Madrid Court Annuls Sale of 2,935 IVIMA Homes to Azora in 2013

25 May 2018 – El Mundo

Administrative Court number 29 of Madrid has annulled the sale by the Housing Institute of Madrid (‘el Instituto de la Vivienda de Madrid’ or IVIMA) of 32 housing developments, comprising 2,935 homes in total, to the investment fund Azora Gestión, which was completed in 2013.

According to the explanations provided in the court ruling, the award “does not comply with the law” and is not justified by any “supplementary report or analysis of a technical, economic, financial or legal nature”.

The ruling maintains that although the sale of the homes was justified by the statement that “they are not necessary”, no explanation or justification was provided for that claim, even though, according to the court, they fulfilled “a social function, specifically, to provide decent housing for the disadvantaged classes”.

The ruling “reveals that there was a lack of motivation or justification for the unnecessary nature of those promotions, as claimed by the plaintiff (…), to be able to authorise the sale of the assets, which were owned by the Public Administrations”, adds the ruling.

The almost 3,000 homes belonged to the Youth Plan of the Housing Institute of Madrid. They were sold for €201 million, almost 20% more than the established asking price (€168.9 million).

The annulment of this sale is included in the judgement in which the court considers the claim of a resident of Navalcarnero, through which the transfer of his rental contract with IVIMA to a vulture fund has been annulled, and regarding which the option to appeal exists.

The President of the Community of Madrid, Ángel Garrido, argued that the sale of the public homes to an investment fund (which has just been annulled by the judge) “was not a success” and he recalls that his Executive has committed “to never sell public housing to the investment funds”.

“Logically, the interpretation of the ruling lies with the legal services and they will inform us of the appropriate way to comply with it”, he said, before adding that these sales should have never taken place.

Original story: El Mundo (by Roberto Bécares)

Translation: Carmel Drake

Supreme Court Places Thousands Of Homes In Legal Limbo

1 July 2016 – Expansión

The town plans for Gijón, Vigo and Marbella are the latest to join the long list of projects that the High Court has declared null and void, placing thousands of homes into legal uncertainty.

The real estate bubble is still causing problems years after it burst. In the last five years, the Supreme Court has ratified the annulment of several general town plans (PGOU) all over Spain, decisions that have continued in the last year with the High Court bringing down the plans in three other places, specifically, in Vigo, Marbella and Gijón.

These rulings make thousands of homes illegal, given that they were constructed in accordance with PGOU guidelines that are now considered null and void. What will happen to them now? Although the risk of demolition exists, it is minimal and the next step for the municipal companies is to draft and approve new PGOUs that include a process to normalise these buildings, which currently find themselves in a kind of legal limbo.

However, that is not the only negative consequence of this escalation in litigation, as reflected in the round table organised by two partners at Ontier, Jaime Díaz de Bustamante and Jorge Álvarez, together with Susana Rodríguez, Managing Director at the consultancy firm Aguirre Newman, and Antonio Pleguezuelo, Director of Town Planning at the same firm.

“The cascade of PGOU annulments is generating a considerable lack of legal certainty”, said Díaz de Bustamante, who insisted that this situation “deters international investors, who cannot afford to allocate their capital to an urban development plan that is subject to unstable regulation”.

But, what are the reasons behind all of these rulings from the Supreme Court, which are nullifying PGOUs all over the country? According to the experts consulted, one of the main reasons is the lack of communication and coordination between the different administrations involved in the preparation of the urban plans.

In this sense, Jorge Álvarez and Antonio Pleguezuelo requested greater coordination between autonomous communities and the central Government when it comes to defining the rules that are going to be applied, as that would result in greater certainty, in their view.

Delays in the process

Nevertheless, more concern and unease in the sector is leading to delays in the approval of urban plans, which, in some cases, is even resulting in changes in government.

For this reason, the experts at Ontier and Aguirre Newman insist on the importance of reducing the regulations relating to PGOUs. “The bureaucracy surrounding these plans need to be reduced so that they can be approved more quickly and adapted to the social reality”, explained Díaz de Bustamante.

Not surprisingly, most of the PGOUs that have been declared void by the Supreme Court in recent years had defects relating to the processing of the different reports required or to the sectoral processes, almost all of which are provided for by state law.

Original story: Expansión (by Laura Saiz)

Translation: Carmel Drake