More families to qualify for reduced VAT on new homes in Murcia

Families earning up to €2,400 a month could qualify for the reduced 4% VAT rate on new-build properties under the revised housing decree

Thousands more people in the Region of Murcia could soon qualify for a reduced 4% VAT rate when buying a new home under a housing decree set to be approved by the regional government.

The measure forms part of the affordable housing plan that will build 25,000 homes over the next five years, making it easier for young people and middle-income families struggling to get onto the property ladder.

The decree was originally approved in October 2025 but was later blocked in the Regional Assembly after PSOE, Vox and Podemos voted against it. Following months of negotiations, the regional government has now secured enough support to bring the measures back.

While much of the attention has focused on plans to increase the supply of affordable housing, one of the most significant changes for buyers is the expansion of the reduced 4% VAT rate on new-build homes.

Income threshold raised

At the moment, only those earning around the national minimum wage can benefit from the reduced VAT rate. Under the new rules, households with incomes of up to €2,400 per month would also qualify.
The change is being made by increasing the maximum income threshold for affordable protected housing from 2.5 times the IPREM, Spain's public income indicator, to 5.5 times the IPREM.

According to the regional government, this will make home ownership more accessible by reducing the upfront cost of purchasing a property.

Officials also point out that buyers under the age of 40 purchasing their first second-hand home in the region can already benefit from a reduced Property Transfer Tax (ITP) rate of 3%, compared with the standard rate of 7.75%.

Measures to speed up construction

The decree also includes several measures to speed up the construction of new homes across the region.

Under the plans, all administrative procedures linked to affordable housing developments will be given urgent status, reducing the time needed for licences and approvals by half. The regional government says this should help get projects off the ground much more quickly.

Developers will also be allowed to build more homes on certain sites than current planning rules normally permit. This includes plots affected by archaeological remains or protected heritage features, where additional building rights can be granted to help make projects financially viable.

The decree also increases the maximum price used to calculate affordable housing developments, raising it from €1,655 to €1,840 per square metre.

When the scheme was first presented, Infrastructure Minister Jorge García Montoro estimated that a newly built affordable flat of around 90 square metres in Murcia could cost between €160,000 and €170,000. Opposition parties criticised those figures, arguing that homes at that price would be out of reach for many people and should not be considered affordable housing.

Regional government sources have said updated pricing information is expected to be released soon.

Housing shortage in focus

Regional President Fernando López Miras spoke about the decree during a meeting of the European Committee of the Regions, describing it as an important part of Murcia's response to the ongoing housing shortage.

He said the measures would help deliver 25,000 homes over the next five years and argued that regional governments need greater flexibility to increase housing supply.

López Miras also called for fewer regulatory barriers, faster administrative procedures, more affordable and protected housing, and greater access to flexible financing tools.

During the debate, he urged the European Investment Bank to provide regional governments with additional financial support to tackle housing challenges. However, the bank's president, Nadia Calviño, responded that Murcia has not applied for funding from the institution for housing projects or other initiatives.

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