ADVIcE Money matters

50 Living Spain WINTER 2009/2010 WINTER 2009/2010 Living Spain 51

Sadly, Spain isn’t quite the purse-friendly haven it once was. With the pound falling around 20 per cent against the euro year on year and exchange rates hitting all-time lows during 2009, many

British expats and second home owners who earn income in Blighty but spend time in Spain are seeing their funds strained. In sterling terms, everything from Spanish utility bills to the weekly grocery shop can now hit you where it hurts – in the wallet.

In light of this, it’s important for British expats, or those simply visiting Spain, to watch the cents so the euros can look after themselves.

Money mattersIf you’re exchanging sterling into euros, it makes a big difference whether you use a bank, a high street bureau de change or a money broker. You’ll do badly if you exchange money in the airport or ferry port, where you’ll get the worst rates in the market. For example, as well as offering a low exchange rate, Travelex – which operates in airports – charges commission of at least two per cent on each transaction. On a day when No1currency was offering e1.10 to the pound, Travelex was offering e1.04. This would make a difference of e30 euros on an exchange of £500. Ouch!

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And beware of the money exchange machines on ferries which give you a mere 53p for a euro coin.

Registering with a money broker to obtain a better sterling to euro exchange rate is wise if you regularly transfer funds from your English to Spanish bank account. HIFX (www.hifx.co.uk) allows customers to transfer money online without picking up the phone, except to register for the service. No1currency (www.no1currency.com) provides an email and phone-based service for transfers of £500 or more, and its analysts offer personal advice on exchange rate movements. No1currency also runs bureaux de change throughout the UK with favourable exchange rates. Moneycorp also offers some good rates of exchange, with services including a regular payment plan, which can deal with mortgage payments, pension transfers, salary transfers and property maintenance payments.

Robert Stevenson, head of bureau services at No1currency, says: “On sterling to euro transfers, we’re cheaper than banks and have a rate watch service. We can contact the customer when the rate’s best for them to ‘buy now’. If you go to a bank, they’ll just make the transfer. With larger transactions, you should always have a conversation with an analyst. ‘The trend is your friend’.”

For those who have a ‘flexible friend’ – their UK credit or debit card – Robert points out that this is an expensive way to withdraw cash from Spanish ATMs. It’s estimated that British holidaymakers squandered an eye-watering £784m on credit and debit card charges in 2008. A withdrawal of €100 could cost you £6 and a 2.75 per cent spread (or margin) is also applied to each transaction. Furthermore, debit cards often carry a flat-fee penalty for spending money abroad. For example, every time you spend on a Halifax debit card, it adds £1.50 per transaction. Robert says: “You have no control over the exchange rate you’re receiving. The ATM has to make money somewhere – it’s not a free service. Use your credit cards as a last resort.” If you must use a credit card overseas, the M&S Money card is competitive on rates.

Switch your utility contractsMost expats will need to sign up for utility contracts in Spain. The bad news is that the

Spanish utility and telephone marketplaces aren’t as competitive as those in the UK. Telefónica – Spain’s answer to BT – still maintains a monopoly over telephone lines, making it difficult for competitors to gain a foothold in the market. Furthermore, the price to performance ratio is lower than in the UK, making broadband internet, in particular, relatively expensive.

However, according to Nick Auvache of Orgiva-based consumer advisory agency, Solve Orgiva (www.solvespain.com), the situation is starting to change and expats should embrace the idea of switching provider to secure the best deal.

Nick believes telephone service bargains may increase with new suppliers entering the market, although the available deals for landlines and mobiles depend largely on the customer’s location. Those living on the Spanish costas or in big cities generally have greater choice than residents of rural areas, with companies such as Jazztel, Orange (formerly Amena), Yoiga and Ya.com joining the more established providers such as Vodafone and Movistar/Telefónica. With mobile phones, favourable deals have been reported from Yoiga, in particular.

However, a cheaper deal may not be a better deal. Nick explains: “The market for electricity was deregulated in July 2009 and some immediate savings may be made by switching but you won’t necessarily see an improvement in service. Providers tend to decrease their costs by employing fewer people with less training.”

If you want to switch, you should monitor offers in stores and on suppliers’ websites, and then proceed with caution. Nick Auvache advises: “If you’re switching provider, make sure you cancel your previous contract so you’re not paying twice. Suppliers don’t make this process easy and you need to know in advance if the contract is registered using your NIE or passport number.

Some providers don’t notify you that they’ve cancelled your contract, while others don’t tell you a contract has started. Always put cancellations in writing or speak to an operative in person as proof. Ask potential new suppliers to email their service guidelines. If they don’t have any guidelines, be concerned.”

Drive down vehicle costsYou may have spotted that Spanish-plated cars don’t come cheap. An old banger that you’d buy for £200 in England can easy command €1,200 in Spain. Graham Shelton of Re-Platemate (www.replatematecostablanca.com), a Costa Blanca-based business that re-registers vehicles for use in Spain, says: “For the majority of people, it’s cheaper to buy a car in the UK and drive it over. Customers pay a flat fee irrespective of the car, plus road tax, which is cheaper than UK road tax. However, the re-registration should be done within the first two months of you taking up Spanish residency to avoid a nasty import tax bill.”

Few restrictions exist where people own an English vehicle before moving to Spain and import it straight away. However, if someone already living in Spain wants to import a vehicle from Blighty, the rules are stricter. How to…

make yourmoney

stretchfurther

Following a few simple measures, expats can secure good deals in Spain and make their ‘dinero’ last during the downturn.

Words Jo ChipChaSe

Supermarket SweepWith the unfavourable sterling to euro exchange rate prevailing, and the cost of imported products from England remaining high (who can resist the imported Frosties and Branston pickle?), the cost of a typical basket of groceries in a Spanish store can prove shocking these days.

Generally, better prices can be obtained by visiting bigger supermarkets rather than using small, local shops. Although supporting your local businesses is important, and comes with a ‘feel good’ factor, you’ll be paying over the odds.

The cheaper supermarkets include Dia, Aldi and Lidl, while Al Campo and Carrefour also provide cost-cutting deals and discounts. Local markets are a source of cheap fruit and vegetables but Nick Auvache advises that you may be buying sub-standard goods bought from the large supermarkets by canny vendors and sold on to unsuspecting punters, so ensure you check the quality closely.

Always check your receipt in the supermarket to ensure that goods haven’t been scanned twice and that multi-buy discounts have been correctly applied, as mistakes often occur. Nick Auvache says: “You can demand that goods are sold for the price marked on the shelves, not the price scanned at the checkout. If you return home and find a mistake on your receipt, you can phone customer services, ask them to bring up the details on their computer and sort it out remotely.”

“You have no control over the exchange

rate you’re receiving at the ATM” Robert Stevenson, head of bureau services, no1currency

“If you’reswitching provider, make sure

you cancel your previous contract”nick auvache of orgiva-based consumer advisory agency, Solve orgiva

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ADVIcE Money matters

52 Living Spain WINTER 2009/2010

In certain cases, vehicles can’t be re-registered; for example, if a car wasn’t made for the European market. Import tax, if charged, can run to thousands of euros.

And beware of vans. Graham says: “Generally speaking, any vehicle that’s classed as commercial can’t be re-registered: this specifically includes panel vans, pick-ups and mini-buses. What can be re-registered are motorbikes, cars and motor homes, whether right or left-hand drive.”

If importing a car sounds arduous and you’d rather buy a Spanish-plated motor, make sure that all outstanding bills relating to the vehicle, such as penalty fines, have been paid by the existing owner before the transaction takes place. Graham says: “A big problem in Spain occurs where the new owner doesn’t transfer ownership to himself, leaving the car registered to the previous owner who then receives all the speeding fines, road tax bills etc. If you’re buying

“Decide on the fee, then look at the place

as a guest and think, would I pay this?” Caroline Frowein Ricano of rental agency, Tiempo Rural

“For the majority of people, it’s cheaper

to buy a car in the UKand drive it over” graham Shelton, Re-platemate

or selling a car, use a law firm or specialist to ensure that the transfer takes place correctly.”

If you receive any parking denuncias (fines), deal with them promptly: they won’t go away and you could end up paying a higher amount.

Make money from holiday rentalsIf you own a second home in Spain, it could earn income to help you through the downturn. According to Caroline Frowein Ricano of rental agency, Tiempo Rural (www.tiemporural.net), provided that your property is up to standard, it’s easy to rent it in the summer holiday weeks and for the Spanish bank holidays (puentes).

She says: “You either need a steady procession of friends who’ll pay money to rent your place, or to advertise on a website that’s highly ranked with the major search engines such as Google and Yahoo. Spain has many puentes.Theoretically, you could be renting your property for a long weekend every month. For these bank holidays, the Spanish expect to pay peak rates, so the income you could receive from one weekend’s rental could really help you out.”

If you decide to rent out your property, Caroline advises: “Decide on the fee and then look at your place through the eyes of a guest and think ‘would I pay this?’ and consider the necessary attention to detail. Make sure you have sufficient cutlery and crockery sets, dining chairs, sun loungers etc.

“If your house sleeps four people, provide for six.” To legalise your property for holiday rentals, register it with your local Delegacion de Turismo as a Casa Rural or a Vivienda Vacaccional – a completely free process.

When you receive the relevant papers, they’ll

inform you of the minimum safety requisites for having a legalised holiday home. These aren’t overly demanding and relate to basic safety. Legally registering your property protects you if anything unfortunate occurs while guests are staying and means that your insurance policy is validated. It’s important to have your property insured against fire, flood and theft.

Tighten those belts...For British expats, times may be tougher in Spain than ever before but opportunities exist for tightening your belt and making your money stretch further. Expats are generally an adaptable bunch, which is why they chose to start a new life abroad in the first place. Robert Stevenson of No1currency points out: “It’s telling that we haven’t heard anyone saying they’ve packed up and are transferring their assets back to the UK.”

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Utility bills can make up a surprisingly large proportion of your living expenses, so switch if you’re paying over the odds.