New Spanish Government Could Damage Fragile Property Market!
The recent General Election in Spain (in November) resulted in yet another hung parliament. (The 4th in as many years.) However, the new coalition government of PSOE (Labour) and PODEMOS another (left-wing party) has taken power in the Spanish parliament. It’s a fragile coalition, but it will endure for now. Both of these parties have some very strong policies that will have significant effect on the housing market.
Tighter regulations on the property rental sector will affect landlords in both social and tourist sectors, but this column will try to explain the significance relating to the property sales segment.
To begin, much of the good work achieved by previous governments in helping owners of illegal/unregistered properties will be put on hold. Already there have been protests by expat victims of illegal property sales in the Costa del Sol. Put simply, the new government is going back on previous promises to legalise individual homes and whole urbanisations in Andalusia.
There will also be a tightening of planning permissions and regulations, making it more difficult for developers and prospective, individual self-build projects – several already being revoked by local and regional authorities. One of the major effects of this initiative is that those builders caught up in this new legislation have no idea whether they will be permitted to go ahead in the future, leaving them in limbo and incurring significant ongoing costs. The net result will be an unnecessary slowing-down in the construction sector costing local economies money and job losses. It’s as though Spain learned nothing from the last financial crisis and is oblivious to the high unemployment rate which still pervades in many regions.
New legislation in the financial/economic sector is likely to be extremely damaging. It seems the new government is determined to extract revenge on the banking industry for the cost of bail-outs following the banking crisis in 2008. Many people in Spain will be supportive of these measures to punish those banks that contributed to the crash, but the banks in Spain have never really recovered their liquidity and certainly still do not pass regular stress tests. By forcing through new tax burdens on already zombie-like banks, this new government is almost certainly going to cause another major banking crisis that will hit the ordinary working person with a mortgage. It will also make borrowing more difficult for young, growing families who need to purchase a larger home.
Ultimately these new detrimental laws will have extremely negative effects on the internal property market in Spain, possibly resulting in a significant dip in property values.
Fuente Alamo Real Estate
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