The Popular Party will extend access to public guarantees up to 50 years to facilitate the purchase of a first home if it comes to power after the general elections on next November 29. The proposal is part of the electoral program of the party led by Alberto Núñez Feijóo, which calls for initially raising the maximum age from 35 to 40 to benefit from these guarantees, with the possibility of extending them later up to 50. The measure aims to make it easier to access a mortgage for those who have sufficient income to cover the monthly payments, but lack the necessary savings to pay the down payment on a house.
As El País has advanced, the housing plan of the conservatives also includes a significant tax cut for younger buyers. Specifically, it proposes reducing the VAT on a first newly built home from 10% to 4% for those under 40 and allowing this tax to be paid in installments over the life of the mortgage loan. The goal is to reduce the initial outlay that buyers must face, one of the main obstacles to accessing housing in Spain.
The PP will expand mortgage guarantees from 35 to 40 years, with the option to reach 50
The main novelty of the proposal is the expansion of the age for access to public guarantees, a mechanism that allows buyers to finance a larger portion of the home’s price without needing to have all the savings that banks usually require beforehand. Currently, the state guarantee line managed by the Instituto de Crédito Oficial (ICO) is aimed at young people up to 35 years old and at families with children in their care, the latter having no general age limit.
The PP plans to raise the threshold of the program aimed at young people to 40 years and considers extending it to 50, although the conditions that would determine that additional extension have not yet been specified. According to sources from the PP cited by El País, the intention is that having family members with economic capacity should not be a practical requirement in order to be able to access ownership.
"Public backing will make it easier for the mortgage to also cover the down payment that many young people today cannot put together", explain from the PP. The party considers that the delay in emancipation and the rising cost of housing justify extending these measures to people who, despite having a stable job situation, have not been able to gather the necessary savings to buy a home.
Public guarantees allow a financial institution to grant a mortgage higher than the percentage it usually finances, around 80% of the value of the property. However, the guarantee does not mean a grant with no strings attached and does not eliminate the obligation to repay the loan. Buyers will have to keep meeting the solvency requirements of financial institutions and pay the corresponding installments.
Reduction of VAT from 10% to 4% to buy the first home
Another of the main measures in the PP electoral program is the reduction of the VAT applicable to the purchase of a new first home for those under 40. The party proposes to move from the general rate of 10% to the reduced rate of 4%, which would mean a 60% reduction in this tax.
For a new home of 250,000 euros before taxes, the current VAT means an outlay of 25,000 euros. With the reduced rate proposed by the PP, that amount would drop to 10,000 euros, which would represent an 15,000 euro saving for the buyer.
The proposal also includes that the tax can be paid in installments at the same pace as the mortgage, preventing the buyer from having to pay the entire amount at the time of formalizing the transaction. This is a measure intended to reduce the initial savings needed to purchase a home, although the financing mechanisms and the terms of that deferral are still to be defined.
In the case of second-hand homes, which are not taxed by VAT but by the Inheritance and Transfer Tax (ITP), the conservatives commit to negotiating with the autonomous communities a reduction of the levy for young people who buy their first residence. They also propose allowing the deferred payment of this tax, whose management falls to the autonomous administrations.
What is the difference between the PP guarantees and the Government’s current aid
The PP proposal takes as its starting point the mortgage guarantee system promoted by the Government of Pedro Sánchez. The state line managed by the ICO makes it possible, in general, up to 20% of the mortgage loan, to be backed, so that financial institutions can reach financing 100% of the lower value between the purchase price and the property’s appraisal. This mechanism is subject to economic and asset requirements, among other conditions.
The youth program is currently limited to buyers up to 35 years old, although there is also a line for families with children in their care that does not set that same age limit. In addition, in October the Government approved a new mechanism called TU CASA, which provides for interest-free public loans of up to 50,000 euros to help finance the down payment for the first home, pending development in its terms of access.
The main difference is that the PP is betting on expanding the age of the beneficiaries of the guarantees and pairing the measure with a tax reduction, while the TU CASA mechanism of the Executive is based on granting public financing that must be repaid later. In both cases, the measures aim to facilitate access to home ownership, although they use different instruments.
For now, the expansion to 50 years is an electoral proposal and not aid that can currently be requested. Its implementation would depend on whether the PP could take it to the Government and approve the corresponding regulation. The possible income limits, maximum home prices, or specific conditions for buyers between 40 and 50 years old have also not been detailed.
Feijóo promises one million homes and changes to taxes
Tax measures and guarantees are part of a broader plan with which Alberto Núñez Feijóo intends to place housing among the priorities of his electoral program for the 29N. The PP president has committed to promoting the construction of one million new homes during the next legislature, with reforms aimed at increasing the available land and reducing the administrative procedures needed to promote new developments.
Among its proposals is to establish a positive administrative silence system for planning licenses after 90 days, a measure that, according to the party, would make it possible to speed up construction projects. The conservatives also propose extending the deadline from two to four years for reinvesting the amount obtained from the sale of the primary residence and maintaining the corresponding exemption in the IRPF.
The PP’s approach contrasts with some of the policies driven by the Sánchez Executive. Feijóo has reiterated his intention to repeal the rental market intervention measures and the suspension of certain evictions approved by the Government, considering that they harm the available supply.
However, facilitating access to credit does not necessarily mean lowering the price of housing. The impact of guarantees and tax relief will also depend on increasing the supply of available properties, since greater purchasing capacity, without sufficient growth in construction, can contribute to keeping pressure on prices.
With these proposals, the PP seeks to expand the group of potential beneficiaries of purchase aid and reduce the initial acquisition costs. The possibility of extending guarantees up to 50 years and cutting taxes thus becomes one of the main housing commitments of the conservatives ahead of the general elections on 29 November.