Madrid’s Gov’t Seeks To Acquire Housing Stock From Banks

15 March 2016 – El Mundo

The regional Government of Madrid has set its sights on the unsubsidised homes that banks have been unable to sell during the years of the crisis. A spokesperson for the Ministry of Transport, Housing and Infrastructure has confirmed that it has made initial contact with several banking institutions, specifically, with Bankia and La Caixa, to make its idea of incorporating the real estate stock into the regional Administration’s portfolio a reality. (…).

The idea is that the Community would take over the portfolios of homes from the banks and convert them into social housing.

“We would only do this if the properties cost the same or less than the social housing homes that we are constructing. The idea is, not only to save costs, but also to speed up delivery times for beneficiaries. If the proposal gets approved, the people being awarded the homes will not have to wait until all of the administrative procedures have been completed to benefit from a public price. We would save time in terms of publishing the offer, assigning the project and constructing the properties”.

Problems to resolve

Of course, the operation is not without its problems, given that, in many cases, the properties are currently occupied illegally. Therefore, the operation would run into problems if the portfolios of homes to be acquired include properties of that kind. (…).

The idea, which is in its very early stages of development, would be to award public housing: for rent, for rent with the option to buy and social housing. Moreover, regardless of whether the figures add up or not, the technicians from the Ministry would have to evaluate the legal pros and cons of the operation.

Currently, the Community of Madrid is one of the regions in which the sale of homes, in particular second-hand properties, has grown by the most. On 9 February, Sociedad de Tasación – a company that specialises in property valuations, appraisals, certifications, real estate advice and housing data – calculated that the supply of new homes in the region and in the capital has decreased gradually since 2014. In total, it calculates that supply has decreased by 38.5% over the last two years, according to the New Home Census 2016 report that it compiled.

It claims that there are currently 5,474 unsubsidised homes available and according to its calculations, at the current rate of sales, it would take ten months for those properties to be absorbed by the market. (…).

The Government of the Community of Madrid has tried to mediate between the banks and the real estate sector in the past, in order to focus the market and acquire properties for those most in need, but it has not had much success to date. (…).

Original story: El Mundo (by Jaime G. Treceño)

Translation: Carmel Drake