31/12/2012 00:00
TW
0

Palma/Madrid.—The government is to scrap tax on property purchased by foreign companies, Madrid has announced.
The move, which comes into force next year, is seen as the latest attempt to encourage foreigners to invest in Spain's struggling property sector.
Property tax can be a large expense for home owners in Spain, with the government raking in €30'000 a year on houses worth €1 million.
The reforms also include a plan to end taxation on the Spanish equivalent of real estate investment trusts, which is expected to go down well with foreign investors.

The government is also considering over foreign property investors immediate residency if they spend over a certain amount as another incentive to attract overseas property buyers as the governments sets about trying to clear the country's property mountain. But, Spain's property slump will deepen for much of the next decade, and tracts of buildings along the Mediterannean coast will have to be demolished, the country's top consultants have warned.

RR de Acuña & Asociados expects home prices in Madrid, Barcelona and other major cities to fall a further 30pc in a relentless slide until 2018, but it may be even worse in sunbelt regions where 400'000 Britons either live or own homes.

Fresh losses could reach 50pc and drag on for 10 to 15 years in those places where construction ran wild during the bubble, bringing the total decline from peak to trough towards 75pc. “The market is broken,” said Fernando Rodríguez de Acuña, the group's vice-president. “We calculate that there are almost 2m properties waiting to be sold. We have made no progress at all over the past five years in clearing the stock,” he said. “There are 800'000 used homes on the market. Developers are sitting on a further 700'00 completed units. “Another 300'000 have been foreclosed and 150'000 are in foreclosure proceedings, and there are another 250'000 still under construction. It's crazy.”