Domo to Give Up Socimi Status After Change in Spanish Rental Law

21 November 2019 – Domo will exit the socimi tax regime and, along with it, its business of developing rental housing due to changes in Spanish regulations. The country approved a law this year where rental agreements would be extended from three to five years, and up to seven years in cases where the owner is a corporate entity.

The firm argued that the change in the law would negatively affect its operations, as its strategy included selling the properties it built within four to six years. Domo added that the new regulations would impact its financing arrangements and decrease its potential profitability.

Nevertheless, Domo expects to maintain its listing on the MAB.

Original Story: La Vanguardia

Adaptation/Translation: Richard D. K. Turner

BBVA Research: The New Rental Decree & AJD Law Will Dissuade Investment in Housing

15 April 2019 – Expansión

BBVA Research is predicting a slowdown in the increase in residential investment this year and next, with forecast growth of 4.6% in 2019 and 4.3% in 2020, after the sector closed 2018 with growth of 6.9%.

According to the Spain Watch report compiled by the research house, the main driver behind the expected slowdown is the regulatory changes that “are affecting the sector and increasing legal uncertainty for landlords, which are reducing the incentives to entry for large investors and making purchases in regions with exposure to the tourist sector less attractive”.

The legal uncertainty first emerged at the end of 2018 when changes were made to the rental law and to who is responsible for paying Stamp Duty (AJD). Previously it was the purchaser; now it is the lender bank. That has resulted in a deceleration in residential sales, which may only be temporary, but at this stage is too early to say.

Meanwhile, BBVA Research has revised down its forecasts for the construction sector for this year and next, with increases of 4.8% and 4.7%, respectively, in light of the above.

Original story: Expansión

Translation/Summary: Carmel Drake