On the 16th of October the Spanish supreme court ruled that banks rather than property purchasers should pay the AJD (Actos Jurídicos Documentados), tax on mortgages. This overturns the Supreme Court’s own ruling from February.
The court reasoned by 15 – 13 that it is the banks, not the buyer that benefit from the mortgage being notarised.
The effect of this decision was seen in a fall in share prices of some of the major Spanish banks includin: Bankia, Bankinter, BBVA, CaixaBank and Sabadell.
The banks in Spain have been hit by a number of legal decisions that have effected the profitablity of mortages, including the “Clausula Suelo” (Mortgage rate floor clauses).
The likely effect will be that as mortgage loans become less profitable for the banks, borrowers can expect higher fees, rates and increased costs to offset the expense to the banks.
Purchasers affected by this ruling will be able to claim, but it’s as yet to unclear how far back claims can be made retrospectively. Legal analysts have stated that they expect the period covered by the ruling will be at least 4 years.
Mortgage set-up costs in Spain are high compared to other countries and it may be worth looking at alternative financing options.
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