Hot Property News Letter – November 2010

Welcome to this issue of the Hot Property news letter which we hope you find informative and helpful. If you have any suggestions, comments or questions, which we can address in future issues, you can contact us at info@hotpropertyspain.net
 
1: FINDING A RELIABLE TRADESMAN AND OTHER ISSUES
 
So you now have your beautiful home here in Spain but, at some stage, you may wish to carry out improvement or maintenance works and this will raise that age old question, "How to find a reliable and professional tradesman who will carry out the works on time, to an agreed price and will actually complete the works to a good standard?”.

This is a simple question, but it does not have a simple answer. There are many advertisements for various trades of many nationalities and the first step most people take is to find someone that speaks their own language, and although this seems a good idea, there should be a note of caution, as there are a number of cowboy builders that disappear on a regular basis, only to reappear in a slightly different location with a different trading name.

A local Spanish contractor who has been trading for a number of years is a fixture in the community, but the problem is communicating with him, whereas a newly arrived expat who sets up as a contractor, has no real ties or checkable history. That said, there are many good expat tradesman, the problem is how to separate the good from the bad? 

Spanish companies.

The advantages are:

They know the local system and methods of construction and will have received correct training and apprenticeship in their particular trade. You can get hold of them as they are unlikely to disappear, although in the present financial climate no company is bullet proof.

They will advise on all necessary licenses required for the works. They will know the best contractors for each trade and the best materials and methods to suit the hot Spanish climate.

They will have a reputation that can be checked through references and examples of completed work.

The disadvantages are:

Communicating with sufficient understanding to ensure the result of the work meets the initial requirements and to communicate during the process when changes occur due to unforeseen circumstances.

Health and safety practices are not always seen to meet the highest standard.

They will not work on local Fiesta dates and will stop for the siesta.  However,  they will start very early and work late.

Expat contractors.

The advantages are:

Communication in your mother tongue, which hopefully will avoid any confusion, but with general builders problems can still arise.

The disadvantages are:

They may not have a long history in Spain and therefore they may not have training and certificates that are recognised here. Since they may not have long term ties in Spain they may not be worried about their reputation.

May not understand the local methods of construction and use a different method which may not be advisable in the long term.

Sensible steps to take.

Whichever route taken, here are a few pointers:

Find a reason to visit the contractor’s offices to see that that it is a bona fide company.

Ask for copies of certificate of insurance and, if necessary, a health and safety statement for the works.
Contingency.

Once the pre start costs have been confirmed, it is still necessary to allow for unseen issues and changes that may arise, therefore a contingency sum, to be spent only if needed, should be provided for. As a general rule 10% of the overall budget
.  
Payments.

Do not pay monies up front, but agree payments at various work stages.

Arrange, if you can, to buy items such as kitchen and bathroom fittings and wall and floor tiling direct from the supplier and pay for them directly. This way you know the items have been paid for, or at least ensure a paid receipt is seen for these items before paying the contractor.

On projects where structural alterations are part of the contract, you will have the need for an approved architect, and therefore it is advisable to hire the services of a project manager.

Approvals.

A licencia (building permit) must be obtained before the construction of any building can begin, regardless of whether the structure is to be used as a dwelling or whether or not it has foundations. This same permit is compulsory for any work carried out on an existing building where this work would change the usage, exterior appearance, modify the volume, or where extra storeys would be created. These permits are required for even fairly minor works, such as external redecoration, or for a prefabricated garden shed, so check with the town hall what permissions are required. In the end, permission will probably be granted, but the fine will be many times the cost of the license.

Completion.

Ensure that all works are completed and with all necessary paperwork in place before making the final payment. On larger projects, it is important to agree in the contract a retention amount and retention period before signing off the works. As an example, say for works requiring structural alterations, 10% of the cost for a six month period. 

2: CURRENCY EXCHANGE METHODS
 
It is advisable to use a Currency Exchange broker when changing currencies as they will give you a much better exchange rate than your bank, and for a large transfer such as for a house purchase, this can save you several thousands of pounds. We can recommend two or three brokers on application.

The Spot Contract

Is the most basic and popular foreign exchange product. It is an agreement to buy or sell one currency in exchange for another. You have 2 days to settle the contract, at a price based on the prevailing "spot exchange rate" - the current value of one currency compared to another.

Although the spot market lets you buy or sell currency as you need it, spot exchange rate movements are highly unpredictable, even during a single trading day. Upon receipt of cleared funds, currency is available for onward transmission.

The Forward Contract

Lets you buy or sell one currency against another for settlement no later than on the day the contract expires. Unlike spot contracts, a forward contract eliminates the risk of fluctuating exchange rates by locking in a price today for a transaction that will take place in the future (up to a maximum of 2 years). You also have the flexibility to take delivery of your currency in an agreed time period before the expiry date.

A 10% deposit is required to secure the contract and is payable within two working days with settlement due on the day the contract expires.

Limit Order

Is an order to secure currency at a specific price that may not be currently available. This type of contract is particularly useful when the markets are moving in a positive direction for you. This is one of the two most common types of orders, the other being a Stop Loss Order.

Stop Loss Order

Is used when the market is moving in a negative direction for your currency. An order is placed on file with your broker to help ease the stress of adverse market movements.

A stop loss order instructs your broker to buy when the currency hits a certain point. The purpose of the stop loss is obvious – you want to prevent any further movement before the currency falls again.

This newsletter is intended as a guide and to be informative and helpful in the process of searching for and purchasing a property in Spain. Total accuracy cannot be guaranteed and in all legal, fiscal and other matters a fully qualified professional should be consulted. Reproduction of any part of this newsletter is not permitted without written permission.