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A tax on vacant housing can reduce the number of properties left standing empty by 13%, according to the latest IEB Report

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  • The French experience shows how the tax increases the number of number of first residences available in the market and makes houses more affordable
  • In Spanish cities with more than 50,000 inhabitants the average vacancy rate is 12.3%, while the natural rate should be more like 5%


The Barcelona Institute of Economics has published a new edition of its IEB Report, entitled ‘Tourism and Gentrification in Global Cities: Could Fiscal Policy be Useful?’, in which various experts analyse how big cities are seeking to combat the negative effects of ‘massification’, be it as a result of tourism or property speculation, on the welfare of their residents and property markets. In her article, Mariona Segú, researcher at Université Paris Sud, tracks the evolution of housing in France following the introduction of the tax on vacant housing and concludes that the tax “is responsible for a 13% decrease in vacancy rates”.

In her article “Does the Taxation of Vacant Properties Improve Housing Affordability in Cities?”, Segú explains how the tax “has increased the number of main residences in occupation, which means that the homes that have come onto the market have not ended up as secondary residences”. In addition, she notes that, in the medium term at least, the construction of new builds does not seem to be affected.

However, she is careful to qualify the situation: “In the short term, the stock of housing units for sale or rent may increase and push prices downward. Yet, at the same time, a vacancy tax may also introduce new distortions given that the incentives to invest in housing are reduced. Thus, in the long run, theory predicts a fall in supply and a subsequent increase in prices”.

Segú stresses that such a tax could be useful in a country such as Spain, given that its cities with more than 50,000 inhabitants report an average vacancy rate of 12.3%, while the natural percentage, according to the experts, should be around 5%. However, its introduction would not be straightforward. “Spanish municipalities can levy a 50% surcharge on the property tax on unoccupied dwellings, but in practice they do not do so because of the difficulties they have in legally defining what might be understood as a vacant property”, she warns.

Varying rates of tourism taxes
IEB researcher, José María Durán, dedicates his article “Tourist Taxes on Overnight Stays: a Useful Tool at the Local Level?” to an analysis of the tourist tax as a tool for offsetting the costs of tourism. “This tax falls, above all, on overnight stays in hotels and is being used by local authorities to boost their revenue and, at the same time, to internalize the social costs derived from tourism”, he explains.

Durán’s study highlights the cases of Venice and Milan, which vary the tax rate depending on the time of year and the demand for tourist accommodation. “Areas outside the centre of Venice enjoy a deduction of up to 30%, and in January the tax is reduced by 30% throughout the whole city”, he explains. In the of Milan, its specific characteristics are a conditioning factor: “Tourism does not carry the same weight as in Venice, but the city is a key destination for congresses, fairs and business. Therefore, if the overnight stay in Milan is considered to take place within the framework of what is deemed an important conference, the tax rate is reduced by 50%”.

In Spain, despite the fact that tourism exceeds 11% of the country’s GDP, the current legislation governing local tax authorities does not foresee the application of this type of tax. This has led the Balearic Islands and Catalonia to introduce their own tax on overnight stays as a specific regional tax. However, unlike the Italian cities mentioned above, the local authorities in these regions cannot regulate it.

Finally, IEB researchers, Albert Solé and Elisabet Viladecans stress that the housing access crisis suffered by many big European cities is largely attributable to the “effects derived from non-residents – tourists and property speculators”, but that the blame cannot be laid solely at their door. In their editorial “Taxation, Tourism and Housing Speculation in Big Cities”, they cite the growing local demand for rental property, the growing demand for housing from non-residents due to the attractiveness of cities, the lack of land supply combined with urban planning regulations that hinder the construction of housing and the lack of social housing as key elements for explaining the rise in house prices in big cities.