Regional Property Taxes Will Rise in 74 Municipalities in Málaga From 2019

11 September 2018 – Diario Sur

The autonomic coefficients that are applied to cadastral values to adjust them to market prices for the purpose of calculating Property Transfer and Property Succession taxes are going to be updated from 2019.

If you are planning to buy a property next year or if you acquire one as a result of inheritance or a donation, then it is quite likely that you will be hit by an increase in the two autonomic taxes linked to the real estate market (the Property Transfer tax and the Property Succession tax) given that the index that the Junta de Andalucía uses to set the charge is going to increase in 74 of the 103 municipalities in the province of Málaga. With the recovery of the real estate market as the main justification, the multiplying coefficients that are applied to cadastral values to adjust them to market prices (to reflect the performance of the sector) will increase by an average of 12.05% in the Andalucían province with respect to the values in 2017, according to plans compiled by the Ministry of Finance (…).

Málaga province leads the rise

According to the corresponding economic report, Málaga and Almería are the only two provinces where increases are expected to be seen in global terms (of 12.05% and 10.83%, respectively). Many of the other provinces in the autonomous region will be moving in the opposite direction, with decreases expected in Huelva (-13.19%), Granada (-12.41%), Córdoba (-8.32%) and Sevilla (-7.26%) (…).

Original story: Diario Sur (by Francisco Jiménez)

Translation: Carmel Drake

Galicia Awards 1.1 million m2 of Industrial Land Supported by Aid from La Xunta

6 June 2018 – Eje Prime

La Xunta is promoting the sale of industrial land and Galicia is whereby reaching pre-crisis occupancy levels in the logistics sector. In total, 1.1 million m2 of logistics land has been awarded in the autonomous region, which represents almost 40% of the total available land for sale in 2015.

Amongst the measures adopted by La Xunta in 2018 include the elimination of regional taxes for the purchase of industrial land from the administration, with a 100% deduction of the Property Transfer Tax and Documented Legal Act Tax, according to Inmodiario.

The intention of the territorial government is, in addition to promoting the entry of new players into Galicia, facilitate the reactivation of disused industrial plots. In those cases, La Xunta adds discounts to the land prices of between 30% and 50%.

The Councillor for Infrastructure and Housing at La Xunta, Ethel Vázquez, anticipates that 2018 “will continue along the same path”. Not in vain, her portfolio has received a significant increase in budgeted aid, of 16.5%, achieving an additional €60 million taking the total fund to €424 million.

Original story: Eje Prime

Translation: Carmel Drake

Tax Collections From Property Taxes To Rise By 7.2% In 2016

8 January 2016 – Expansión

BUDGET 2016 / Spain’s autonomous regions are forecasting a 7.2% increase in tax collections relating to house purchases in 2016, with Navarra, the Balearic Islands and Madrid leading the way.

Spain’s autonomous regional governments are predicting significant increases in house sales and consumption in their budgets for 2016. A report prepared by the Ministry of Finance based on the accounts submitted by the autonomous regional governments, shows that income from the Property Transfer Tax and Stamp Duty (ITP and AJD, respectively), which are levied on the purchase of second-hand and new homes, will grow by 7.27% in 2016, to amount to €5,865 million, representing an increase of €400 million. Meanwhile, the autonomous regions expect to raise €21,959.35 million from VAT, an increase of 14.1% compared with the previous year.

The autonomous regions forecasting the highest rates of growth are: Navarra (26.7%), the Balearic Islands (18.2%) and Madrid (13.3%), followed by Castilla y León (10.7%), Galicia (10.1%), Andalucía (9.2%), the Canary Islands (9.1%) and Cantabria (2.2%). By contrast, revenues from the same taxes are expected to decrease in Murcia (12.1%), La Rioja (4.4%), Valencia (2.9%) and Aragón (1.8%).

The Ministry of Finance has analysed the projections submitted by all of the autonomous regions, with the exception of Cataluña, Asturias, Castilla-La Mancha and Extremadura, because either they have not submitted their budgets or their budgets have been rejected.

These forecasts show that the autonomous regions forecast an increase in the sale of second-hand homes, on which ITP is levied, as well as new homes (AJD and VAT). They are also predicting a significant increase in consumption, equivalent to more than three times the rise forecast by the State’s General Budget for 2016.

The forecasts made by the Institute of Business Practice (IPE) in its Real Estate Pulsometer (published in December) show that house sales will increase by 17% in 2016 and house prices will rise by 6.6%. The Balearic Islands (24.5%), Madrid (23.5%) and Cataluña (22%) are expected to lead these increases.

These percentages are consistent with the projections made by the autonomous regions in their own budgets, given that the majority of the regions are not going to increase their rates of ITP-AJD; instead they expect revenue growth to stem from increases in activity. In fact, Navarra, the region that forecasts the highest increase, plans only to make a technical change to ITP, despite increasing other (non property-related) taxes in 2016. These tax rates are not forecast to rise in Madrid, Castilla y León or Galicia, nevertheless revenues are projected to grow by more than 10% this year.

The rate of ITP is forecast to rise in Aragón only, from 7% to 8% – and AJD will increase from 1% to 1.5% there too. In the Balearic Islands, the regional government has created a new ITP band for properties worth more than €1 million, which will be levied at a rate of 11%.

The collection of taxes from housing increased during the first half of 2014 for the first time since the beginning of the crisis, by 5.9%; these same revenues plummeted by 40% in 2008. Experts at Fedea (‘Fundación de Estudios de Economía Aplicada’ or the Foundation for Applied Economic Studies) have warned against the danger of inflating earnings forecasts on the basis of real estate activity.

Original story: Expansión (by Mercedes Serraller)

Translation: Carmel Drake

Second-hand Housing Is More Appealing To Buyers

23 February 2015 – El País

62% of the homes purchased in Spain last year were second-hand.

The second-hand segment is winning by a landslide in the race to sell more homes in the Spanish real estate sector. Overall, sales increased in 2014 for the first time in four years – breaking the trend observed since 2010 – and they did so thanks to the used home segment.

62.7% (200,065) of the 318,928 homes sold in 2014 were second-hand and just 37.2% (118,863) were new builds, according to the statistics of the Association of Registrars. According to INE, sales of second-hand homes increased by 18.4%. By contrast, sales of new builds plummeted, falling by 16.9%.

All indicators suggest that second-hand homes will continue to dominate transactions throughout 2015. Thus, the gap between new and used housing will become increasingly larger. Why? The main factor tipping the balance is price; second-home homes are more affordable for the long-suffering buyer. Used homes are between 5% and 15% cheaper, according to Manueal Gandarias, Director of the Research Unit at pisos.com. In euros, “the difference between an average used home and an average new build in Spain amounts to approximately €400 per square metre”, according to calculations by the appraisal firm Tinsa.

Second-hand properties ended the year with an average price of €1,347 per square metre, whereas new builds stood at €1,624/m2, according to data published by the General Council of Notaries. Moreover, second hand properties are available for as little as “just over €1,021. This undoubtedly encourages future buyers”, says Chus de Miguel, Commercial Director at Casaktua.com.

Furthermore, the prices of used homes offer more room for negotiation when they are in private hands, especially for overvalued homes acquired during the bonanza years.

Another point in favour of second-hand properties is that they are taxed at a lower rate. Brand new properties are subject to a 10% VAT charge, whereas Property Transfer Tax (Impuesto de Transmisiones Patrimoniales or ITP) is levied on those that are already inhabited and it varies from 6% to 10%. Moreover, aside from a few exceptions, used homes are located in better areas, since new homes are often scarce in city centres, unless they are refurbished homes. “A high percentage of used homes are located in more established, central areas that have more services”, says Chus de Miguel.

Although new builds have a very important advantage: “the greater ease of financing offered by the developers and banks that own these homes”, says Jesús Duque, Vice President of Alfa Inmobiliaria. Loans are normally granted to the developer in the case of new builds, which may be subrogated to the potential buyer. And financial institutions offer more credit facilities to place their own products, be they new or used. The individual vendor is disadvantaged in this sense.

In terms of the state of the property, new homes are ready to move into and live in, whereas used homes may require the buyer to invest in a face-lift or comprehensive renovation. “Our clients prefer to buy a house in a good building, update it or renovate it to their taste and pay 20% less than they would pay for a new build”, says Fernando Sánchez, agent at Re/Max Urbe. And he continues “problems should not arise if the property has a favourable Technical Building Inspection (report), is energy efficient and has good insulation”.

Regardless of tastes, is it worth paying more for a brand new home? “If we are talking about the same area and similar characteristics in terms of a property, I do not think it is worth paying 10% or 20% more for a new home”, says Duque.

Before signing any agreements, experts advise that (potential buyers) perform a simulation of the annual costs that will result from the purchase. As well as of the monthly costs. One should appreciate that “new builds typically charge higher community fees (to cover the cost of swimming pools, gardens, sports facilities…) and that it is possible to find second-hand homes where the central heating and water costs are included”, say sources at Fotocasa.es.

The fact that the second-hand segment is driving the reactivation of the real estate market is also explained by the fact that there is more supply. And “because the new builds sold by banks are also classified as second-hand”, say experts at Idealista.com. Much of the stock held by banks is classified as ‘used’ even though it is actually brand new, because they are homes that they have absorbed from developers in exchange for the payment of debt.

And whilst the second-hand market is growing, the new build segment is contracting; it is plummeting because hardly any new homes have been constructed in Spain in recent years. It is true that the construction of new homes is now increasing, albeit at a very slow rate. By 2016, the panorama will have changed. Bankinter estimates that, after years of significant decreases, driven by low demand and developer paralysis, sales of new builds will return to a level close to 100,000 units by 2016 (with total sales amounting to 450,000).

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake