Cross Border Acquisitions of Residential Property in the EU: Problems Encountered by Citizens
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DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT C: CITIZENS' RIGHTS AND CONSTITUTIONAL AFFAIRS LEGAL AFFAIRS Cross Border Acquisitions of Residential Property in the EU: Problems Encountered by Citizens STUDY Abstract This study was commissioned by the European Parliament's Policy Department for Citizens' Rights and Constitutional Affairs at the request of the JURI Committee. It identifies and analyses the legal and practical difficulties that an EU citizen faces when buying properties abroad and investigates what can be done to assist an EU citizen when buying residential immovable property in another Member State, making ten recommendations to improve their lot. PE 556.936 EN ABOUT THE PUBLICATION This research paper was requested by the European Parliament's Committee on Legal Affairs and commissioned, supervised and published by the Policy Department for Citizens’ Rights and Constitutional Affairs. Policy departments provide independent expertise, both in-house and externally, to support European Parliament committees and other parliamentary bodies in shaping legislation and exercising democratic scrutiny over EU external and internal policies. To contact the Policy Department for Citizens’ Rights and Constitutional Affairs or to subscribe to its newsletter please write to:[email protected] Research Administrator Responsible Roberta PANIZZA Policy Department C: Citizens' Rights and Constitutional Affairs European Parliament B-1047 Brussels E-mail: [email protected] AUTHORS Professor Peter Sparkes, University of Southampton. Dr Dilsen Bulut, ZERP, University of Bremen; Professor Magdalena Habdas, University of Silesia; Mark Jordan, Southampton Law School; Dr Héctor Simón Moreno, University Rovira i Virgili, Tarragona; Professor Sergio Nasarre Aznar, University Rovira i Virgili, Tarragona; Dr Tommi Ralli, ZERP, University of Bremen; Professor Christoph Schmid, ZERP, University of Bremen. LINGUISTIC VERSIONS Original: EN Manuscript completed in March, 2016 © European Union, 2016 This document is available on the internet at: http://www.europarl.europa.eu/supporting-analyses DISCLAIMER The opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorized, provided the source is acknowledged and the publisher is given prior notice and sent a copy. Cross Border Acquisitions of Residential Property in the EU: Problems Encountered by Citizens ____________________________________________________________________________________________ CONTENTS LIST OF ABBREVIATIONS 12 LIST OF TABLES 12 EXECUTIVE SUMMARY 15 1. METHODOLOGY 26 1.1. Objective 26 1.2. Our approach 26 1.3. Specimen conveyancing systems 27 1.4. Authorship 28 References 29 2. CROSS BORDER PURCHASERS 30 2.1. The European market in land 30 2.2. The scale of cross border acquisition 31 2.2.1. The conveyancing market in Europe 31 2.2.2. Foreign buyers in Spain 31 2.2.3. ‘Pull’ factors reflected in mobility of EU citizens 32 2.2.4. ‘Push’ factors reflected in EU emigration 33 2.2.5. EU citizens crossing language boundaries 34 2.2.6. Summary of flows of people moving within the EU 35 2.3. Economically active purchasers 35 2.3.1. Residential purchase by economic actors 35 2.3.2. Categories and sub-categories of economically active purchasers 36 2.3.3. Numbers of economically active purchasers 36 2.4. Properties bought to let 39 2.5. Holiday homes 39 2.5.1. Holiday home owners 39 2.5.2. Volume 40 2.6. Self-supporters and pensioners 41 2.7. Cross border ownership, purchasing and borrowing 44 2.7.1. Britons abroad 44 2.7.2. Cyprus 44 2.7.3. Finland 44 2.7.4. Sweden 45 2.7.5. Spain 46 2.8. Recommendation 46 3 Policy Department C: Citizens' Rights and Constitutional Affairs ____________________________________________________________________________________________ References 47 3. ACCESS TO PROPERTY INFORMATION 48 3.1. Concerns of a buyer 48 3.2. Property search 49 3.2.1. Setting the parameters 49 3.2.2. Estate agents’ particulars 50 3.2.3. Generalised locational information 51 3.3. Access to the cadastre 51 3.4. Accessible registers of title 53 3.5. Less accessible land registers 56 3.5.1. Title registers lacking conciseness 57 3.5.2. Registers accessible locally 57 3.5.3. Registers used mainly by notaries 57 3.5.4. Registers of deeds 58 3.5.5. Privacy 59 3.6. European initiatives on the accessibility of registers and cadastre 60 3.6.1. Institutional co-operation 60 3.6.2. Knowledge exchange 60 3.6.3. Substantive standards 61 3.6.4. Academic analyses 61 3.6.5. EULIS 61 3.7. Recommendations 62 3.7.1. Summary 62 3.7.2. Specific problems 63 3.7.3. Recommendations about access to land information 64 References 64 Web portals 65 4. PHYSICAL EXTENT AND CONDITION 66 4.1. Concerns of a buyer 66 4.2. Physical extent 66 4.2.1. Sources of information 66 4.2.2. Problems with the quality of spatial information 67 4.2.3. Coordination of cadastre and land register 67 4.2.4. Problems with spatial information 68 4.3. Boundaries 69 4.3.1. Plot separation systems 69 4.3.2. Common law systems 70 4.3.3. Latin registers 71 4.4. Physical condition/value 71 4 Cross Border Acquisitions of Residential Property in the EU: Problems Encountered by Citizens ____________________________________________________________________________________________ 4.4.1. Survey before contract: England 72 4.4.2. Survey before mortgage: Spain 73 4.5. Fixtures and fittings 73 4.6. What are you buying in Poland? – A case study 74 4.7. Recommendations 76 References 77 5. LEGAL TITLE 78 5.1. Concerns of a purchaser 78 5.2. The paradigm of ownership 78 5.2.1. General observations 78 5.2.2. French influenced states 79 5.2.3. German influenced states 80 5.2.4. England/common law states 80 5.3. Interests short of the paradigm of ownership 81 5.3.1. General observations 81 5.3.2. Leaseholds 81 5.3.3. Shares 82 5.3.4. A life interest/reversion on a life interest 83 5.3.5. Intermediate tenures 83 5.3.6. Property affected by squatting 85 5.3.7. Polish perpetual usufruct and cooperative proprietary right 85 5.4. The seller’s spouse or partner as an incumbrance 86 5.4.1. England 86 5.4.2. Spain 86 5.5. Defective titles in Northern Cyprus 87 5.6. Burdens 88 5.6.1. Burdens on the register 88 5.7. Burdens not on the register (overriding interests) 88 5.7.1. England 88 5.7.2. Poland 89 5.7.3. Tenancy contracts 90 5.5 Recommendations 90 5.8. Comparative accounts of European property law 91 5.8.1. EU funded projects 91 5.8.2. The Common Core Project (the ‘Trento’ project) 91 5.8.3. The European Network for Housing Research (ENHR) 91 5.8.4. Commercial texts 91 5.8.5. Ius Commune Casebooks 92 References 92 5 Policy Department C: Citizens' Rights and Constitutional Affairs ____________________________________________________________________________________________ 6. FLATS AND NEW BUILD 93 6.1. Flats 93 6.1.1. Prevalence of flats 93 6.1.2. Buying a second hand flat 94 6.1.3. Flat schemes 94 6.2. Ownership of a flat 95 6.2.1. Market terminology 95 6.2.2. Dualist schemes on continental Europe 95 6.2.3. Unitary systems on continental Europe 96 6.2.4. Leasehold flats in Britain and Ireland 97 6.2.5. Potential difficulties in England 97 6.3. Restrictions on purchase of flats 97 6.4. Block ownership and management 98 6.4.1. Block management 98 6.4.2. Service charges 99 6.4.3. Problems with the communal aspects of flat schemes 100 6.5. New build - information 101 6.5.1. Competence to protect buyers of new build 101 6.5.2. Protection of buyers of land 102 6.5.3. National legislation 103 6.5.4. Provision of legal advice to buyers of new build 104 6.5.5. Recommendation on provision of legal advice to buyers of new build 104 6.6. Value added tax 106 6.7. New build flats 106 6.8. New build – construction and stage payments 107 6.8.1. Acceptance of the work 107 6.8.2. Post completion guarantees 108 6.8.3. Security of stage payments 109 6.8.4. Residual liability 111 6.8.5. Dispute resolution 111 6.9. New build flats – ongoing management 111 6.9.1. Problems while an estate is only partly sold 111 6.9.2. Hidden mortgages in Cyprus 112 6.9.3. Block management 113 6.10.Recommendations 113 References 114 7. PUBLIC RULES 115 7.1. Concerns of a purchaser 115 7.2. Controls on alien purchase 116 6 Cross Border Acquisitions of Residential Property in the EU: Problems Encountered by Citizens ____________________________________________________________________________________________ 7.3. Lawful development 116 7.3.1. Urbanisation 116 7.3.2. Planning permission 117 7.3.3. Lawful construction 118 7.3.4. Energy certification 118 7.3.5. Limitation periods 118 7.3.6. Illegals 118 7.4. Public rights and proposals 119 7.4.1. Absence of public charges and proposals 119 7.4.2. Absence of development potential 120 7.5. Utilities 120 7.5.1. Residential infrastructure 120 7.5.2. ‘Land grab’ laws in Valencia 120 7.5.3. Does ‘land grab’ infringe the human rights of owners in Valencia? 122 7.5.4. Does ‘land grab’ infringe public procurement rules? 124 7.5.5. De facto expropriation 125 7.6. Special areas 125 7.6.1. Special designations 125 7.6.2. The coast of Iberia 125 7.7.