Reclaim mortgage costs in Spain

Supreme court rules on mortgage set up costs

On 16th October 2018, the Spanish Supreme Court has ruled that the stamp duty on mortgages should be paid by the bank and not the consumer.

This represents a change in stance from the court and now leaves the banks in Spain facing a further flood of claims from mortgage clients.

Over the past few years the banks in Spain have lurched from one disaster to another, with a huge amount of property repossessions and mortgage settlements after the property crash, to an even more expensive deluge of claims for floor clauses.

The court has now decreed that the mortgage lender should be the party that incurs the tax on new mortgages.

The potential claims are estimated to be several million Euros. The stock prices of most of the banks fell on the IBEX as a result of the news.

The tax is the cost of registering the mortgage as a deed at a notary. The Supreme Court ruled that it it the bank that is the party with the interest in registering a deed against the property and therefore should be the party to pay the costs of doing so.

The banks will no longer be able to charge the client for this tax.

Mortgage clients who have paid this tax already, will be able to file claims for a refund.

The tax is a % of the loan value. It can vary region by region, for instance in Madrid the tax is only 0.5% but in Andalucía it is 1.5%.

It is estimated that the average is around €3,000 and with total potential claims of 24 billion Euros.

This judgment now means that all set up costs of a mortgage can now potentially be reclaimed.

The wave of new mortgage related claims could lead to further strains on the court system in Spain.

The enormous volume of claims for mortgage floor clauses (minimum interest rates) led to the establishment of special courts to deal exclusively with mortgage claims.

These courts have not been able to cope with the volume of cases. Those consumers who made a floor clause claim soon after the Supreme Court judgment managed to avoid the delays.

With the knowledge of hindsight, it is therefore a good idea for consumers to proceed with a claim as soon as possible.

If you have a mortgage in Spain and would like to discuss whether you have a case for reclaiming monies from your bank, please contact us.

GB Abogados provide a free, no-obligation consultation.