The vice president of the autonomous community of the Canary Islands, Manuel Domínguez, announced this Friday that he will propose a reform of the Economic and Fiscal Regime (REF) so that the Canary Islands Investment Reserve (RIC) can be used to rehabilitate housing in order to lower rental prices.
The RIC is a tax incentive that allows entities subject to Corporation Tax to reduce the taxable base of the amounts that, in relation to their establishments located in the Canary Islands, allocate from their profits to the reserve for investments in the Canary Islands.
In a press conference, Manuel Domínguez acknowledged that it is not the solution but one more measure to reduce rental prices, and thus help improve the quality of life of citizens.
The vice president pointed out that emphasis should be placed on it being public housing, for the most vulnerable people.
To carry out this measure, the Law of the Economic and Fiscal Regime (REF) must be modified, for which the Parliament of the Canary Islands must issue a favorable report and send it to the central government if it receives the support of two-thirds of the regional deputies.
The commissioner of the REF, José Ramón Barrera, indicated that the aim is to have a REF "more social", and insisted that the proposal opens the possibility of helping to solve an urgent problem that is the high price of housing rentals, which, he added, the Bank of Spain has said is caused mainly because there is a large demand and a short supply.
The situation is more serious in the Canary Islands than in the rest of Spain because the disposable income is among the lowest, pointed out the commissioner, who added that, in addition, in the archipelago almost 50% of the family budget is allocated to housing rental, when the Bank of Spain recommends that it should not exceed 30%.
In the investment reserve there are about 2,000 million euros, which, José Ramón Barrera recalled, are not unpaid taxes, but money pending investment because the majority of the productive fabric of the islands, formed mainly by self-employed workers and micro-enterprises, has decided not to distribute it for private use, with the commitment to invest it in four years, as established by the REF law.
Given the difficulty of finding investments to materialize those 2,000 million euros, the opportunity to generate produced fabric is lost and therefore it will be proposed that this money, all or part of it, can be allocated to housing.
The REF delegate does not believe that the measure will push prices upwards
José Ramón Barreda explained that this model existed until January 1, 2007, from which date it was eliminated due to the "false" belief that the RIC was putting upward pressure on housing prices in the Canary Islands.
The commissioner of the REF stated that it was a false belief because it was eliminated when the growth of housing prices in Spain was exponential in all the autonomous communities, but in the Canary Islands it was much lower, 4 percent, while in Extremadura it was 25 percent.
Now, what is intended is to "improve" the model and offer legal certainty that did not exist before, so that the housing goes to rent, so a short period of time will be given so that, from the purchase to the rent, the four years that the law gives to materialize the investment reserve do not pass.
What is wanted is that the housing goes to rent "as soon as possible", and therefore the measure will focus on those that need rehabilitation, but it is also intended that the housing be habitual residential, and in addition the possibility will be raised that the rent is with an option to buy, and that entrepreneurs can build to rent to their employees.
