New Housing Measures from the Government: Tax Benefits for Affordable Rentals and Restrictions on Non-Resident Foreign Buyers
The Spanish government, led by President Pedro Sánchez, has unveiled a comprehensive set of 12 new housing initiatives aimed at addressing what he describes as a critical issue for the middle class in both Spain and Europe. Key components of this package include increased taxation on property purchases by non-resident foreign buyers from outside the European Union, restrictions on tax incentives for real estate investment trusts (Socimis) that do not promote affordable housing, and a proposed 100% income tax exemption for landlords who adjust their rental prices according to a designated reference index.
During a recent forum on housing organized by the government, Sánchez emphasized the need to prevent societal divisions between wealthy property owners and struggling tenants. He criticized the previous administration's approach to housing during the economic crisis, claiming that they failed to take necessary actions and instead perpetuated a cycle of economic bubbles.
Among the 12 initiatives detailed, the government plans to transfer 3,300 homes and two million square meters of residential land to a newly established public housing enterprise. This entity is tasked with constructing thousands of affordable housing units. Sánchez stated that this new organization will have legal mechanisms to prioritize the acquisition of homes and land and ensure that all publicly funded housing remains publicly owned. Additionally, approximately 30,000 homes from Sareb, the so-called 'bad bank,' will be integrated into this public housing strategy, with 13,000 being made available immediately.
The government also announced the formation of a public guarantee system designed to protect both landlords and tenants involved in affordable rental agreements. This system will offer guarantees to facilitate rental agreements while safeguarding landlords from potential risks. Moreover, a program will be initiated to rehabilitate vacant homes for affordable rental purposes, with a commitment to maintaining these properties for at least five years.
On the fiscal front, the proposed plans include a 100% income tax exemption for property owners who rent out their homes in accordance with the established reference index, regardless of whether these properties are located in high-demand areas. Additionally, the government aims to impose stricter regulations on short-term rentals, ensuring they are taxed as businesses rather than residential properties. This move aims to create a fairer tax environment where landlords operating multiple short-term rentals do not benefit from lower tax rates compared to traditional hotels or employees.
To further combat rental fraud, a fund will be established to assist regional and local governments in enhancing enforcement against temporary rental violations. The government is also committed to revising tax benefits for Socimis, ensuring that these advantages are exclusively available to those engaged in affordable rental schemes.
In a significant policy shift, the government plans to impose restrictions on property purchases by non-resident foreign buyers from outside the EU, raising the tax burden to 100% of the property's value. This unprecedented measure is intended to curb speculative buying practices that have contributed to the ongoing housing shortage, a concern highlighted by Sánchez as an urgent need for reform.
Additionally, a strategic project known as a Perte will be launched in Valencia to modernize and innovate within the construction industry. This initiative will focus on modular construction methods, allowing for quicker and more cost-effective housing solutions, which Sánchez believes will bolster the economic framework in Valencia and across Spain.
During the forum, the Minister of Housing and Urban Agenda, Isabel Rodríguez, acknowledged the housing crisis as a pressing issue affecting many citizens. She asserted that the right to housing must remain a non-negotiable priority for the government, emphasizing the need for a balanced approach that prevents the pitfalls of unregulated market practices that previously led to detrimental housing bubbles.
In summary, the government's housing strategy comprises various measures aimed at increasing the availability of affordable housing, protecting both tenants and landlords, and regulating the housing market to prevent speculation.
