If in 2020 the rental sector was significantly affected by the lack of tourists, in 2021, various governments decided to return to its regulation in order to provide affordable housing for the local population.
For example, the authorities in Prague, tired of struggling with the unthinkable rates, introduced an additional tax on short-term rentals. In Spain, an important law imposed limits on rent increases for owners of ten or more housing units and significantly increased local taxes on vacant housing. Even China near the end of the year imposed limits on rents in cities. “Only Amsterdam broke the pattern by again allowing short-term rentals in the city center.
All this, of course, is not too happy for foreign investors who are engaged in renting apartments. But on the other hand, we can expect that due to the balance in the rental sector and more affordable housing for locals, the real estate market as a whole will be more stable.
Tax Legislation
There were two multi directional trends in taxation in the global real estate market in 2021.
The first is to encourage sales with tax incentives. This path was taken, for example, by Indonesia, which abolished VAT on new buildings. It was joined by Greece, which provided tax breaks for hundreds of thousands of owners.
The second is to impose new taxes or increase them in order to limit market activity or raise state revenues in a pandemic. For example, Cyprus passed a law on a tax on the sale of real estate. Iran imposed a real estate tax, which was not there before. And the Basque Country passed a tax on empty housing.
However, the most telling example is Great Britain. In 2020, it introduced a vacation on stamp duty, which made it more profitable to buy expensive property in the country. Subsequently, the tax break was extended. This caused a real surge in buying activity and led to higher prices. On October 1, the tax relief ended. So now we can expect the market to cool down.
The year 2021 has turned out to be much more generous with pleasant events in the real estate market than the previous year. Many news inspire optimism to investors and buyers of overseas square meters. It remains only to hope that in 2022 we are not waiting for unpleasant surprises. And the rest is in your hands!