While Rajoy’s political campaign was fairly coy on policy details – given Spanish voter dissatisfaction with the governing Socialist party, it was enough of an advantage just being an alternative – PP did announce some policy measures related to the real estate market.
Speaking from the Lucas Fox Barcelona offices after the election win by Partido Popular (PP) with 44.6% of the votes, Lucas Fox Director Alex Vaughan said: “We congratulate Prime Minister Elect Mariano Rajoy and his team for a strong win that we are hopeful will have a quick and positive impact on the property market in Spain. The majority win by the PP means the new government will have the political stability and mandate necessary to take action to address the current financial crisis and its impact on the property market in this country.”
Spanish politics tends to have a long handover timeframe, so that while elected in November, Rajoy and his team are not due to take full rein of the government until 22 December. News of appointments to crucial ministerial portfolios such as housing and development have yet to be made, but real estate news portal Idealista has recently shared some of the early announcements regarding which of PP’s housing policies are expected to be green lit.
Reanimating the Spanish Housing Market 2012
PP has announced a number of tax incentives to help stimulate the Spanish Housing Market in 2012. These include:
- Maintaining property sales tax at 4%: Initially introduced by the outgoing Prime Minister Zapatero’s Socialist Party, property tax rates were halved from 8 to 4% until the end of 2011. PP has announced a continuation of this policy into 2012, maintaining the tax rate at the lower 4% level for at least another year.
- Reduction on ITP transfer tax: While details are yet to be fully announced, it is understood that PP plans to reduce taxes related to property transfers.
- Removal of income capping on tax rebates for residential housing purchases: In what could have a significant impact on the Spanish housing market 2012, PP plans to remove current tax rebate caps on purchases for residential properties (i.e. where the buyer intends to use the property as their main Spanish residence). At present, an income cap means only those who earn less than 24,000 euros annually are entitled to a tax deduction. PP intends to provide the tax rebate to any buyer and retroactively implement the policy to benefit any residential home buyers in 2011.
“Tax incentives such as the extension of the VAT reduction on new build property and a proposed cut to ITP transfer tax on second hand property purchases will help to sustain and build on the healthy signs in the property market that we observed in the third quarter,” Mr Vaughan said. Lucas Fox International Properties announced its best ever quarter for sales transactions in October this year, trading €19.5 million of properties in the three months from 1 July 2011. If implemented, these proposed tax incentives could stimulate the property market and help assist the lower end of the market to catch up with the renewed vigour at the high end,” Vaughan concluded.
Housing market policies will be a key indicator of policy success for the incoming government. Subscribe to the Lucas Fox blog to keep up to date with analysis and policy developments related to the Spanish Housing Market 2012.