Situation report April 2010

The winter period has been much quieter than in previous years as the financial situation seems to have affected confidence and the ability to get a mortgage.

Some owners have reduced their prices slightly or are willing to negociate a little more than in previous years. On the other hand houses on La Palma are still being sold for prices close to the asking price.
Puntagorda has been very popular in the first months of 2010, with a sudden flurry of serious interest. The sales have been completed on 3 houses and 3 more are under offer, some via us and some with other agents.

We have houses to suit most pockets and wishes.
Not all our houses are shown on our website. It is therefore a good idea to let us know what type of house you are looking for, the price range and location so that we can see if we have other properties which may be suitable for you.

Starting a business or being self-employed

If you have a talent which other people find useful then perhaps you could set up your own small business of offer your services as a self-employed person.
There are possibilities for anyone with a trade to be able to make a living on La Palma.
Don't expect to get rich, but getting enough work to be able to live should be possible.

Most of the carpenters (wood or aluminium) , plumbers and electricians that we know have such a backlog of orders that there should be plenty of work around to be able to get started. People with welding and metalwork skills should also have no problem starting a business.

Fresh vegetables have been a booming area in recent years. The traditional Palmero diet does not contain many vegetables, just potatoes, sweet potatoes, avocados and tomatoes and ingredients for soup which include beans. In recent years more variety has been introduced via the supermarkets, but the quality is below the locally grown produce and there is little variety.
Since about 2002 Farmers markets have been growing in popularity. The permanent markets in Santa Cruz, Los Llanos and Mazo have always had some vegetables but since the introduction of the weekend Farmers market in Puntagorda selling produce grown locally in the rich soils of the North-West of the island people have discovered the difference in quality and the will drive miles to get good quality fresh vegetables. More recently other places have opened weekend markets.
When in season the Puntagorda strawberries are sold out within a couple of hours.
There must be a market there for this and other produce.

Teachers, doctors and dentists are in demand, but you would need to speak the Spanish language. You may be able to give private English lessons but again, speaking reasonable Spanish would be important.
There is a small foreign community on the island, mainly German but also some English, Dutch, Belgians and other nationalities. You may be able to find some work in this 'market' but in practice these markets are already saturated.

Don't expect to come to La Palma to make a quick killing with some new concept or with the gap-in-the-market that you have found. That 'gap' maybe because there is just no demand.
You may find that you cannot charge the rates that you are used to because the wages are lower than elsewhere.

If you have experience with computers there are also opportunities, teaching people to use them, installing and updating software, arranging Internet connections and resolving computer problems.

You can almost always find casual work as a gardener or cleaner, or as an odd-job man or on a building site. Of course you will need to know someone who can introduce you to the employer, just walking in off the street probably won't work. This type of work is not well paid and can be hard, but it can give you enough to live on.

Finding a job on La Palma

Working on La Palma.
We are often asked how people can find work on La Palma.

The simple answer is that it is not easy to find a job on the island.
There are very few large companies on the island so there are very few office jobs.
There are some hotels but jobs there are not easy to find or are poorly paid.
Most companies, bars and restaurants are small family businesses employing just a handful of people.

Speaking Spanish is essential for almost every job, without it you are unlikely to find work.
If you speak several languages you stand a much better chance in the tourist industry.

It is unlikely that you will get a fixed employment contract, certainly not until your employer gets to know you. Most jobs are on a casual basis.
La Palma has a population of just under 90,000 people. In any area that you are seeking work people tend to know everybody, so integrating is not always easy. Employers always know people who know applicants, it gives an element of trust which as a new arrival you cannot compete with.
Bear in mind that many foreigners who ask for jobs tend to come and go so local employers will take a lot of convincing that you are still going to be here in 6 months time. We know people who have stayed less than 2 months. It helps if people that they know and trust will recommend you for a job.

There is very little point in applying for a job by email, post or phone. You have to be here. It might be worth contacting hotels or car hire companies beforehand, but don't expect them to be enthusiastic about you. They will need to meet you and talk to you before they make any sort of commitment.

Only having a casual job means that banks will not accept your mortgage application.

For most people it is easier to start a small business or to be a self employed freelance worker.

Buying a house on La Palma but you need a mortgage?

Summary.
It is not easy getting a mortgage in Spain, but it is possible provided that you can convince the bank that you are a safe bet.
In general Spanish banks will give no more than 60% or 70% mortgages.
As a basic rule, if your bank in your home country won't give you a mortgage then a Spanish bank won't either.

The banks
Banks in Spain are no different to banks in the rest of Europe.
There are 2 basic rules that they apply.
1. You have to have security.
2. You have to show that you can make the repayments.

Where should I get apply for a mortgage?
Ideally you should apply for a mortgage in the country where you can prove your security and your income which is usually where you also pay tax.
If you are intending to move lock, stock and barrel to La Palma with no income or property in your (old) home country then obviously you will need to apply to a bank in Spain.
If you have security (property) in your home country and income in your home country then the best option is to ask a bank there. It will be a lot easier to convince them that you are a safe bet than it would be to convince a Spanish bank. Your 'foreign' pension or benefits may not carry much weight in Spain.
In other cases it will depend on which is easiest to prove.

Security using a property on La Palma.
If you apply for a mortgage in Spain with a property in Spain as security the banks will base their offer on the valuation of an official valuer which a Spanish bank will usually arrange. This valuation is often lower than the market value.
Special care has to be taken with older properties. Roughly speaking, the Spanish banks require that a property has been registered with the Land Registry for at least 2 years. Older properties may not be registered in the correct way, especially if they have not changed hands in the last 10 years. Whilst the ownership may not be in doubt the banks are super careful and will insist on waiting for 2 years after a first inscription before considering a mortgage.

Income requirements.
As with all banks you will need to prove to a Spanish bank that you have a regular source of income in the future. They will base their judgement on your financial history and prospects of continuity.
Euro-based pensions are usually acceptable. Non-euro based pensions may be valued lower to allow for currency fluctuations.
Usually the bank will ask for tax and bank statements for the previous 2 financial years. They will also ask for proof of continuity, so if your income will change or stop because of your move to La Palma your mortgage application may not be accepted.
If you are 'starting again' on La Palma with a new business or a new job it is unlikely that a bank will accept a mortgage application in the first 3 years. This is because you have no proof of continuity of income and no banking history with them. If you are not self-employed then only a permanent salary with a long term contract will suffice. Self-employed people have to show 2 successful financial years with adequate income and profits to be entertained as potential applicants.
Bear in mind that the banks know that many people who dream of an easy life on La Palma leave within a few years. You have to prove that you are not one of them.

Tell the estate agent.
It is very important that you tell the estate if you will need a mortgage before you start looking at houses. The bank rules may prevent you getting a mortgage on a specific house, or other requirements may rule out a mortgage in the first few years. Please tell us before we spend time and effort looking for suitable houses and arranging visits to houses. We need to check suitability for mortgage purposes.
It can lead to disappointment on your side and irritation with sellers and estate agents if you do not.

How can LivingOnLaPalma help.
We cannot change the bank rules and regulations.
We can help you to prepare the presentation of your application to a bank, find a bank which may accept your application and be there when you talk to the bank to explain your situation.

Forest fires on La Palma in August 2009

The news stories.
La Palma was in the news in August 2009 due to forest fires on the southern tip of the island.
Many of the news reports of the extent of the damage were greatly exacurated, many were wildly inaccurate.
The press reported 4000 people evacuated from the island, hundreds of houses destroyed, most of the forests destroyed, they said that the observatory was threatened and the island was consumed by flames. There were even reports of mass evacuations by boat.

The damage
In fact the fires only burned in the very southern part of the island and damaged less than 2% of the pine forests on the island. Somewhere between 500 and 1000 people left their homes temporarily and returned the following day. No one had to leave the island. Only 30 houses were damaged, plus some outbuildings. No people died or were injured but a few dozen domestic animals were killed, some grape vines and lots of weeds were burnt. Nobody was evacuated from the island.
A handful of tourists missed their flights and one hotel had a smokey 24 hours.
For the people directly affected it was a disaster and very frightening, but for the majority of the island it was business as usual.
See www.islalapalma.com/en/forestfires.html for more details.

The pine forests
People talk about the forests being destroyed but that is not accurate. The grass, shrubs and pine needles on the ground burn, as do the dead pine needles hanging on the trees. The trees themselves get scorched but not burnt. The grass recovers after the next rain, the shrubs may take a few years to recover but due to their deep roots the pine trees start to sprout green shoots within weeks and recover substantially after the first winter.

The danger period?
Forest fires can occur in July and August when the vegetation is dried out and the weather is hot. A major fire occurs about once every 5 years, almost always they are high up in the pine forests on the hills up above the villages. Usually no houses are affected.

Fire protection services.
The forest fire protection services are active all year round cleaning up the forests and improving installations. From mid-june to mid-october their numbers are increased dramatically. In the north of the island large networks of high pressure water pipes have been laid and fire-breaks have been made. This helps to contain the fires and allow the fire services to bring them inder control quickly.

Preventative action
House owners take simple precautions to prevent their houses being damaged.
There are 2 dangers, one is fire creeping along the ground, the other is sparks blown by the wind.
The main precautions are:
- make concrete and gravel areas directly around the house, make a fire proof border of about 2 to 5 metres,
- make sure the house has no exposed wood,
- plant a garden with flowers, cactus and shrubs around the house,
- clear all grass and wild shrubs within 20 metres of the buildings,
- don't leave piles of wood near the house,
- when you are not there (in july and august) put all burnable objects (plastic garden furniture!) in a protected area away from the house, inside the house or in a shed.
- insist that any neighbours do the same, help them if needed.

With these simple precautions the risk of fire damage is very small.

Situation report April 2009

Despite the economic dip we are still getting many enquiries about houses for sale on La Palma.
Many of the dreamers are gone and most enquiries that we have are from people who have real money in the bank or have already sold a property.

For some people the crisis has given them a reason to invest in property in a stable market, and La Palma is a lot more stable than neighbouring Tenerife and the Spanish Costas.

For other people the downturn has encouraged them to move forward their plans to leave the chaos, pressure and grey skies of Northern Europe and to make their dream of a house in the sun come true now rather than later.

Of course, we have our share of enquiries from people who think that a 10% downturn in some areas means that sellers on La Palma will accept offers of 40% below the asking price, but the difference in asking price and selling price is no different to previous years and the asking prices are only dropping by a few percent.

La Palma is still a good place to buy property. The island is not dependent on tourism and is therefore pretty much imune from the huge effects that a drop in tourism has had on many other locations.

Most Spanish banks are not keen on giving mortgages to foreigners these days but with proof of income and a good property valuation motgages of 60% to 70% are sometimes possible.

Crisis, what housing crisis?

We often get enquiries from people who are surprised that house prices on La Palma have not dropped in line with the massive drops in the USA, UK and the Spanish Costas.
It may seem surprising but it appears to be true that houses on La Palma, Canary Islands are maintaining their value.
La Palma seems to have escaped the 'crisis' in the housing market. The market has remained fairly stable so far for cottages, holiday homes and detached houses.

Perhaps it is because the young palmeros are more prosperous then ever before and no longer want to follow tradition and live with their parents. They are buying up property.

Perhaps it is because owners are prepared to wait a couple of years as they are generally not in a hurry to sell and do not want to lower their price.

Perhaps it is because people from the Spanish Peninsula and Northern Europe want to leave their own countries and move to a better climate and live a more relaxed life, creating a continued demand for houses on La Palma.

Perhaps it is because there really isn't much property for sale on the island at any one time.

Of course, some property owners are still overly optimistic, but in our experience there is still enough demand for houses to be sold at prices fairly close to the asking price.

In any case the property prices on La Palma do not seem to have dropped significantly in 2008