Tag: late payment interest

Congress Agrees that the Banks will Pay All Mortgage Costs, Except the Appraisal

13 November 2018 – Expansión

The political parties today agreed by majority that the new Mortgage Law will establish that notary expenses linked to the signing of mortgages will be paid by the banks and that the appraisal costs will be paid by customers.

Moreover, the notaries will carry out a questionnaire with each borrower to ensure that he/she understands all of the clauses in the mortgage contract, at no additional cost.

The Mortgage Law was presented again today at the Congress’s Economy Committee after the Government approved a royal decree law which stipulates that the Documentation Registration Tax (AJD) will be paid by the banks and not by customers.

The new Mortgage Law reflects that decision and makes it clear that the financial institution will pay for the first copy of the notary deeds; the customer will cover the cost of any copies he/she requests. Meanwhile, the registry costs will also be paid for by the bank; and the borrower will pay the appraisal expenses since he/she will be able to choose the appraisal company freely.

Nevertheless, several other important issues still need to be agreed, such as those relating to early repayment fees, late payment interest and the early termination clause of mortgages and which allows the foreclosure of homes depending on the debt that has been acquired by the borrowers (…).

On the other hand, the political parties will also have to decide about the entry into force of the new standards, given that the financial sector is asking for a margin of 6 months versus the 15 days that the draft bill is proposing.

The Mortgage Law, which is a transposition of a European directive, seeks to provide greater protection for consumers and promote transparency in the granting of mortgages, which is why the political parties have agreed that appraisal companies can be independent physical persons or legal entities (…).

Original story: Expansión

Translation: Carmel Drake

Regional Gov’ts Demand Rental Tax Payments From Tenants

3 March 2016 – El País

Tenants in the Community of Madrid with a residential rental contract signed within the last four years are now going to have to pay ITP (Property Transfer Tax or ‘Impuesto de Transmisiones Patrimoniales’). In the case of a rental charge of €600 per month, the tenant now has to pay almost €29 per year of the contract. Currently, it is typically for rental contracts to last three years, which means a cost of €86.40, to be made in a single payment. It does not matter whether this clause is included in the contract signed between the owner and the tenant or not.

Since the start of 2015, as part of its plan to combat fraud, the Ministry of Finance in the region of Madrid has been making a mass claim for the payment of this tax to the surprise and amazement of tenants, who have never heard of such a charge before. However, Madrid is not the only region. Cataluña, Asturias, Andalucía and Galicia have also included the ITP claim in their tax control plans.

The weak regional coffers are unable to forgive the payment of this tax any longer, the corresponding legislation has actually been in force for more than two decades. Until now, the Madrilenian Government, during the mandate of Esperanza Aguirre and then Ignacio González, generated revenues of €600,000 per year from this source. Now, Cristina Cifuentes’s Government hopes to raise a lot more, although it does not provide any figures. Cataluña, which is immersed in the same process, raised almost €6.4 million in 2015, compared with €482,000 previously. (…)

In force since 1993

Unbeknownst to the vast majority of Madrilenians, the ITP on rental payments in nothing new; in fact it has been in place since 1993, when the state law governing Tax on Property Transfers and Stamp Duty ruled that it considered a rental contract to be an onerous acquisition, much like a purchase. And the tax has even been envisaged in the law since 1980 (…).

Until now, “the small quantities involved meant that the Administration was not interested in allocating resources to find pockets of fraud against this tax, but now inspection activity is much simpler, given that with a simple cross reference of data, it is easy to find the debtors”, says Pelayo de Salvador Morell, a lawyer at the law firm deSalvador Real Estate Lawyer. (…).

The tax charge or amount to pay is obtained by applying the rate set by the regional government in each case, to the taxable base. Cristina Cifuentes’s Government is applying the State’s standard rate of 0.4%. Other regional governments, such as Cataluña, have increased the rate to 0.5%, which means that instead of the €86 mentioned above, tenants in Cataluña will have to pay €108 for three year rental agreements.

The payment of the tax must be made within 30 days of the contract being signed, through various means, such as using the stamp-impressed paper stocked in tobacconist shops…submitting the self-settlement 600 form to the General Tax Authorities…or telematically through the online office. Despite the mandatory nature of this legislation, the Community of Madrid has chosen to not penalise for non-compliance…due to the high cost involved. It is claiming only the amount of the tax that should have been paid at the time, plus late payment interest. (…).

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake