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Spanish Property Developers in Crisis

Many British people have bought properties from Spanish developers who are now suffering as a result of the financial crisis. This blog will provide updates on the current situation and useful information about the problems British buyers are facing in respect to their Spanish properties.

VAT for new Spanish properties reduced to 4%
24 August 2011 @ 13:28

On 19 August 2011 the Spanish Government reduced the rate for VAT on new properties from 8% to 4% in order to help the beleaguered housing market where there are nearly 700,000 unsold new properties. The new measure is effective immediately and expires on 31 December 2011. The measure is being introduced to help kick start the sale of new properties which are mostly in the hands of the banks who have land and property valued at more than 65,000 million euros!

Alex Radford a Solicitor & Abogado with Irwin Mitchell Abogados believes this is a welcome measure from the Spanish Government however Alex commented that “unfortunately this only applies to new properties and should also be extended to resale properties where transfer tax is up to 8% depending on the value of the property purchased. Further with a lack of liquidity and credit available in the market it is unlikely to make real inroads into the unsold housing stock in a little over four months”.

Irwin Mitchell Abogados have an experienced Property Department and offer a complete property service when buying or selling Spanish Property. For more information on the services offered contact Alex Radford at alex.radford@irwinmitchell.es or telephone (+34) 952 209 860.

www.irwinmitchell.es



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3 Comments


como tu quieres said:
24 August 2011 @ 13:40

Well it is very beneficial to those who seek to buy last few units that remain unsold as also is the case with many builders/banks and are being snapped up by mostly Spanish buyers who are also buying theseproperties at very cheap almost 60% off the original price.

Since last year, here in the Southern Coasta Blanca, we have seen an influx of mostly Madrileños but also from all other regions such as Galicia, Navarras, Cantabria, Castilla Leon and Castilla de Lemancha who have bought more than one such property all along the coast, and resales at rock bottom prices. As this region has developed the infrastructure and the beaches and much more specially all the Autovias that makes their journeys easier and shorter. They are also making their presence felt by supporting the local Spanish businesses such as supermarkets (Mercadona) Spanish bars and restaurants and trying to integrate with mostly ex-pat community in mot of the urbanizations. I welcome them and their friendly, helpful contribution. So this reduction in IVA will certainly benefit los españoles who always like to have a home by the seasides, and enjoyed by them and their Very large extended families too. :) :0

Then may be this will be extended to the resale sector of the property market too.



como tu quieres said:
24 August 2011 @ 13:43

Well it is very beneficial to those who seek to buy last few units that remain unsold as also is the case with many builders/banks and are being snapped up by mostly Spanish buyers who are also buying theseproperties at very cheap almost 60% off the original price.

Since last year, here in the Southern Coasta Blanca, we have seen an influx of mostly Madrileños but also from all other regions such as Galicia, Navarras, Cantabria, Castilla Leon and Castilla de Lemancha who have bought more than one such property all along the coast, and resales at rock bottom prices. As this region has developed the infrastructure and the beaches and much more specially all the Autovias that makes their journeys easier and shorter. They are also making their presence felt by supporting the local Spanish businesses such as supermarkets (Mercadona) Spanish bars and restaurants and trying to integrate with mostly ex-pat community in mot of the urbanizations. I welcome them and their friendly, helpful contribution. So this reduction in IVA will certainly benefit los españoles who always like to have a home by the seasides, and enjoyed by them and their Very large extended families too. :) :0

Then may be this will be extended to the resale sector of the property market too.



lobin said:
24 August 2011 @ 14:29

It will not only benefit the sale of last few units in some developments, the reduced tax applies to all first sales of a unit by the developer. In some areas there are entire buildings where very few, if any, units have been sold.

It is questionable whether this will help really activate the market because the reduction does not apply to resales by banks who have taken the units from the developers and are reselling them, because these are resales subject to Transfer Tax (usually 8%) and not first sales subject to VAT.

The reduction does apply to sales by banks when the banks took over an unfinished building and became the developer by finishing the building themselves. These sales can then be classified as first sales subject to VAT.

Until the banks start offering financing to all buyers and not only to buyers of the stock in their hands, the market will not be reactivated, in my opinion.


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