I must sincerely thank Mr Phillips for putting my concerns regarding a problem for UK and Majorca's first time buyers to right. There was me believing the statistics I read on the unhealthily small number of first time buyers in Majorca, when things, according to Mr Phillips, could not be better! There are plenty of properties valued by the normally conservative banks at 150'000, where the property owner only wants 112'000 and even better, no black money transfers take place! Banks are also bending over backwards to loan (effectively) 100% mortgages to new UK arrivals, if their new job salaries are appropriate, even on their initial six month contract. So actually, all is well with the first time buyer market in Majorca - according to Mr Phillips.
For those who live in the real world, these are the figures that a first time buyer faces.
1). Agreed sale price with vendor (say) 125'000.
2). Declared selling price to bank and taxman 100'000 Black money required 25'000.
3). 80% mortgage from bank 80'000 White money required 20'000.
4). Estimated 11% stamp duty etc 11'000 White money required 11'000.
5). Setting up new home costs 8'000 White money required 8'000 (minimum).
This means that at the bottom-end of the property market, the buyer must have at least 64'000 available in cash (savings) over HALF the agreed sale price! Mr Phillips may argue that the Bank would value the property at 125'000 thus effectively providing a 100% mortgage (the Bank believes you are only paying 100k for the property). So, at best, the first time buyer ONLY needs to raise 44'000, IF you live in Mr Phillips' world.
My original point was to encourage UK first time buyers to Majorca is totally wrong, unless they are given the full facts of buying property here and can cope with it. My solution is declare an amnesty on all property black money transactions to date that were always considered the norm. Declare active monitoring on all future property sales with punitive measures to those caught deceiving the system and action against professional bodies who have previously turned a blind eye to the practice. Removing the previously accepted black money dealing in property sales would be a massive bonus to first time buyers and stimulate the market significantly in my view.
As a footnote, it is sad to reflect that we have many people like Mr Phillips with an I'm alright Jack attitude to life and selfishly refuse to see the real issues faced by others less fortunate. The youth are our future and we have a responsibility to afford them every assistance so they may responsibly get onto the property ladder. Failure will mean that they will be forced to emigrate - leaving Majorca to a future of being a geriatric state.
(Naïve) Dr Mark Masters, Andratx
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