The Republican Left of Catalonia party Esquerra Republicana (ERC) is to propose a new bill in Congress this Tuesday to introduce a new tax for owners of several properties in Spain.
ERC’s proposal is an extra tax on accumulation of residential real estate, applicable from the third property onwards. This means it will increase in line with the number of homes owned.
The pro-Catalan independence party argues that the new tax would complement VAT to “penalise the speculative concentration of housing and encourage mobilisation towards homeownership and renting regular and social housing”.
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The tax increases they suggest are from 4 to 8 percent for three and four properties, and then up to 12 percent for the fifth one. From the fifth property onward, an additional 5 percent would be added to the 12 percent for each new home.
The initiative seeks to help “prevent the concentration of property ownership in the hands of large holders”.
In addition to the extra tax, the ERC want to eliminate the tax benefits given to Listed Real Estate Investment Trusts (Socimis), as they believe that they currently operate under a “virtually tax-exempt” regime.
They are also calling for an “immediate” application of a 21 percent tax rate on tourist accommodation, a measure also proposed by Pedro Sánchez’s socialist PSOE party in Congress.
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The proposed bill aims to increase the minimum property tax (IBI) for homes that are not primary residences and are owned by landlords who own several properties. The idea behind this measure is to allow municipalities to penalise landlords who rent out to tourists and prioritise “residential, stable, and sustainable” use.
ERC’s spokesperson for Housing in Congress Etna Estrems defended the plan, saying she believes that previous governments have prioritised the private market and promoted a favourable tax regime for owners of several properties as well as tourist rentals. “Housing cannot continue to be treated as a commodity or a financial asset: it is a right that must be guaranteed,” she added.
According to data from property site Fotocasa, 4 percent of homeowners in Spain own three or more properties, and 98 percent of them use at least one of these as their primary residence.
Data also shows that more than one million properties in Spain are owned by landlords with a large portfolio of real estate. This has increased by 20 percent in the last decade.
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The ERC’s proposal is another in a long line of potential solutions to Spain’s ongoing housing crisis.
Last week, far-right party Vox presented another proposal in Congress to increase taxes for foreign property buyers in Spain, with the aim of using the money to give tax breaks for Spanish citizens and promote the construction of subsidised housing.
Vox’s proposal was not that different to Prime Minister Pedro Sánchez’s idea announced last January, to impose a 100 percent tax on non-EU non-resident property buyers.
This essentially means that non-resident foreigners from outside the EU would pay double for a property in Spain in the future, if the law passes.
The ERC themselves also lodged a proposal back in April to prevent foreigners from buying property in Spain if they can’t prove that they’ve lived in the country for at least five years. However, this measure was rejected.
