The last few months of 2018 have been very significant and turbulent for the regulatory systems for the mortgage and banking sectors. The latest news has raised alarm bells amongst a wide range of people in the middle of and thinking about buying a property as the bank must now pay the Tax on Documented legal acts (known as AJD in Spain). This was decreed by the Government in a Royal Decree Law in the framework of a change in mortgage laws, a measure which will restructure lending from banks. At Pollentia Properties, real estate agency in Pollensa, we will be talking about what repercussions this latest change will have.
The change in mortgage legislation, will take place after a two year delay period, it is thought that apart from the documented legal acts, the banks should also pay for the writing of the deeds, the administration fees and the notary charge, leaving the client to only have to pay the valuation of the property they are going to buy and the copies of paperwork which they solicit. This way, the buyer will save approximately 90% of the mortgage costs, a significant percentage in terms of figures, but this will be irrelevant to the total cost of buying a property. The buyer will be exempt of the majority of the mortgage costs, but will continue to have the obligation of paying the taxes such as VAT if it is a new build, or the real estate transfer tax, instead of paying the notary, registry and the administration of the paperwork of the procedure.
It’s not all good news for buyers. You can’t have action without a reaction, and it’s that, with having to take on all of the documented legal acts, the bank will modify the price of mortgages. With the payment of this tax, the bank will no longer have substantial earnings on the first five years of the mortgage, which creates a risk for if it is cancelled well in advance or if it is restricted in the short term. It is believed that the entities which lend credit will not do it for free. In consequence, it is predicted that mortgages will rise in the near future.
Whilst we are left in limbo waiting for this new change to come in to effect on mortgages, all of those who have paid stamp duty in the last four years will be able to claim it back at the treasury. As it has been confirmed by the Government, who have reminded us again that it is the banks who should pay the tax, and should have done it thus far. For them, the buyer should request the rectification of the self-assessment of the stamp duty presented in date and therefund of undue income to the Treasury.
At Pollentia Properties, real estate agency in Pollensa, we offer exclusive guidance and advice for those interested in applying for a mortgage and buying a property in Mallorca. Our experts in the real estate sector will help you with everything you need. Do you have a query? Don’t worry, contact our real estate agency and we will try to help you as quickly as possible.
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