It’s a busy week for homeowners in Spain, with the unpopular Plusvalia tax finally being scrapped after it was deemed illegal, and the first landlord in Barcelona being fined for ignoring the rent cap. This is a precedent that will have ramifications for landlords across the country, and is a story that has been widely reported this week. Here’s all of the latest property news from across Spain this week:
The End of the Plusvalia Property Tax
The Plusvalia property tax is a tax that was levied on property owners when their property was sold: it was a municipal tax charged halls that taxed any increase in land value that the property had experienced from when it was purchased to when it was sold. This tax was incredibly unpopular in Spain, and was finally declared unconstitutional by Spain’s constitutional court from 26th October. That means that, from this month, town halls are no longer allowed to implement Plusvalia tax charges. Unfortunately, any taxes already paid will not be retroactively refunded, but this is still good news for anyone whose home is currently on the market, or thinking of selling their property.
It’s not all good news: this legislation change will have a huge impact on the public coiffers, so it has been reported that the Hacienda (the Spanish tax authority) are already considering new ways in which they can tax the increase in land value that won’t be deemed unconstitutional. If you wish to avoid this tax, therefore, now is the right time to sell.
Barcelona Landlord Charged €9,000 for Overcharging Tenants
In the first case of its kind since Barcelona’s 2020 rent control legislation was introduced, a landlord in the city has been fined by the council for overcharging their tenants. The fine that was imposed was a whopping 9,000 euros. The crime? Charging new tenants more than previous tenants had been charged, and not including these figures transparently within the rental agreement. When the current tenants approached the former tenants for clarification, they discovered that they were being charged 1,200 euros a month, whilst the previous tenants were only paying 950 euros.
After the current tenants complained, the case was settled in their favour, however the landlord continues to refuse to further reduce the rental figure. This is an interesting case because the Spanish government have announced their own housing bill proposal this week, and this national legislation could well overrule the Catalan government’s municipal legislations. The 2020 rent cap legislation in Barcelona has been a frequent source of debate, and many landlords would be very pleased to see it removed under this framework.
The Impact of the Rising Consumer Price Index
Inflation is rising dramatically in Spain right now, and the Consumer Price Index (CPI) had increased to 5.5% by the end of October, across the country. One of the biggest reasons for this rising inflation is the huge increase in the cost of utilities, especially electricity, in the country: as well as making it more expensive to run a home, this has also had a knock-on effect on the cost of consumer goods and everyday essentials. Another factor driving the CPI increase is rent increases, which are often linked to CPI due to clauses in rental agreements that allow landlords to increase their rent in line with the Consumer Price Index figure. That means that many renters could see their monthly rent going up in the coming months, at a time when they can least afford it.
The Squatting Problem
Squatters have long been a huge problem across Spain, with huge numbers of unoccupied buildings being taken over by okupas (Spanish for squatters) and over the last year 40 new squats have been reported to the authorities every day. Despite this, the number of legal challenges against squatters has fallen in Spain this year: this can be credited, at least in part, to the number of anti-squatting consultancy businesses that have been established to support property owners in getting their properties back without having to go to court. Rather than use legal challenges, these businesses employ boxers and bouncers to find a solution, which may involve making a deal with the squatters directly or putting pressure on them to leave. If you live in Murcia, Valencia, Barcelona, Madrid and Zaragoza, its likely you’ll have already heard of these services, as they have an established presence in these hubs.
There are currently 3.4 million empty homes in Spain and, the fact is, until the problem of huge numbers of properties sitting empty whilst native Spaniards struggle to find somewhere to live is addressed, the squatting problem in Spain is unlikely to be solved.
A New Spanish Housing Law Bill
As mentioned above, Spain’s Council of Ministers have approved the first stage of introducing a housing law into force: the first housing law in the country’s history. It is hoped that this proposed housing budget will be in place by 2022, however support for the draft has not get been guarenteed by the current administration.
If it does come into force, the law will include rental price freezes, better landlord regulation (particularly for those landlords with more than ten properties) and increased amounts of social housing across Spain. Spain has a social housing crisis, with the lowest rates of social housing available of any country in the EU: social housing makes up only 1.1 percent of properties in the country right now. If the proposal comes into force, 30% of all new build properties will have to be earmarked for the social housing market.
Are you ready to take your next holiday to Spain? Or perhaps you are in the process of moving to Spain or looking to make the right move to Spain for you? If you’re looking for estate agents in Southern Spain then why not get in touch ? Our locally based property experts are a font of local knowledge, and are perfectly placed to help you find the home of your dreams.