Spain Tackles Struggling Housing Market

Spain’s economic woes have been bitterer than most others in the Eurozone and now the government wants to find a way to start filling all the empty homes …

Spain’s economic woes have been bitterer than most others in the Eurozone and now the government wants to find a way to start filling all the empty homes that dot the country. Many Spaniards can’t afford to buy the homes so Spain is offering to fast track residency permits for foreign buyers. Additionally, they’re offering amnesty to home dwellers without deeds that have not been paying property taxes. Spain’s property market showed marginal improvement September, but experts say any good news is cause to celebrate and these new initiatives are taken as a sign that the government wants to support a housing market recovery. For more on this continue reading the following article from Property Wire.

The Spanish government is appealing to foreigners to buy property in Spain and in return they will be fast tracked for residency permits.

It is estimated that there are millions of empty new properties in the country that Spaniards can’t afford to buy. Now the government has decided the only solution it to encourage buyers from outside the European Union who can be tempted to come and live in the country.

The government has also announced it is to offer an amnesty to people living properties who don’t have title deeds and therefore are not paying property tax.

There may be thousands of properties in Spain that have not been properly inscribed in the Cadastre, which means owners have not been paying the correct amount of local property tax known as the IBI.

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Under the proposal owners who have not paid taxes on properties can now register their homes and avoid fines for back taxes by paying a penalty of just €60. Under the current law, the fine could be as high as €6,000.

The amnesty will only benefit owners of properties that do not contravene any planning laws. It will still not be possible to register illegally built properties in either the Property Register or the Cadastre.

The announcements come at a time when there are indications that the Spanish property market is improving. The latest figures show that sales in September were up by 3% compared with the same month last year.

‘It may not be much but any good news for the market is welcome in these dark days. The market has found a floor at just over 20,000 home sales per month, which translates into 250,000 a year. Assuming there are 16 million households in Spain, that means just 1.5% households buy a new home each year,’ said Mark Stucklin of Spanish Property Insight.

But in the boom years it used to be 2.5 to 3% more. ‘Now people are either renting or staying put,’ explained Stucklin. He added that even although there has been a small annual gain, sales were down 9% on a monthly basis. ‘Things are clearly not out of the woods yet,’ he added.

Property agents are hoping that a planned increase to VAT on new property due in January will be cancelled as they are convinced that it is the current reduction in VAT of 4% that is helping sales.

‘I have spoken with banks, lawyers and other experts and few think the Prime Minister would be so stupid as to raise VAT up to 10%. An extra 6% would add €15,000 in costs for a property priced at €250,000, hard to swallow at a time when the Spanish construction business is on its knees,’ said Nick Stuart, director of Spanish Hot Properties.
‘The government knows that it has to get rid of housing stock before the construction industry can pick up and I think that it will do anything to help facilitate the sale of new builds from developers or the banks. However Rajoy will no doubt wait until the end of December before he shows his hand so as not to derail the current buying,’ he explained.

This article was republished with permission from Property Wire.


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