Paragon Advance España sees defaulting tenants and evictions triple for expat landlords in Spain

Paragon Advance España , part of the Paragon Advance group of companies offering tenant referencing and rent warranty in Spain, have noticed a substantial increase in English landlords in Spain experiencing problems with bad tenants and the eviction process as  what they describe as “pirate tourism” takes a hold.  Recent research shows that defaulting tenants and evictions have tripled in the past two years as owners look for a solution to create income by letting their property as an economic alternative to hotel accommodation or resort to long term lets to locals.

Bryn Cole, Managing Director of Paragon Advance España who have offices just outside Marbella, the Costa del Sol and Madrid comments, “the majority of expats living in Spain have opted to retire there and are living either off their English savings or pensions.  The effect of the recession has hit them through the weakness in the pound and the dramatic fall in interest rates, meaning that a person who is paid a pension in the UK and then has to convert it, has seen it fall dramatically, giving them less money to cope with a far more expensive cost of living than it was six months ago.  Owner occupiers are now moving back to the UK and being forced into letting out their homes in order to be able to pay the mortgage and, for those investors who jumped on the Spanish property market, buying off plan, only to see it go into freefall before they could offload their investment, they have had their fingers burned and are having to let long term and ride it out.”

The number of tenants who default on their monthly payments is, however, increasing at alarming rates with tenants also being affected by the economic crisis and unemployment in Spain.  Many expat landlords are unaware of the different mechanisms in place to secure rental income and often fail to implement them in their rental agreements which can leave them unprotected if the tenant does not, or cannot, pay the rent.

In order to assist ex pat landlords, Paragon Advance España offer a rent protection and legal expenses warranty which offers a standard loss of rent cover for up to €2000 per month for up to 6 months cover, although rents of over €2000 can also be covered, and legal expenses cover up to €15,000.   By using the route of arbitration, the timescales involved are dramatically reduced as Javier Iscar de Hoyos, General Secretary of the European Association of Arbitration (AEADE) explains, “it can take around 18 months through the usual law system and, in the meantime, the landlord still has to pay the mortgage, utility bills and has no redress over the defaulting tenant during this time.  If the landlord should refuse to pay and, for instance, the electricity is cut off, the tenant can prosecute the landlord.  We  have invested time and effort in ensuring that a more specialised system of arbitration takes root in society, providing fluidity, security and trust in contractual relationships between landlords and tenants. More than 80% of proceedings dealt with in 2008 were from the property sector in which the number of arbitration cases rose by 83%.  During this time, the average dispute resolution took less than four months.  With regard to tenancy arbitration, thanks to the special system created by AEADE to facilitate disputes in that sector, the time frame was limited to an average of 25 days, with more complex cases being resolved within six months.”

Ends

For further information, please contact:

Bryn Cole, Managing Director, Paragon Advance España, 0844 375 9606

Javier Iscar de Hoyos, Secretario General AEADE, 0034 9143 22800

 Holly Addinall, Paragon Advance PR, 01276 62201

N.B.  If you should require a case study to back up your article, please contact Paragon Advance PR on 01276 62201 who will supply further details.

Editors Notes

Paragon Advance is an independently owned company with no affiliation with any other service providers and offers a unique and comprehensive range of services to both lettings agents and private landlords.

Originally specialising in credit management and business risk management, they are now established as one of the leading tenant referencing companies and have been working with the residential lettings industry for nearly 14 years with over 4,000 agents now being registered and utilising the services provided.

Services offered include:  tenant referencing, credit searches, debt recovery, tracing, warranties, insurance, mortgages, secured loans, investment property, free identify theft insurance for tenants.

Paragon Advance is authorised and regulated by the Financial Services Authority – Firm Reference Number 304595.

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