The creation of a fixed rate of €5,000 in property commissions will reduce house prices by 3.89% and generate annual savings for Portuguese families of around €850 million, real estate consultant Imovendo warns in an analysis of property market prices . .
The implementation of this measure would allow the Portuguese to save, on average, 8,600 euros (-3.89%) in the transaction of a property, also reducing the rate of effort of families in housing loans, according to the analysis carried out by a consultant with based on the number and value of properties sold in 2022.
“The real estate market needs more practical measures that will really help Portuguese people to buy a home and deal with the uncontrolled escalation of prices. This proposal is an example of how to fight inflation in the housing market without harming owners or buyers “, underlines Miguel Mascarenhas, CEO of imovendo.
On average, real estate agencies operating in Portugal charge a commission of around 5% of the property value, which ends up inflating house prices.
“Setting the real estate tax at 5,000 euros, instead of a percentage whose value varies according to the price of the property, will allow the sale price of apartments to fall by 3.89% – an average saving of 8,000 euros – and 4 , 1% in houses, for an average saving of 10,200 euros”, stresses Miguel Mascarenhas.
Another of imovendo’s proposals to combat high prices in the real estate market is to reduce the VAT rate on real estate supplies from 23% – current value – to 6%, which would result in a general reduction in real estate prices by 0 .81%.
In practice, the consultant, owner of a T3 apartment, worth 400 thousand euros, who makes the transaction through a traditional brokerage office, will have to pay a commission of the final sales value of 26,212 euros (approx. 5% plus VAT), of which 4,654 euros will be allocated for the payment of the 23% VAT amount.
“The result of this very high rate is that the property will be put on the market with a value of 426,212 euros, since, upon sale, the owner will pay a commission of 5% plus VAT, a non-deductible amount. for most cases,” stresses Miguel Mascarenhas.
According to imovendo’s analysis, with a reduced VAT rate of 6%, the same property would be offered for sale at a price of 422,762 euros, i.e. 3,450 euros cheaper, allowing a saving of 0.81%.
“Property commissions in Portugal are among the highest in Europe, especially compared to the Nordic market where values of 1% to 2% apply. of the real estate market, also allowing a reduction in the value of loans to purchase and greater profitability of the business”.
If you consider the reduction of VAT on residential property – and that 60% of property transactions are done through estate agents – this measure would result in a loss of annual VAT revenue of around €180 million for the State. If the measure is taken only for second-hand properties and with the same assumptions, the loss of annual VAT revenue would be €156 million.