department of consumer affairs is of the view that this charge often leads to artificial escalation in property prices. The proposal will now be examined by the law ministry.
One of the prime objectives of the move is to bring down the real estate prices for the end user. Abolishing the transfer fee will not be difficult for state governments because it does not have any implications for the state exchequer. At present, the transfer fee is just another way of generating revenues for a property developer.
Until last year, the transfer fee in Delhi was charged at a rate of 5% of the total value of a property. In certain premium localities, this charge has been as high as £18 sq ft. It was then subsequently capped by the state government at Rs 700 (£8.50) sq ft.
The proposal to completely abolish this fee is a part of a series of government measures to put a check on the ever increasing property prices. “We are working on an idea that the only way to reduce property prices for consumers is by cutting down on additional expenses that they incur. All other factors, such as price of land and cost of construction cannot be regulated”, a senior government official said.
“Transfer fees were originally charged by developers to discourage speculation in the property market. Until last year, some flats were changing hands at least five times before completion. Now prices have stabilised and a correction has happened in most areas, transfer fees can be done away with”, said Ansal API president (marketing) Kunal Bannerji.
Other states in India are expected to abolish the transfer tax in the coming months.
Property prices rise by 8.2% a year in Chinese biggest cities
Property prices in the 70 biggest Chinese cities increased in value by an average of 8.2% year-on-year in August, compared to 7.5% in July, the National Development and Reform Commission (NDRC) said.
In a statement published on its website, the NDRC said that prices of new residential properties rose 9.0% year-on-year in August, with the growth rate up 0.9%compared to a month earlier.
Shenzhen and Beijing were among the top five cities to record property price growth exceeding 10% year-on-year, at 17.6% and 13.5% respectively.
Non-residential property prices grew by 6.2% year-on-year, 0.2% quicker than in July, it added.
