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Spanish property news roundup: New laws, taxes and rental benefits

Spanish property news roundup: New laws, taxes and rental benefits
Spain's Prime Minister Pedro Sanchez announced on Tuesday young mid-income workers will get a €250 monthly rental allowance if his government's new housing law is approved. Photo: JOHN THYS / AFP / POOL
Spain’s government has proposed a series of major changes to the country's housing laws, from price freezes to €250 rental allowances, big tax hikes on empty homes and more.  

Spain’s left-wing coalition government of PSOE and Unidas Podemos on Tuesday agreed on the country’s Housing Budget for 2022 and with it big changes to the country’s property laws.

The proposed new legislation still has to be approved by the Spanish Cabinet, with no date set yet, lots of questions still to be answered and so far plenty of opposition from right-wing parties PP and VOX. 

The Bank of Spain has also warned that studies conducted in the US, UK and France have shown that measures such as state rental subsidies end up increasing prices.

But if Pedro Sánchez’s government gains the support of the Basque Nationalist Party (PNV) and the Republican Left of Catalonia (ERC), these new laws signalling increased regulation of Spain’s property market will come into force in the near future. A win for some, a loss for others. 

Here’s a round-up of the main proposed changes to property laws in Spain:

Price freezes with some benefits

Spain’s future housing law has a clause focused on the regulation of rental prices for large property holders, those with more than 10 homes. 

If the measure is approved by the Spanish cabinet, they must by law lower rents based on the reference index drafted for all contracts in property markets that are under pressure. 

Regional governments will be responsible for informing the national government of where rental prices are spiking and if they want to introduce the rent cap.

In addition, smaller property holders who are letting out real estate in neighbourhoods where prices are ballooning will also have to freeze rents.

If they’re willing to draw up a new contract with a lower monthly rent, tax credits of up to 90 percent on their personal rental income (IRPF) could apply to these landlords.

As explained by Spain’s Minister of the Presidency Félix Bolaños, the new law will “freeze and reduce rental prices “, with “a very powerful package of tax credits for property owners to willingly introduce price reductions”.

Tax on empty homes 

Spain’s potential new housing law will include a tax on empty homes through an IBI surcharge of up to 150 percent with some exceptions.

IBI stands for Impuesto sobre Bienes Inmuebles in Spanish, which translates to tax on property goods, but it also goes by the name SUMA.

It’s a local tax which has to be paid once a year by all property owners in Spain, and it serves as a benchmark to calculate all other Spanish property-related taxes.

As the IBI amount is decided by the town hall in which your property is located, there can be differences of hundreds of euros between municipalities, and there’s also likely to be opposition to the proposed new tax on empty homes. 

Madrid’s PP mayor José Luis Martínez-Almeida has already promised that authorities in the capital will introduce all the necessary measures so that people in Madrid “aren’t affected by this unjustified increase of the IBI by Spain’s national government”.

READ ALSO: How to pay less Spanish IBI property tax

A young couple and their two infant children at the window in an occupied building in Sanlucar de Barrameda, near Cadiz. Photo: AFP PHOTO/ CRISTINA QUICLER
According to a September survey by Spanish property engine Fotocasa, 62 percent of under 35s in Spain face financial obstacles when buying or renting a property. Photo: Cristina Quicler/AFP

More public housing 

Thirty percent of new builds will have to be social housing projects meant for rental, Spain’s new housing law states, a decision which still has to be approved by the Spanish cabinet. 

Spain has the lowest amount of social housing in the EU with 290,000 units, only 1.1 percent of all properties in the country. 

To put it into context, 30 percent of homes in the Netherlands are social housing, 24 percent in Austria, 20.9 percent in Denmark, 19 percent in Sweden, 17.6 percent in the United Kingdom, 16.8 percent in France and the EU average is 8 percent. 

€250 monthly rental allowance

Spain’s Prime Minister announced on Tuesday that as part of his government’s wave of proposed changes to housing laws, 18 to 35 year olds who earn below €23,725 gross per year will be able to get a monthly discount of €250 off their rent.

Tenants would be able to claim a maximum of €6,000 in total over a two-year period whilst vulnerable families will receive extra state aid to cover “up to 40 percent” of their monthly rent.

READ MORE: Spain to give young mid-income earners €250 monthly rental allowance

Property price hike in Malaga 

In other property news, Malaga province has seen the biggest real estate price increases of all 50 provinces in Spain over the past year, up 9.2 percent compared to 2020 and 13 percent higher than in 2019. 

The average price of €2,433/sqm makes the coastal province the most expensive in Andalusia and the sixth most expensive in Spain after Guipúzcoa, the Balearic Islands, Madrid, Barcelona and Vizcaya, new figures from Idealista show. 

According to data from Spain’s Ministry of Development from the first quarter of 2021(the latest figures available), the average price of a home in Málaga province is €240,238.

Properties in Spain

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