OWNERS of empty homes in Spain could be forced to cough up surcharges of up to 150 per cent under a sweeping new housing law aimed at tackling the country’s worsening affordability crisis.
The new measures were approved by the Spanish government last week after the eviction of 87-year-old Maricarmen Abascal from her home of more than six decades in Madrid reignited tensions over housing.
The government says demand has outstripped supply after years of low housebuilding and rapid population growth, with around 750,000 additional homes needed to meet the number of new households created over the past 15 years.
The new rules are designed to get more properties onto the market and tackle what the government describes as speculation and predatory ‘vulture funds’.
One of the biggest changes for property owners is the power given to councils to impose hefty IBI surcharges on homes left empty.
The tax hike can reach a staggering 150 per cent for owners of two or more residential properties that have remained vacant for more than three years.
The rules also allow for lower surcharges in other circumstances, including up to 50 per cent for certain homes left vacant for more than two years and up to 100 per cent where the period exceeds three years.
There are exemptions for homes that are empty for justified reasons, such as relocation, health problems, renovation work or legal disputes.
The government will also dangle a carrot for vacant property owners, offering tax incentives if they sell to public administrations or businesses involved in the procurement of housing.
A 100 per cent exemption from capital gains tax will apply where the property is sold for €200,000 or less, with a partial exemption applied on properties shifted for between €200,000 and €800,000.
The package also takes aim at landlords, tourist accommodation and property investment companies.
Landlords will receive larger tax deductions in certain circumstances when they reduce rents, while those who increase the amount tenants must pay may see their deductions reduced.
Tenants who earn less than €33,007.20 a year will also be able to claim a new 10 per cent income tax deduction.
The government is also targeting SOCIMIs – large property investment companies that own and rent out homes – by upping the tax rate on their undistributed rental profits from 15 to 25 per cent.
However, companies providing significant amounts of affordable housing will be eligible for reductions of up to 100 per cent – depending on the proportion of their homes offered at below-market rents.
Tourist rentals are also firmly in the government’s sights again, with the new law introducing a 10 per cent VAT rate and allowing councils in stressed housing zones to impose additional IBI surcharges on properties being used for holiday lets.
The package also creates a new state-backed housing body, CASA 47, which will be tasked with expanding Spain’s stock of public and affordable homes.
The measures came into force on October 1, although the royal decree still needs to be ratified by Congress.
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