The lockdown in Spain is taking one of Europe’s older-fashioned property markets into the 21st century, with estate agents rushing to offer virtual visits and notaries lobbying to legalise e-signatures to offset a near-total halt of business.
In the latest episode of Spain’s real estate rollercoaster 99 per cent of transactions have stopped during the battle against the coronavirus, according to Spain’s Notary Commission.
“We are definitely going down the virtual route,” said the commercial director of a Barcelona-based agency with a 17.5 million-euro turnover in 2019.
“We are teaching our brokers how to angle the camera,” she said. “It will be very professional: a GoPro, lighting, one person talking and the other recording.”
Spain’s real estate sector accounted for a big draw for foreigners, for nearly one in five buyers in 2018 and accounted for 10.5 per cent of gross domestic product in 2019, according to the General Council of Notaries.
A partner at the Barcelona-based agency, said that he hopes the crisis has a “purging” effect.
“It’s an old, antiquated industry that needs shaking up anyway,” he said of the sector that still often relies on multiple people in a room together for a signing.
However, no estate agent is an island: their business relies on mortgage-providers, notaries and lawyers, all of whose operating ability is on hold.
Notaries have only practised in emergency cases under quarantine, when halting transactions caused patrimonial or financial loss.
One family had sold their old home, but not yet signed their new one’s purchase when the country shut down.
The whole family was staying with relatives – until a notary intervened, over a month into lockdown. He deemed the family’s situation pressing enough to certify their acquisition.
“You cannot leave a family on the street because they have not been able to sign the deed,” the Notary said, adding most people opted to delay signing.
The few transactions he has certified were all conducted with gloves and social distancing measures – but the Notary in question – who is also a spokesman for Spain’s Notary Commission – said that the profession was rushing to establish new processes.
“We are developing a system allowing people to sign electronically, and waiting for the justice ministry’s authorisation,” he commented. “We could use this electronic method even after the crisis.”A spokeswoman of the justice ministry said that they will evaluate the notaries’ proposal “thoroughly”.
“Commercially speaking, other countries use technology much more,” said the president of Spain’s Association of Professional Real Estate Experts. “We love physical contact. Clients prefer meeting in person to email or phone calls.”
Institutional investors such as France’s Amundi agree: real estate transactions require more physical presence in Spain than in other European countries, a spokeswoman said.
Spanish regulation also stifles innovation, according to a CEO and founder of a fintech platform allowing lightweight investors to invest in real estate projects through crowdfunding.
Spain’s legislation “has definitely hindered the appearance of new players,” said the CEO & founder, whose startup waited two years before receiving regulatory approval.
“It makes more sense to go to the UK, or Germany. We were burning cash without being able to sell our product.”
Even with the ongoing changes, selling a house is likely to remain a largely physical process. Currently, if mortgages are involved, up to a dozen people can be in the room for the signing, when buyers give sellers a physical cheque as brokers, bankers, agents, lawyers and notaries look on.
“Not everything can be done through power of attorney,” lamented the partner at the Barcelona agency. “It’s still very manual.”