7 Nov, 2018 @ 18:36
1 min read

BUNCH OF BANKERS: Supreme Court rules in favour of lenders in ‘unprecedented’ mortgage tax fiasco

Spain Supreme Court
RULING: Spain's Supreme Court rules on mortgage tax on property purchases
RULING: Spain’s Supreme Court rules on mortgage tax on property purchases

HOMEBUYERS will have to pay the hefty mortgage tax when purchasing a property, Spain’s Supreme Court has finally ruled.

After 15 hours of debate over who should pay the tax, known as the AJD, judges from the Supreme Court voted 15 to 13 that the client should foot the bill, NOT the bank.

“The banks win and the citizen loses,” said Podemos leader Pablo Iglesias.

The tax is a substantial fee – up to 1.5% of the property price – which is paid to the notary and allows banks to start foreclosure proceedings should the client fail to keep up with mortgage payments.

The tax has been paid by the client for the past 20 years.

WARNING: Pablo Iglesias warns of the power of banks

But in mid-October, a decision was taken by the Supreme Court dictating that the banks should pay as the document in question is in the lender’s interest.

However, as shares in a number of Spanish banks, including Bankia and Sabadell, promptly tumbled at the prospect of massive retroactive legal claims, the President of the Administrative Litigation Division of the Supreme Court, Luis Díez-Picazo dictated a day later that the ruling should be revised due to what was being termed as having ‘potentially enormous economic and social repercussions’.

Had the judges decided the banks should shoulder the minimum of four years of backdated payments, the €6 billion-plus bill would have been a blow to the financial sector, but according to Manuel Pardos, President of Adicae, an association for bank clients, the banks are ‘being cry babies’.

“They’re moaning and claiming they’ll be ruined, which simply isn’t true,” he said.
Podemos are organizing a protest march in light of the decision this weekend and the Consumer Organization OCU are demanding that Díez-Picazo resign.

Heather Galloway

Heather Galloway has lived in Madrid for over 30 years, working as senior writer for Hello! magazine before going freelance. She now works for various news sites, including El País, Euronews and The Olive Press. Contact [email protected]

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