Spain went to the polls again on Sunday, having failed to come up with a Government after the last election in December. What impact, if any, will the latest election result have on foreign property owners in Spain?
This time around the right-of-centre Popular Party (PP) under Mariano Rajoy did better than expected, but not well enough to win an absolute majority of 176 seats in the Congress of Deputies. That means a they will have to form a coalition government, which will almost certainly include the PP, as other alternatives are so complicated they are almost out of the question.
The Spanish Socialist Party (PSOE) had their worst result ever, but managed to hold onto second place, whilst the insurgent hard-left Unidos Podemos party failed to gain ground, and the Citizens Party (Ciudadanos) lost eight seats as right-of-centre voters went back to the PP as a safer bet to stop Podemos.
On balance the result was a relief for the markets, and probably for the international powers-that-be, as investors were nervous about a left-wing Government driven by Podemos taking power in one of Europe’s biggest economies.
Now the business of trying to form a coalition Government is under way, with all sides marking their red lines and Rajoy talking about who’s to blame if they fail. A lot of posturing is going on at this stage.
HOUSING MARKET POLICIES
With Podemos almost certainly barred from power in Madrid, their housing policies like preventing speculative development (of which there is none at this moment), banning foreclosures on primary homes, converting the Bad Bank (Sareb) into a social housing office, and encouraging people to squat in empty homes, will stay in the drawer for now.
The PP is the most likely party to be in the next Government, and they have plans to encourage the renovation of Spain’s housing stock, improve energy efficiency, control abusive mortgage clauses, modify the Horizontal Property act, and rationalise holiday-rentals laws, having devolved holiday-rental legislation to the regions in a previous Parliament.
The PSOE might be in a coalition Government, with their plans to increase the stock of social housing for rent, improve the management of the Bad Bank, improve energy efficiency, fine banks for having empty homes, and recovery some tax breaks for homeowners.
The Citizens Party is closest to the PP, and they propose formalising debt for property swaps (jingle mail), removing inheritance tax on middle class and working class people who inherit a home, and temporarily providing social housing for people whose homes have been foreclosed.
Nobody is talking about vital things like reducing transaction costs and sorting out the mess that is town planning in Spain, though it is true these areas are largely devolved to the autonomous regions.
Assuming a coalition Government is formed with the PP as the largest party, foreign property owners won’t notice much or any impact, though there could be some changes on the holiday-rental front. I’ll keep readers informed if there are any changes.
However, it would be good for the Spanish economy, and therefore the housing market, to have a stable coalition Government in Madrid. Let’s hope the politicians bury their differences quickly and reach an agreement soon.