TAX BOOST FOR NEW HOMES IN SPAIN

The Spanish government has unveiled plans to halve the tax on new homes in Spain in a bid to help the country’s struggling construction sector.

Sales tax on new homes has been cut from 8% to 4% until the end of the year to help housebuilders clear some of the excess stock of unsold residential properties.

It is estimated that there are well over a million unsold vacant homes in Spain, due to over construction, a fall in consumer demand and an adverse economic environment, which has caused property sales and prices to plummet nationwide.

Despite a huge government push to boost demand for properties in Spain, government data shows that Spanish home sales in June fell to their lowest level since the property crash began, suggesting that prices may have to fall even further, supported by the cut in new build homes tax.

There were 24,699 home sales in June (excluding social housing), down 26% on the same time last year.

If the drop continues at the same rate for the rest of this year, it would be the worst single year for the Spanish property market in 30 years.

Nevertheless, Spain remains the most popular destination for second homes for people from the UK, with around 700,000 Brits permanently living in Spain.