25 March 2015 – El País
Financial institutions, investment funds and the bad bank – Sareb – will have three months to inform the Generalitat about the number of empty homes they have on their books as a result of foreclosures or the assignment of deeds in lieu of payment (“daciones en pago”). Using this information, the Catalan Government will be able to impose a tax on vacant homes (the corresponding bill is currently with the Parliament) and undertake the necessary actions to establish their condition and demand their refurbishment. The decree that creates the register, approved yesterday by the Consell Executiu, also includes a pre-emptive purchase option by the Public Administrations of the homes whose residents are at risk of being evicted.
The Ministry for Housing, led by Carles Sala, wants to increase its stock of social homes in areas with highest demand. The urgent measure decree law to mobilise homes resulting from mortgage foreclosures establishes that the Public Administrations may exercise “their pre-emptive rights and rights of first refusal” – i.e. to a preferential purchase – when a company, financial institution, investment fund or Sareb is going to sell a home for which a mortgage foreclosure procedure is pending in any one of the 72 municipalities with greatest demand for housing. The text will come into force when the Official Document from the Generalitat of Cataluña (Documento Oficial de la Generalitat de Cataluña or DOGC) is published, which is expected to happen this week.
Sources from the Catalan Executive explain that they estimate that the banks have between 10,000 and 20,000 vacant homes on their books in areas with highest demand. This figure, which currently ranges quite a lot, should be confirmed by the register, which all owners of empty homes in Catalaña will have to sign up to. The occupants of the homes that will be handed over to the Public Administrations – which may in turn assign them to entities in the third sector (of social economy), per the request of those entities – will have to pay a social rent amounting to €212 per month on average.
The Department for Planning and Housing, led by Santi Vila (pictured above), is already exploring the market and may announce its first transactions next week. For the time being, the Catalan Housing Agency has €8 million to make purchases, although its final budget will depend on the amount collected through the tax that it will apply to the banks’ empty homes, which may range between €8 million and €26 million. Sources from the department explain that they are not looking to purchase homes for €100,000. The majority of the homes that have eviction orders pending are located in suburban neighbourhoods, and as such they are modest flats whose market prices may be as low as €20,000 or €40,000.
The Generalitat has also found that many of the homes in the stock that have been vacated due to evictions are falling into disrepair. For this reason, the decree obliges the entities that own such properties to carry out the necessary renovation work. If they do not, there are two options. The first involves a serious fine. The Housing Law establishes fines of up to €90,000, although the Catalan Government is in favour of ensuring that the amount of these fines is commensurate with the cost of the works that need to be performed. If the financial entity that owns the home does not carry out the renovation work, the Generalitat may conduct an “enforcement”, involving the expropriation of the use of the home for a period of between four and 10 years.
In the end, the department will try to avoid any double evictions through an aid package that will be collected in April. In this case, the objective is to prevent families that have lost their homes, but that have benefitted from the assignment of deeds in lieu of payment or social (discounted) rent by the financial entity, from having to face additional procedures if they cannot afford the rent.
Original story: El País (by Lluís Pellicer)
Translation: Carmel Drake