14 January 2015 – El Economista
New homes that are more than two years old and those sold by banks are considered to be “used homes”.
The real estate website idealista.com says that the methodology used by the National Institute of Statistics (INE) to compile statistics on housing sales explains, at least in part, the “hegemony” of used housing over new housing.
Analysis prepared by idealista news recalls the latest statistics published by INE, which showed a 20.6% decline in the number of new home transactions in November (down to 7,767 homes) versus a 41.6% upturn in the sales of existing homes (to 17,433). Thus, 69.2% of the homes sold during the month were used.
However, the website notes that, only part of this “hegemony” of second-hand housing is explained by “the greater bargaining power that individual homeowners have versus developers”; the rest is down to two other factors.
How does INE define used homes?
Fernando Encinar, Head of Research at idealista.com says that, at first glance, it appears striking that no new homes are being sold, but, points out that there is more to this data than meets the eye. This is because new homes that remain unsold after two years are classified as second-hand by INE.
Moreover, Encinar points out that “in the case of banks, they accumulate lots of newly constructed homes in their portfolios that have mainly been awarded e rate developers. For tax purposes and in INE’s survey, those properties are also considered to be used homes”.
The difference between new and used housing is also important for the Tax Authorities. In this way, if a brand new house is acquired, VAT of 10% is levied on the transaction.
For this purpose, the definition of a new home also includes a home that a person buys from the developer after having leased the property for at least two years. If, however, the purchaser were another person (not the tenant), then the sale would be considered to pertain to a second-hand home.
Finally, the website explains that when an existing home is sold, the purchaser must pay a property transfer tax (ITP), the rate of which varies by autonomous region.
Original story: El Economista
Translation: Carmel Drake