The amateur economist

I never thought I’d turn into a market watcher let alone a market predictor but buying a property in Spain has come close to seeing me pull on the red braces and pin-stripe suit, and aspiring to nip to the nearest Porsche dealership.

When you are shopping about for holiday money you try and find yourself a decent rate but resign yourself to the fact that currency markets fluctuate and at the end of the day it only makes a few quid difference. When you are talking about buying tens of thousands of Euros then the slightest fluctuation can make a big difference.

The difference between securing an exchange rate of 1,10 € and 1,20 € to the pound is the difference between getting 11.000 and 12.000 € per £10,000. All of a sudden this realisation turns into a market watching hawk, scouring the daily news for stories which may effect the following days trends, installing the BBC’s market ticker on your laptop, reading the currency exchange blogs, and trying to hit the market at its peak to maximise your cash.

As dangerous as mountain climbing

What you also need to do is lift yourself out of the tourist rate equation and get something a bit closer to the inter-bank rate – the headline rate which gets published in the newspapers, but you never get anywhere near at Thomas Cook.

We got ourself a currency consultant called Robert at Foremost Currency Group and after extensive discussions we settled on a target of 1,135 € to the pound, at a time when the inter-bank rate was around 1,100 €. In the reservation contract we’d agreed on 1,095 € so anything better than that and we were ahead.

A couple of weeks later and the pound strengthened to a level where I got the call from Robert. We fixed the price at 1,1351 € and I was happy, we were 350 € per £10,000 up on the reservation contract agreed exchange rate . But my joy was short-lived. The pound continued to strengthen, despite my extensive research, and when we eventually went to Galicia on the 21st June to complete the purchase the rate was 1,195 €, making economics yet another pastime to add to the long list of disciplines at which I am a rank amateur.

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Jesús is getting all our money

Ramon was fast off the mark because within minutes of us agreeing the price the ‘reservation contract’ landed in my inbox. Where was Spanish inefficiency when you really need it?

We added to our list of differences between buying a house in England and Spain with numbers 37 and 38. Although it was a simple enough document, it contained within it two frightening elements.

Firstly the deposit would be a massive 15%, a big chunk of our liquid assets, and it was requested immediately on us signing the contract. This was non-returnable, should we change our mind, but would only cost the seller 1.500 € if she decided to back out, it didn’t seem particularly fair.

The second was that the completion date would be in 28 days, not enough time for us to raise the funds and do all of the other tasks (NIF (Número de Identificación Fiscal), bank account, consultations with our gestoria) that we needed to complete prior to handing over the purchase money.

Inma got a copy too, and after a little discussion and negotiation we managed to get the deposit reduced to 10%, and the completion extended to 60 days, but it would still be tight, and if we missed the deadline then we lost that deposit. Wheels were set in motion to arrange the finance in the UK and plans were quickly made to go back out to Spain for a short trip to sort NIF and Bank account as well as actually meeting Inma face-to-face for the first time.

We landed at Asturias airport slap-bang in the middle of a civil servants strike, it could only happen to us! First we’d a three hour trip to Lugo, the provincial capital, to present our NIF application documentation in person at the police station, where the civilian element were out on strike. After much telephone discussion between Inma and her sister Campo (in Lugo) we were assured by the authorities that we’d be able to put in our application, despite the walkout. We arrived as advised, expecting massive queues but within five minutes we were heading back to the car to leave the big city and head back north. It would now take a week for the authorities to issue the numbers that we needed to purchase a property, and open a bank account. Campo would collect and forward to Inma.

Next up was the bank. We’d chosen Banco Santander  not for any other reason than Inma suggested it (probably on a commission) and she took us to meet the bank manager, Jesús. He was great, got us to sign a ream of blank forms, awaiting the NIF, and assured us that everything was going to be fine. I guess that sometimes you just have to go with the flow, but timing was going to be crucial if all the places of the jigsaw were to fall in place at the right time.

Now we’d got to sort the money in the UK.

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Wind farms are like marmite

Surprisingly only the USA, Germany and China produce more wind power than Spain, but it is much less of a shock to find out that within Spain, Galicia is the third largest producing area in the country. As the wind whips inland off the Atlantic the first thing that it often encounters is the wind farms which the autonomous state of Galicia has cunningly located, thanks to many EC grants, to catch it.

Wind energy is the third largest power generation techique in Spain with nuclear producing 50% more than wind and thermal gas responsible for twice the wind energy production. 

Costa del Morte Wind Farm

Wind turbines do solicit severe reactions from people, oriented towards one end of the spectrum or the other. Wind farms are either loved or hated. I can understand the rationale behind the dichotomously opposed views.

Against;

  • They spoil the natural landscape.
  • They can be seen from miles around.
  • They can be noisy.
  • They wreak havoc with migrating birds.
  • They are unreliable, inefficient and unpredicatble, requiring a back-up source of energy.

In favour;

  • They are aesthetically pleasing and elegant to look at.
  • They help the environment and safeguard all our futures.
  • Wind turbines green and harvest an abundant and renewable source of energy.

Personally I quite like them. There are three stood on the hills to the west of our house, a couple of kilometers away, and I expect to see more each time we visit. There have been complaints in the local newspapers, especially around the time of winter power-cuts, that they are noisy, but I’ve never heard them.

Wind Farm near Viveiro

Everyone is a NIMBY (not in my back yard) and I guess that if I found out that they were planning more turbines directly opposite the our property then I’d be likely to change my view. But while ever they are far enough to be appreciated for their modern beauty, juxtaposed against the natural skyline, then I’ll be a distant supporter.

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The offer, the counter-offer, and the lost game of golf

This was the closest that we’d been in our months of searching. We’d our Immaculate gestoria, our surveyors report of pretty pictures and a plan, and our hearts deeply set on two acres of gently sloping Spanish countryside upon which six, or was it seven, total ‘basket case’ houses sat.

What should we do next?

We decided to rely upon our vast English property buying knowledge and experience, drawn from both of the West Yorkshire houses that we’d bought in the last twenty years…and we made an offer. Not any old offer mind you, it was an offer based on a detailed formula, one rationalised and agonised over for hours. An offer pitched just at the right level to secure the house, and allow enough budget for the monumental renovation task that would follow. Not too big, and not too small, it was perfect.

The following morning I allowed the nervousness to build for an hour and then called Ramon. Butterflies in my stomach, slightly sweaty palms, Ramon set off at his usual one hundred miles an hour. After listening for a while about his plans for one of his houses, taking the dog for a walk, and a new restaurant he’d found on his last trip, I managed to but in and said ‘We’d like to make an offer on Liñeiras’.

‘Oh, great’ said Ramon. I could almost see him smiling at the other end of the phone.

I put our carefully crafted offer to him, the type offer which would get the greedy contestant thinking very hard during a tense game of ‘Deal, or No Deal’, our offer that we thought should secure our dream house. Then silence, not even the sound of the wind that had been buffetting Ramons mobile phone microphone for the last twenty minutes as he exercised his dog. It was the kind of silence that made me suspect that he’d put his phone in his pocket while he stifled the laughs. ‘Okay’, he came back, a sterness in his voice, ‘I ask Julio to put offer to the seller’.

Seconds, then minutes, then an hour passed and Ramon called back. ‘No’ he said, ‘Julio, he say no’. I waited for the counter offer but it wasn’t forthcoming. ‘Try again’ said Ramon. Amanda and I had discussed this eventuality and what our reaction would be, but in the heat of the moment I said ‘Okay, up our offer by five thousand Euros’.

‘Better’ said Ramon, and hung up.

More hours passed and the phone rang again. ‘Julio say seller say no’. Stunned, I asked what the counter-offer was and Ramon struggled with the concept. It was becoming obvious that in Spain you make an offer and it is either accepted or rejected. There is no counter-offer, no negotiation, a simple ‘yes’ or ‘no’. We’d had our second ‘No’.

Amanda and I talked long and hard through the night and we decided on a second increase, the increments getting smaller, which would be followed by a third, if necessary. We were, however, getting closer to our absolute purchase budget. Another call to Ramon and another offer saw yet another couple of hours wait before a third ‘No’ but this time something out of the ordinary, a previously unheard of Spanish counter-offer. Ramon was stunned, but I was in my element. Now they were playing my game.

I made an offer under their counter-offer (I hope that you are keeping up at the back) and finally they came back with a final-final offer half way between theirs and mine (via text message as I was on the golf course playing a competitive away match).  We textually shook hands, my opponent waiting impatiently on the fourteenth green, frowning at my lack of etiquette, and the house was ours, all bar the contracts. The excitement of wanting to get home and tell Amanda was overpowering. My golf game went rapidly downhill and from being in the lead at the time of the text, I lost the matchplay game with holes to spare.

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How does your garden grow

We’ve only been in Galicia from November to June, so we’ve not had chance to view the state, area or property when nature has fully taken hold and the sunshine and occasional abundant rain have worked their magic. It’s now two whole months (and seems longer) since we completed on the house and I image that the last sixty days will have seen a massive change.

Following the Life in Galicia blogsite my curiosity was further enhanced by their article ‘It’s summer because…’ due to the fabulous looking fruit and veg, not to mention the ‘frog shower’ water feature. These ‘Expats’ are in Sober which is about 150km from our house and due south-west with us both being about equidistant from Lugo. Whilst the climate is warmer and more humid at their house than it is closer to the north coast, it still gives us a good example of what we may be able to expect to grow with some success. Tomato, grape, apple, walnut, olive, a whole host of salad stuff and root vegetable, squash, pulses and legumes.

At the moment our land has some salad vegetables and potatoes growing on it, thanks to our friend Carlos (more of whom later). We also have a number of fruit trees, most of them sadly self-seeded in the most unfortunate of places for our impending development. Hopefully we’ll get a crop or two from them before they have to go, but to recompense we intend to plant a small orchard to at least keep ourselves self-sustained in apples, cherries, limes and lemons, kiwi (which is a big industry in Galicia), and possibly olives and walnuts.

On the last trip in June I snapped the following. If anyone can help with identification then please feel free to comment;

Specimen A

Specimen B

Specimen C

What I did recognise were; apple (at least two varieties), walnut, olive, cherry, almond and the most interesting of all….a fig tree.

Fig Tree

Apparently the ones to eat are the ones covered in ants…for they are the sweetest and ripest.

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