The Spanish Government have announced a 50% cut in IVA from 8% to 4% on new houses with immediate effect and extending  up to the end of this year.  Is it enough to get the market moving?

Lesley McEwan, MD of Cadizcasa Estate and Rental Agents in the Costa de la Luz said “I think the Spanish Government are out of touch if they think a 4% cut is going to regenerate interest in the Spanish real estate market.  We have properties on our portfolio where the prices have been slashed by more than 50% from 340,000 to 150,000 and they are not selling so another 4% is not going to make any difference.   We have buyers interested but the problem is not the price it is the finance.  They are unable to get mortgages from the banks.

This seems to me like wanting to be seen to do something by making a very minor adjustment rather than grasping the nettle and dealing with the real problem which is the banks defiance to lend.  Although the Government has told our banks to start lending to house buyers they have in my opinion defied that instruction by making lending available on such ridiculous terms and with such excessive security demands that nobody cannot fulfil their requirements.  Effectively they are still not lending.  It seems to me that the tail is most definitely wagging the dog here and the Government seems unable to apply pressure in the right places.  This may well be a last attempt by a Government struggling with the country´s problems to hold on to their voters for the forthcoming elections.   Sadly I do not think it will be enough.

I believe the Government have plans to help people with long term rental.  While that may alleviate some of the criticism from within Spain regards the provision of housing for those who cannot secure a mortgage  it does not help to bring in foreign money to the country from investors and private purchasers.  The view seems to be somewhat insular and fails to look at the vast overseas market which we could bring back to Spain if the Government committed to sorting out the problems we have”.

When asked what problems Lesley felt the Spanish property market had, she replied “Our real estate market has been badly damaged over the past few years by many factors including, the lack of available and affordable lending, the overbuilding which was allowed to happen and the illegality situation which remains unresolved.  All these factors are creating a lack of confidence in the market by both overseas and Spanish buyers and  we need a strong leadership to get it back on course.  I am afraid if our current leader had been a little Dutch boy, his finger would not have been big enough to stop up the hole and prevent the flood”.

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