The Spanish government is preparing a package of housing initiatives. According to El Economista, it includes two key blocks: measures to stabilize the long-term rental market and an increase in value-added tax (VAT) for short-term tourist rentals. The reforms are designed to mitigate the housing crisis and increase the supply of affordable housing, but have already caused controversy among property owners and market participants.
The main innovation is that luxury apartments and apartments for rent will be subject to the standard VAT rate of 21%. Currently, such facilities are either exempt from tax or are subject to a reduced rate of 10% (if there are hotel services, such as cleaning or reception). According to Libre Mercado, the new rule will affect all types of tourist accommodation, which will make them taxed higher than hotels, and, according to critics, will hit the pockets of both tenants and owners.
The second direction of the package is a change in the rules for long-term rentals. The authorities intend to oblige the parties to conclude contracts in writing. It is planned to introduce Personal Income Tax (IRPF) tax breaks for landlords who voluntarily reduce their rent. These measures, according to the government, are designed to make the market more transparent and secure for tenants, as well as encourage owners to retain tenants for the long term.
In addition to tax changes, the reform involves measures to increase supply. Among them are the reduction of bureaucratic procedures to speed up housing projects and administrative flexibility when putting new housing into operation. The authorities hope that this will make it possible to quickly saturate the market with affordable facilities and bring down prices, which continue to rise in large cities and resort areas.
For foreign investors and property owners in Spain, the changes will be significant. If the package is accepted, the profitability of the daily rent will decrease significantly due to the increased tax burden. At the same time, long-term lease agreements that are not related to tourist services do not fall under the new VAT rate.Experts are already calling the proposal controversial: the hotel sector is likely to benefit from more expensive alternatives, and apartment owners may massively reorient themselves to long-term rental or sale of facilities. However, the government insists that the reform is necessary to restore balance in a market where tourist rentals are increasingly displacing locals.
The law is expected to be passed in the coming weeks.
Source: Idealista
