The Spanish economy may still be in trouble and the price of property may have hit rock bottom, but for many people who have retired or relocated to Spain with the view of changing life for the better being at the Costa del Sol still beats life back home in Britain.
After yet another rain-soaked summer in the United Kingdom many people are asking themselves, if it is worth staying in Britain. Inflation and a depressed housing market, high unemployment and even higher taxation combined with miserable weather all account for record numbers of UK citizens leaving the country. So who are these lucky people?
They are mainly people with £250,000 or more of investments, who are free to move countries as they please. The coastline of the Costa del Sol with its famous resorts of Malaga, Marbella, Torremolinos, Fuengirola, Benalmadena, Mijas Costas, Nerja and Estepona enjoy more than 300 days of sunshine per year and an average temperature of 18 degrees Celsius; combine that with lower taxation, sea view or golf properties at exceptionally low prices and large expat communities already in place and you have a perfect spot for relocation.
Spain is welcoming record numbers of tourists this year and this has already had an impact on some areas, most notably the Canary and Balearic Islands where hotel and self-catering accommodation can be scarce during summer months. Investors seeking to convert ancient palaces to chic boutique hotels in Spain’s medieval cities or buyers looking for beachfront apartments and villas for holiday lettings should not delay their plans for too long.
However, there are a number of things to consider for people who still need to make a living, when they move to Spain. Working as a nail technician or beautician may seem a good idea, but living in resorts like Marbella is expensive and working on a self-employed basis with a Spanish autonomo (NIE) certificate is also not for the faint-hearted. Every month the Spanish taxman will deduct EUR 258 minimum in social security from a self-employed person’s bank account, regardless if they have made enough income that month or not.
It takes several fact finding trips to establish which area is best suited for relocation and for making a decent living. Marbella and Nerja already have large established British expat communities. Joining clubs and associations is not just good for making new friends - networking is essential when establishing a new business. Gyms, drama groups, reading circles and kids’ pony clubs are all good places to get acquainted with people and receive helpful advice. However, the first port of call should be the British Embassy, which can advise on working and living in Spain.
In May this year a report in The Telegraph warned that life for expats had become tough in Spain, but these things are relative - isn’t life also tough in the UK?
The difference is perhaps that Spain’s economy depends to a large extent on tourism and that the labour market as a consequence provides only employment for part of the year, namely from May to October, the main holiday season. For the remaining months it can be difficult to make a living, something that Spain’s current government is hoping to change. A number of new initiatives by the Ministry of Tourism aim to encourage more year-round tourism to provide stable employment for locals.
Expats need to renew their residence permit every few years, something that can take its time at the moment, because so many governmental services had to be cut owing to chronic money shortages. On the plus side new-built property is cheap because of various tax incentives, from a 50% cut in capital gains tax to a 50% cut in sales tax on new housing units.
Moving to Spain at the present time may be hard, but with property still selling at rock bottom prices, there could be a bright future ahead for those who buy Spanish property now and ride out the storm of the recession by continuing to rent and work in the UK until the time is right to move permanently to Spain.