RIC tax incentive could release 10,000 long-term rental homes onto the housing market
The Canary Islands Government is optimistic that the new fiscal incentive linked to the Canary Islands Investment Reserve (RIC) could bring as many as 10,000 residential properties onto the market over the next few years.
Under the new measure, approved this week by the Spanish Congress, businesses benefiting from the reduced tax regime of the RIC will now be allowed to reinvest profits in the construction or renovation of residential rental housing.
However, reinvestment in holiday lets or tourist accommodation is explicitly excluded, ensuring that the tax benefit is directed exclusively towards the long-term residential rental market to make more housing available for residents.
Speaking yesterday in Agüimes, Canary Islands President Fernando Clavijo acknowledged that, in theory, the measure could facilitate the release of up to 40,000 homes. However, he tempered expectations, describing that figure as “highly unlikely,” since it would require full reinvestment of all funds currently allocated to the RIC.
“This initiative will provide a boost to the housing market, alongside other measures we’ve been implementing in cooperation with the Canary Islands Federation of Municipalities to streamline permits and secure land for rental housing,” Clavijo stated. He expressed particular hope that the RIC incentive will make a noticeable impact on the segment of affordable rental housing targeted at the working class.
Not everyone shares the government’s optimism. Opposition party Nueva Canarias-Bloque Canarista has criticised the reform, arguing that allowing RIC funds to be used for free-market housing disproportionately benefits investors rather than those struggling to find affordable rental accommodation. Party deputy Carmen Hernández was particularly outspoken, accusing the regional government of favouring speculative interests and failing to ensure the social function of housing.
The reform of the Canary Islands Economic and Fiscal Regime (REF) will enable companies to deploy over €2 billion of uninvested RIC funds to acquire, refurbish, or build properties on the free market, provided they are rented out as primary residences for at least five years.
However, critics have warned that the absence of rent caps or price controls may limit the measure’s effectiveness in easing the real demand for affordable housing, but it is a first step in the right direction
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