It is true that companies within the most impacted segments, such as hotels and retail, can place their workers on lay-off to reduce costs. It is also true that it is allowed by law for tenants to delay their rental payments. But this last measure «has a very big impact on the owners and landlords because they do not receive rents and have to continue paying all their suppliers and all their employees even though they can use the lay-off, which is a kind of help, but not in all cases», explained Filipa Arantes Pedroso in an interview to Iberian Property Investment Talks.
Without collecting rents, it becomes «very hard» for investors and developers to move forward. Hence, «taxes like those concerning municipal tax policies, transfer property tax, IMT, IMI should also be suspended this year to help the economy and to help these owners who must pay these taxes but are not collecting their rents», stated the Senior Partner at Morais Leitão.
«Another important tax is the value-added tax (VAT). There is a big movement trying to lower VAT in construction from 23% to 6%, which is important. Rehabilitation within our cities has been very important and, for these rehabilitations, VAT is 6%. It should be so for all construction. If we want construction to have lower prices, we need to lower selling prices and have leases at lower prices. For this, we have to lower construction prices», she explained.
On this point, Filipa further remarked that «the big burden for developers is that they have to pay 23% VAT and do not get it back, because they sell without VAT. Real estate sales do not have VAT. This is something that we should think about because real estate sales have VAT in some countries and when that is the case, we can get back the VAT that we spend in construction. This is a very important issue that needs to be looked into because it is important to follow up on construction prices».
«Another big problem is licensing. We need licensing to be quicker and more effective. We need quicker licensing for construction», mentioned Filipa Arantes Pedroso and she further advised that despite the willingness to move forward with construction, banks have also become a problem since all new financing processes are currently on hold.
For the Senior Partner at Morais Leitão, «another important issue is related with lease agreements, golden visas, short rentals and rehabilitation which generated the boom in real estate in 2008,2012 and 2014». On this matter, Filipa Arantes Pedroso alerted that « all these important laws which generated the ‘boom’ in real estate are now being analysed again and risk being changed. So, that is also something we need to think about. These agreements have already been changed in a way that does not benefit owners, landlords or investors».