New homes in spain to get boost from transfer tax?

Photo credit: Pepe Rodmon

Building permits for new properties in Spain fell 31 per cent year on year in the first five months of the year, according to the Ministry of Development. In May alone, application numbers plummeted 33 per cent annually, as the crowded supply in the market continues to impact the struggling construction industry.

Confidence appears to be improving among estate agents, with sales reportedly on the up, but the housing market and the economy’s recovery will be a long, uneven journey if the construction sector remains stagnant.

New build property may receive a slight boost, though from new transfer tax changes. The updated regulations have seen ITP on resale property in the region of Valencia hiked from 8 per cent to 10 per cent, making new homes more affordable than existing homes.

“ITP isn't levied on new-build property, but VAT (IVA) is applicable, also currently at 10 per cent (as well as stamp duty),” explains Richard Way of the Overseas Guides Company.

“Reports from estate agents are of new projects beginning to come on line in the Costa Blanca, so with resale becoming dearer, brand new key-ready properties will be on the radar of foreign buyers."

Richard concludes: "At the same time, recent stats from Valencia's regional government showed that almost half of all property sales in the first three months of 2013 were to foreigners - an unprecedented level and an indication of how valuable the international market is to Spain's property market along its Costas."