Changes in property law on the horizon

2005 is likely to see some positive changes in property laws. Tenerife Property Shop analysts identify areas of policy in Spain in which changes are likely to occur in a report released this week. It looks likely that the Government will reduce the cost of cancelling a mortgage.

Up until 27th April 2003 mortgage lenders were allowed to charge a penalty of up to 1% of the value of the mortgage for early cancellation. From the 27th April 2003 the law capped the early cancellation fee at 0.5% and now Pedro Solbes, Economy Minister, has announced his intention to introduce a law prohibiting the application by lenders of early cancellation penalties. 

The Tenerife Property Shop report predicts that this will reduce the costs involved in the sale of a property, increasing the fluidity of the market.  Other changes are being encouraged by the International Monetary Fund.  Rodrigo Rato, previously in charge of Spain's Economy, is now at the helm of the IMF. 

Amongst Rato's proposals are the reduction of tax breaks for property buyers, overhauling the laws governing land development to provide more building land and introducing new fiscal incentives to stimulate the rental market.  Tenerife Property Shop suggest that the prospect of financial incentives to rent should increase interest from investors in the property market.  Though none of these proposals yet translate into Government policy, Rato has influence in Spain's fiscal policy and it is to be expected that at least some of his proposals will be adopted.