Tag: costs

Spain’s New Mortgage Act will Enter Into Force on 17 June

18 March 2019 – Expansión

The new Mortgage Act was published in the BOE on Saturday and it will enter into force in three months time, on 17 June 2019.

The legislation reflects an EU directive, which seeks to increase the transparency of mortgage contracts to try to reduce the high rates of litigation in the banking system.

It means that Spanish legislation will, for the first time, require the banks to bear all of the costs associated with the formalisation of a mortgage, except for those relating to the appraisal/survey.

The Bank of Spain agrees that the new law should reduce the number of litigation cases but voiced concerns that it will also make new loans more expensive.

Original story: Expansión

Translation/Summary: Carmel Drake

The Countdown Begins to Energy Efficient Social Housing

14 September 2018 – El Mundo

The revised Technical Building Code (CTE) is going to be published soon in Spain, in line with similar developments in other European countries. In addition to standardising a new way of building, the revised code is going to incorporate the definition of nearly zero energy buildings (EECNs), which will introduce much more demanding parameters than are currently in place.

Private property developers know that from 31 December 2020 onwards, all of the new properties that they build will have to comply with those guidelines. They are demands that come from Europe and that also affect new buildings that are occupied and publicly owned, including social housing. Those buildings must comply with the energy requirements from 31 December of this year.

But, are the Public Administrations prepared? According to Inés Leal, Director of the Nearly Zero Energy Building Congress, “the large cities are better equipped to handle the implementation of nearly zero energy buildings than the smaller towns, which may find it harder to achieve the objectives”.

Although there are not many constructed EECN public housing projects, the buildings certified under the Passivhaus standard have become the closest example of nearly zero energy buildings.

Adelina Uriarte, President of the Passivhaus Building Platform (PEP), believes that the different administrations have the capacity to adapt to the guidelines of European legislation in this regard. What’s more, she adds that “those with the greatest predisposition have already done so ahead of the established deadline”.

One of them is the Town Hall of Madrid, which wanted to set the example and anticipate the 2019 deadline. Thus, at the Municipal Plenary on 25 May 2016, an agreement was unanimously adopted which assumes that all new buildings that are planned, and even those that are already standing that have to undergo an extension or a comprehensive renovation, must be positive from an energy perspective (…).

Financing and costs

In terms of financing, the experiences involving public housing already undertaken in Spain are demonstrating that EECNs are economically viable. In fact, according to Germán Velázquez, Partner at VArquitectos, a public building can be made nearly zero energy efficient with the same budget. And he justifies it: “The current legislation demands several issues that no longer represent an extra cost for developing ECCNs; the key is in the drafting of a good set of plans to ensure that the euro ratios per square metre are equivalent to those of a conventional building”. In his experience, the average cost per square metre amounts to around €650/750 in a conventional public building compared with €700/800 that it costs to construct a public EECN (…).

Original story: El Mundo (by Juanjo Bueno)

Translation: Carmel Drake

ACR: Residential Construction Costs Rose by 12.1% YoY in 2017

25 January 2018 – Cinco Días

The rate of inflation in the house building sector is causing concern. That has been reflected in recent months not only by the trade association but also by companies in the sector and other entities such as Sociedad de Tasación. On Thursday, some of the first data evidencing this phenomenon was published. Over the last year, to December 2017, the cost of residential construction rose by 12.1%. That is reflected in the recently created Index of Direct Construction Costs, prepared by the Navarran construction group ACR.

The index also shows that the increase has amounted to 17.5% over the last two years. The figure indicates that in 2017, these costs grew dramatically and that they accelerated. “Costs mainly grow for two reasons, a shortage of labour and a lack of manufacturing capacity in trades such as structures and façades”, said Michel Elizalde, CEO of the ACR Group.

The company has obtained this data from its construction sites in Madrid and is convinced that the inflationary figures can be extrapolated to other companies in the sector and to other regions such as Barcelona, Málaga, País Vasco and Zaragoza, where the housing market has reactivated.

Nevertheless, at the level of the general Spanish market, that rise is not being reflected in the most active areas. The statistics from the Ministry of Development indicate that in October 2017 (latest available figures), the cost of residential constructions had risen by 5.5 points since 2010. Sources at ACR report that the minimums were recorded in 2012 and 2013 after prices had been contained and have only been starting to rise since 2016.

“There is more tension when it comes to labour costs”, acknowledged Elizalde, basically due to the lack of qualified professionals in certain trades such as framers and rebar workers, according to ACR, as well as those involved with bricklaying, experts in partition walls, façades, flooring, tiling and carpenters. That causes teams and subcontractors to change construction site in the middle of house building projects if another company offers to pay them more.

“Contractors are suffering from this situation,” said the Head of ACR, given that property developers are contracting turnkey projects with fixed costs and the construction companies are, in turn, those who are suffering from a lack of professionals.

“There is a shortage of trained professionals because many of those who left during the crisis are not coming back or have now retired”, said the director.

In YoY terms, prices have increased by the most in glass making (25.2%), façades (15.4%), earth moving (15.6%) and structures (13.4%).

Original story: Cinco Días (by Alfonso Simón Ruiz)

Translation: Carmel Drake

Sareb’s Expanded Rental Portfolio Now Contains 4,558 Properties

15 November 2016 – Invertia.com

Sareb expanded its portfolio of rental properties during the first half of the year, from 3,831 buildings at the end of 2015 to 4,558 at the end of June 2016.

According to the so-called bad bank’s half year report, 3,900 of the properties are residential assets and 675 are dedicated to tertiary use. (…).

With this boost to its rental strategy, Sareb is looking to increase the value of its rental properties with a view to their possible sale. This would allow it to recover its costs in the case of sub-optimal buildings by exiting from them.

To create this portfolio, Sareb has defined the perimeter of the assets in this category, something which will help the servicers – Altamira, Haya RE, Servihabitat and Solvia – market them for rent and, in some cases, make them attractive for sale.

Avoid defaulted payments

Subsequently, the bad bank conducts a tenant selection process, for rental purposes as well as for sales, with the aim of finding people who will allow them to reduce their defaulted payments to a minimum.

Sareb explains that homogenous selection criteria are applied by all of the servicers to guarantee the rents and, in the event of divestment, an appropriate valuation of the “live” lease contracts.

The so-called bad bank has also identified several housing developments that are pending completion or renovation, andit has approved, or is in the process of analysing, their completion. “The aim is to rent those properties out in order to avoid impairment, cover costs and facilitate their future sale”, says the bank.

During the first six months of the year, Sareb also tried to recover “overdue rents corresponding to valid contracts” with the aim of improving revenues and/or taking over the properties for their subsequent sale.

Original story: Invertia.com

Translation: Carmel Drake