Catalan Government finally approves tax on empty flats owned by financial institutions

Barcelona (ACN).- The Catalan Government has approved a measure to impose a tax on empty flats owned by financial institutions. The aim of the tax is to incentivise banks to rent out the empty homes. Santi Vila, the Catalan Minister for Planning and Sustainability, said that the “mere announcement” of the tax has already caused Sareb (Restructured Banks Asset Management Company, Spain's 'bad bank'), CatalunyaCaixa and Bankia to yield to the Government 1,230 empty homes for social rent. During the press conference after the weekly Cabient meeting, the Minister pointed out that the new tax will not apply to individuals and will only be intended for flats owned by corporations that have been taken out of the market for more than two years. The Minister also said that the measure is not simply about "tax collection" but is instead to render decent and affordable housing more accessible to citizens in the midst of a housing crisis. In the last few years, the number of people evicted from their homes has increased dramatically, as many people could not face the payment of their mortgages. With the collapse of the real estate bubble, the price of mortgages was considerably higher than the home's market price, in the middle of an economic crisis with high unemployment levels. As a result, banks were keeping their houses, and those evicted were on many occasions still carrying a debt with the financial entity. On top of this, many savings banks participated in the real estate sector in the years of the economic boom. Therefore, now there are thousands of empty flats owned by financial entities and thousands of families unable to access a house.

The Catalan Government estimated a few months ago that banks own around 40,000 empty flats, including in areas with high housing demand. The Minister estimated on Tuesday that the tax will affect at least 15,000 properties owned by financial institutions across 72 municipalities with proven demand, mainly in the metropolitan areas of Barcelona, Tarragona, Lleida and Girona. The tax will only affect properties which have been empty for more than 2 years without a justifiable reason.

A tax only paid for flats empty for more than 2 years

The amount of tax incurred will be based on the total number of square metres owned by individual banks and will include significant accumulative bonuses if the institutions decide to rent out their properties, especially for social housing. The amount of the bonuses will depend on how many apartments will be put up for social rent. The tax per empty household is estimated to be between €850 and €1,650 on average per annum, per flat. Individuals, public administrations and third sector organizations will be exempt from this levy.

Vila estimated that 80,000 empty homes will be affected by future government regulations. “There will be things happening”, he said, although he did not release any future plan. Vila recalled that Spain's 'bad bank', Sareb – a public body that took over thousands of toxic assets from private banks – is the main owner of empty properties in Catalonia. For this reason the Catalan Government had such a "high interest" to reach an agreement with the Sareb to allocate flats for social housing; an agreement that was signed on Monday. Without specifying any name, the Minister acknowledged that there are other organisations “with a significant collection of empty flats, but which have their own policy of renting these homes.”

The Catalan Government will launch “subsidised rent” this summer

The tax on empty flats owned by banks is part of the Plan for the Right to Housing, a €480 million scheme aimed at improving access to decent and affordable housing in Catalonia, as well as social policies aimed at rehabilitation. In this vein, the Government will launch this summer a “subsidised rent;” a scheme which aims to encourage owners of empty flats in the private sector to temporarily pass their properties to the Housing Agency of Catalonia, which will renovate the flat and put it up for social rent.  

Vila considers the subsidised rent scheme a “pilot experience” which will mobilize a stock of 200 apartments located in one of the 72 municipalities with a strong demand for housing. The Government will renovate and adapt the flat for a maximum of €12,000 per household. The plan, worth €2.5 million, will allocate €75 per month to compensate the owners for ordinary housing expenditures such as property tax or neighbourhood associations.

Back in March this year, Vila described housing as a “basic need that has a social function” and stated that the Catalan Executive was looking to honour the right to good quality and affordable housing.