Ministry of Finance Raises The Land Registry Of …

2 September 2015 – El Confidencial

The Law protects. It is stated that each year, sheltered from/by the State Budget, it is possible to update the coefficients applied for establishing rateable value of the property. And although the electoral calendar is pressing, with only three months left for the general election, and this measure is not among the most popular because it can result in increased taxes, such as the Property Tax (Impuesto de Bienes Inmuebles, IBI), the Budget for 2016 does not preclude this measure.

“For 2016 the application of adjustment coefficients is expected to increase the rateable value in 1,567 municipalities, comprising 7,021,827 properties, and to reduce it in 126 municipalities, comprising 1,085,053 properties, representing an improvement in the approximation of the assessed values to market values in a total of 1,693 municipalities with 8,106,880 properties, “says the Cadastral Management Program developed by the Ministry of Finance.

As stated in the program, this revision addresses “the need for the Administration to have, through the Real Estate Cadastre managed by the General Directorate of Cadastre, a database constantly updated, in relation both to the basic characteristics of the real estate, and to its value”. That is, the aim is to rectify valuations that have become obsolete.

As stated in the program, this review responds to “the need for the Administration to have a constantly updated database”

“Otherwise,” is added in the program, “it will impair tax purposes which for the community have tributes”, such as the Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas, IRPF), the Transfer Tax/Tax on Patrimonial Transmissions (Impuesto de Transmisiones Patrimoniales, ITP), the Inheritance and Gift Tax and local taxes, such as the Real Estate Tax (Impuesto sobre Bienes Inmuebles, IBI), and the Tax on the Increase of Urban Land Value (Incremento del Valor de los Terrenos, IVT). The higher the rateable value, the more of taxable base and taxes, paid by taxpayers and collected by the Public Administrations..

Clues for the City councils

Updating the land registry is a particularly sensitive issue for the municipalities, who actually formulate request to the Treasury to revise the rates. “This measure is also an important outreach to municipalities and other local entities with the possibility of application of these rates, in order for municipalities to request application of the rates established in the General State Budget Act, as well as those in the successive years”, states the program. If it refers to the application as a possibility, it is because precisely municipalities ultimately decide if the new ratios are put to practice.

In any case, the document does not conceal that the update of cadastres provides a key information for the tax management of local government. “Municipalities need to know in advance the expected results, in both cadastral values,as well as in gross tax bases and net tax bases, so as to approve by tax regulation the adjusted rate of taxation and estimate the fees to be collected. Therefore, municipalities need cadastral data to define and set up their taxation policy regarding the Property tax,” it states.

The revision of rates forms part of the provisions of Article 32.2 of the Real Estate Cadastre Law, which states that “the general budget laws may update cadastral values of urban properties in the same municipality by application of rates based on the year of entry into force of the corresponding property value report of the municipality “. Based on these reviews, the municipalities will request the application of these ratios if three conditions are met. The first, “that at least five years have passed after the entry into force of the cadastral values derived from previous collective evaluation procedure of general nature”. Second, there should be “substantial differences” between market values and those taken in turn in cadastral values. And the third, the request to the General Directorate of Land Registry (Dirección General del Catastro, DGC) should be disclosed  before May 31 of the previous year.

Continues the fight against fraud

But updating assessed values is not the only mission of the DGC in 2016. It will continue with the special Plan of the cadastral regularization procedure from 2013 to 2016, that is, with its crusade to “fight against fraud” cadastral adopted in late 2012 together with other tax measures aimed at the consolidation of public finances.

Specifically, based on technical work done by the DGC, it intended to prevent that the new constructions, expansions of existing ones, renovations or alterations of buildings remained off the radar of land registry. Or what is the same, it seeks to curb “the breach of duty to state correctly and in full by the obligation to do so” with the “ultimate aim to ensure consistency between the cadastral description and the real estate reality”. Let the land registry be a real property map of the present, not of the past.

With this aim, it entrusted to the State Company of Real Estate Asset Management (Segipsa) administration of  the work of this cadastral regularization, a task that has a total cost of 124 million euros, to be distributed in four years, as it covers the period of 2014-2017.

Original story: El Confidencial

Translation: Lee La

Spain property: Madrid waits for the signal to ‘go’

27 April 2015 – Financial Times

Is the influx of Latin American buyers a sign the capital has turned a corner?

Over the past decade and a half, making even a modest investment in Madrid’s housing market has been a bit like taking a rollercoaster ride. Since the market reached its peak in early 2008, average house prices in Spain have dropped by 35 to 40 per cent, according to a report issued in March by the Spanish Savings Banks Foundation, known by its acronym Funcas. New developments on the outskirts of Madrid have been some of the hardest hit.

Other figures suggest an even greater drop in values: also in March, the Spanish property portal calculated that the average home in Spain has lost 45 per cent of its value since the peak of the Spanish housing boom, with values in Madrid (a 44.6 per cent drop) representative, more or less, of Spain as a whole.

But both Funcas and report glimmers of light at the end of the tunnel: recorded a 1 per cent increase in home prices in Madrid in February, while Funcas says that the Spanish housing market is now in an “incipient, gradual recovery”.

As in Barcelona and the Balearic Islands, where small price rises have also been recorded in recent months, overseas buyers are helping to create a mild sense of optimism.

In Madrid, the most enthusiastic foreign homebuyers are heading from across the Atlantic, rather than Europe, according to Alberto Costillo, prime residential director at Knight Frank Spain. A “perfect storm” is bringing a new wave of wealthy Latin American house-hunters to Madrid, particularly from Mexico, Colombia and Venezuela.

“Madrid has advantages of culture and language, and Latin American buyers have long thought of Madrid as a safe haven. But with an improving Spanish economy, and the recent fall in the value of the euro [Latin Americans are more likely to have savings in dollars than euros], they see now see a real opportunity here,” says Costillo.

With its pretty boating lake and rows of statues, many wealthy foreign buyers look to purchase property near the city’s celebrated Retiro Park.

In the grid-like Salamanca district adjacent to Retiro Park, Knight Frank is selling a three-bedroom, two-bathroom apartment with 187 sq metres of living space, parquet floors and air conditioning in a building dating from the early 20th century for €1.47m.

In the well-heeled neighbourhood of El Viso, part of the Chamartín district north of the city centre, a 402 sq metre duplex apartment with four en suite bedrooms and a txoko — a combined cooking and dining space more commonly found in homes in the Basque Country — has an asking price of €4m. On sale through the agency Rimontgó, the unit has three parking spaces and the building has a pool and a gym for residents’ use.

“[El Viso is] quiet and exclusive, but also well-connected with the rest of the city and within easy reach of the downtown,” says José Ribes, director-general of the agency handling the sale. “This is a part of town most associated with aristocrats and intellectuals, but in recent years it has attracted people working in the financial sector, politicians and sportsmen.”

Salamanca and Chamartín are home to many of Madrid’s best restaurants. The capital has 12 Michelin-starred restaurants, compared with 23 in Barcelona. But Madrid is the only one of the two cities with a three-star restaurant — David Muñoz’s DiverXO, where dishes are called “canvases” and diners are asked to arrive “with an open mind”.

Central districts of Madrid are densely populated, but some of the city’s satellite communities, particularly to the northwest, offer more leg room for buyers. In Pozuelo de Alarcón, nestling among pine trees and benefiting from cool breezes from the nearby Sierra de Guadarrama mountains, a gated housing estate called La Finca is home to some of the capital’s wealthiest residents, including footballers from Real Madrid such as Cristiano Ronaldo.

Typical of the sprawling, cubist-style homes at La Finca is a five-bedroom, seven-bathroom house with almost 2,000 sq metres of living space. The property has a two-bedroom housekeeper’s apartment, a lift, indoor and outdoor pools, a gym, a sauna, a cinema, a wine cellar and a carport for six vehicles. On sale through La Finca Real Estate for €11m, the house stands on a plot of just over a hectare. However, according to one estate agent who prefers to remain anonymous, potential buyers are sometimes put off La Finca “because of its reputation as a playground for soccer stars”.

On Calle de Serrano, a broad, tree-lined avenue in the Salamanca district which is sometimes referred to as Madrid’s golden mile for its high-end shopping, there are few signs of the economic downturn, dubbed la crisis in Spain. However, the recession has hit some of the city’s public infrastructure.

Guillermo Bernardo, a former banker with two young daughters who now runs his own cabinet-making business, points to cutbacks in the maintenance of neighbourhood parks and gardens. “The Retiro is Madrid’s calling card, and it’s immaculate, but there is less money these days to clean and repair local playgrounds,” he says. “The perception that most people have is that the state of the economy hasn’t changed a lot but we may be about to turn a corner. Nothing is forever, not even la crisis”.

Buying guide

● Buyers should budget 6 per cent of the sale price to cover land registry taxes

● Estate agents typically charge vendors a commission of 3 to 5 per cent

● Madrid has the third largest metropolitan area in the EU by population size

● Units in a building without a lift are unpopular and may be difficult to resell

● Madrid has hot, dry summers and cool, usually sunny, winters

● Violent crime is rare but pickpocketing and bag snatching can be a problem

What you can buy for . . .

€500,000 A modern, 90 sq metre flat with two bedrooms in the Chamartín district of Madrid

€1m A 140 sq metre, three-bedroom apartment in the Salamanca district, within walking distance of Retiro Park

€5m A seven-bedroom house in El Viso with an outdoor pool on a plot measuring 1,000 sq metres

Original story: Financial Times (by Nick Foster)

Edited by: Carmel Drake