Unfortunately, many Russians have been affected in some way by the recent political and economic events that have occurred around the world over the past few months. One of the unpleasant effects of the sanctions against the Russian Federation was that players in the Spanish real estate market sought to capitalise on the panic caused by the situation. Let’s examine the factors that Russians should consider if they want to conclude a successful real estate transaction in Spain today.
Content:
- Restrictions for Russian customers of Spanish banks
- Purchase of real estate worth more than 100,000 euros
- Withdrawal of funds from Spanish accounts
- Exchange transactions
- Real estate management
Restrictions for Russian customers of Spanish banks
Some intermediary companies exaggerate the effects of sanctions on the Russians and say that Russian home buyers cannot pay off their mortgages, that their Spanish bank accounts have been frozen, that the money in those accounts will be withdrawn, and even that a special law will be passed to address these issues. This is not true at all.
In reality, the country’s financial institutions continue to work according to the standards established by Spanish legislation. Banks do not violate EU regulations, but are always open to dialogue with all their customers, regardless of their nationality. Even the Banco de Sabadell, whose representatives in March announced the blocking of all Russian accounts, started to change its policy after the work done by experienced lawyers.
All mortgage payment issues have been resolved through dialogue in the majority of banks. Russians are typically required to show full documentation of their income, which they provided during the account opening process. Additionally, they must explain, e.g., any blocked credits, to prove that this is a rental payment.
It should be noted that the news about Spanish banks imposing a 100,000-euro limit on Russian clients’ accounts is credible.
To pay for mortgages and utilities, you can still use the money in Russian accounts. All required transactions will be completed. However, to do so, the Russians need to cooperate with the banks that are still connected to SWIFT and have not received sanctions.
Purchase of real estate worth more than 100,000 euros
This 100,000 euro limit may severely restrict the options available to Russians wishing to purchase property in Spain. However, this does not imply that their only solution is now to live in cheap housing. The following three ways are frequently used by Russian customers to get around the restrictions in place:
- Married people have the right to open a new account or transfer money to their current spouse’s bank account. This decision will help to double the maximum amount.
- Most Spanish property developers offer instalment payment plans. Russians who plan to use this option need to ensure that the total of any lump-sum payments made under the agreement does not exceed 100,000 euros.
- Secondary property purchasers can also negotiate instalments with a homeowner. While not all sellers will agree to such terms, it’s very possible to find those who are willing to discuss it.
Withdrawal of funds from Spanish accounts
Russians who do not want to visit Spain can sell their real estate in the country and don’t have to do this at a loss. You can offer a discount to close the real estate transaction faster, but selling a property at a significant discount is not a smart move.
Any issues with transferring money between Spanish and Russian accounts can be resolved. The Spanish typically have the option of purchasing real estate from the Russians as are not subject to personal sanctions. This is because the sanctions are intended to limit the Russians’ ability to move their funds, not the Europeans’.
The seller needs to immediately confirm that the real estate agency he selected can work with Spanish citizens and understands how to persuade them to complete the transaction. Reliable intermediaries will not force the seller to make a substantial discount by dumping all of the problems on them.
Exchange transactions
Currently, many intermediary organisations offer exchange transactions to their Russian customers. This is hardly unexpected as some people try to relocate to Spain while others want to sell an overseas property, fearing losing access to it in the future due to new restrictions.
But what can the owners of Spanish real estate experts in the Russian Federation do? After analysing the real estate ads in Russia, it can be concluded that the asking prices of Russian elite properties don’t correspond to the new realities. Therefore, these transactions should be approached with caution.
Real estate management
Russians who acquire real estate in Spain may be asked a lot of questions. Who’ll be responsible for the management and maintenance of the acquired property? How are the problems with the Spanish banks addressed? Who’ll take care of the rental payments if the house or apartment is rented out?
Judging by the experience of Russians over the past six months, working directly with a Spanish bank can lead to difficulties. Many property owners have to coordinate almost all of their actions and payments with their representatives. Some financial companies, though, do not use such severe measures. Real estate rentals are a secure source of income for their clients. To avoid the issues that resulted from the well-known events, it’s a clever idea to keep working with the real estate intermediary company that assisted in the selection and acquisition of the property. Even though handing over the keys and registering the title are the typical ways real estate agencies end their relationship with a customer, modern Russians may find it useful to hire an agency to maintain their property. This advice is especially relevant in cases where the new owner has no established contacts in Spain and doesn’t wish to make Spain his permanent place of residence.
