It is said that Spain has traditionally had an economy based on sun (tourism) and real estate. Because of the latter, the 2008 financial crisis was especially hard for the country. All Spaniards have the memory of people losing their house because of a mortgage, while the government saved the banks from bankruptcy.
This situation made banks’ image decline in people’s eyes. In October, the opposition between the people and the banks had a new episode. On the 18th, the Supreme Court changed its jurisdiction about who should pay the Actos Jurídicos Documentados (AJD) tax, a tax that is paid when a mortgage is signed, at between 0.5 % and 1.5 % of the trade for an average of about €2,500.
Until that moment, the consumers were paying this tax, but that day the judge Jesús Cudero from the Supreme Court changed the legislation stating that should be the financial entity who pays the tax, raising alarm bells for the financial institutions. Just 24 hours later, the Supreme Court summoned a plenary session to decide whether this decision was right or not.
If the Supreme Court validated the new jurisprudence, banks could lose between 3,500 and 4,500 million euros. Moreover, it would generate a lot of lawsuits, claims and trials.
The plenary session of the Supreme Court took place on the 5th November, and the final decision was that the consumers would continue paying the tax. It was a tough decision with a lot of pressure on the Supreme Court from both sides – society and financial institutions. The result was 13 to 15 votes.
Just a few days later, the Government changed the law through a decree-law. The result was the consumers will not need to pay this tax any more, but the consumers that already had a mortgage will not be able to claim back against the banks.
Mortgage regulations are still under the public eye. The government wants to bring in some amendments to the decree-law and the opposition is struggling to try and void the full tax.
From the consumers’ point of view, the most important thing is to avoid financial institutions adding this new cost to the price of the mortgages, so that the consumer ends up paying it anyway.
There are other important details being discussed. For example, a potential forbidding the “bind-together” of products that the bank requires the customer to hire in case the consumer wants their mortgages to be accepted.
As you can see, real estate regulation in Spain is changing these days. Therefore, if you are about to buy a property in Spain, do not hesitate to contact us so we can advise you about what to do to defend your own interests.