Rental Contracts Will Be Governed by the Urban Rental Act Again From 23 January 2019

22 January 2019 – El Confidencial

Rental contracts that are signed from tomorrow will again have a duration of three years, regardless of whether the landlord is a physical person or a legal entity. Also, landlords may require future tenants to provide more than one month’s deposit, as well as any additional guarantees that they consider appropriate, either in cash or as a bank guarantee.

Royal Decree-Law 21/2018, dated 14 December, governing Urgent Measures in terms of Housing and Rents, published in the BOE on 18 December, has had a very short life, given that it has not been ratified by Congress today, in such a way that all of the rental contracts that are signed from tomorrow onwards will be governed once again by the Urban Rental Act (LAU) approved in 2013. The result of the vote was 103 votes in favour versus 243 votes against, plus one abstention.

In the way, the Government has today suffered its first major defeat in Congress, after the majority of representatives voted no to the law on rental, which was only supported by the PNV and PDeCAT in the end. The decree was completely rejected by Unidos Podemos, which was not happy that the Executive had ignored its main demand to move forward with the budgets: to limit rental prices in those markets with greatest tensions and highest prices. PP, Ciudadanos and ERC joined the Purple Party in their rejection of the decree (…).

All of this means that for practical purposes, the rental market will once again be governed in accordance with the legislation set out in the LAU of 2013, whilst all of those contracts that were signed following the approval of the royal decree in the BOE to date will continue in force in accordance with the provisions thereof.

Three-year contracts and larger deposits

The parties may negotiate freely regarding the duration of contracts, nevertheless, the obligatory extension of those contracts shall be three years. In other words, although a landlord and tenant sign a one-year contract, the tenant will have the right to extend that contract for a total of three years. The tacit extension, in other words, after those three years, and provided the parties are in agreement, shall be one year.

“The landlord can demand whatever deposit he wants for the rental of a home; the decree law limited that figure to two months. In this way, the owners of flats will be able to continue to ask for bank guarantees or bank deposits, as well as a normal deposit”, explained Francisco Javier Fajardo Fernández, Professor of Civil Law at the University of Navarra (…).

Regarding those parties who have signed a rental contract in the last 35 days, he indicates that “it would be normal for citizens to sign rental contracts for a year, but those that have signed contracts in the last 35 days could be subject to a mandatory extension of up to five years. The law would cover them, although it is possible that some landlords will want to modify their contracts to apply the current law (…).

“Contracts signed between 18 December and 22 January shall be subject to a special regime with respect to the contracts signed from tomorrow onwards (…)”, said the Professor from the University of Navarra.

The return of the law from 2013 also means that landlords will be able to recover their property to use it as a permanent home in certain cases after the first year of the contract term (…).

Rental updates

On the other hand, regarding updates to rental prices, another controversial topic, according to the royal decree, if the contract does not explicitly specify that the rent will increase each year, then there shall be no rent increase. By contrast, under the law from 2013, even though the contract does not specify it, rental prices are updated each year in line with CPI – the typical rate used – or the index specified – and, if there is no mention of any index, the consumer guarantee index (IGC), approved by the Disindexation Law of 2015 (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

New Legislation Stipulates that Residential Rental Contracts will Last for 5 or 7 Years

15 December 2018 – Expansión

On Friday, the Council of Ministers gave the green light to a royal decree of urgent measures relating to housing and the rental sector. The Minister for Development, José Luis Ábalos, highlighted that the majority of evictions occur due to a failure to pay the rent, whilst the number of mortgage foreclosures has decreased.

The main measures with respect to rental are: extending the term for the extension of leases, from three to five years – or up to seven years if the lessor is a legal entity – and increasing the term for tacit renewals from one to three years. Also, limiting the deposit to two months as a guarantee, facilitating agreements between tenants and owners to improve housing, management expenses shall be borne by the lessor when that is a legal entity, improving the remission of tourist rental contracts and horizontal ownership so that three fifths of the residents can limit tourist apartments, amongst other measures.

Nevertheless, the minister highlighted that this decree does not include measures aimed at intervening in rental prices, as had been agreed with Unidos Podemos in the budget agreement. However, he did not rule out that they may be included within the framework of the budget negotiations for next year.

For the time being, and precisely due to the absence of these measures in terms of prices, Pablo Iglesias has warned that the vote of his party to approve this decree-law will be “unfavourable”.

“We had agreed something else with them in the budgets, that the housing measures had to include controls over rental prices to decrease rental prices”, he said when the measures in the decree were made public.

“We hope that they are rectified so that we can go ahead with this decree, provided that it has the same content that we agreed”, added Iglesias, who also declared in a tweet that “the Government’s decree does not contain the most important measure from the agreement: that of prohibiting abusive increases in rental prices”.

Original story: Expansión

Translation: Carmel Drake

Ibosa Offers €33.5M to Acquire Most Sought-After Plot in Madrid

20 November 2018 – El Confidencial

The cooperative managed by Grupo Ibosa, Residencial Shaula Sociedad Cooperativa, has fought off competition from 16 other contenders in the auction for the most sought-after plot of land in Madrid. On the table: €33,510,000, an amount that almost doubles the minimum price of €17 million that the Treasury had set for it.

The cooperative has fought off competition in a tight bid from Desarrollos Los Astros, constituted at the beginning of November, and backed by Grupo Nozar, which placed €32 million on the table, and Arcano, which bid €31.2 million. Nevertheless, those two high offers were unable to compete with Grupo Ibosa, which has a lot of experience in this type of auction.

Expectations were high at Calle Guzmán el Bueno 139, the headquarters of the Special Delegation of the Economy and Finance in Madrid, where the auction was held. At 10am, in a room full with more than 100 people, 17 envelopes were opened containing 17 bids for the most sought-after plot of the year in Madrid. The land was owned by the National Currency and Stamp Factory (Fábrica Nacional de Moneda y Timbre), which entrusted its sale to the Heritage Service. The cooperative members will have to make the first disbursement within the next few days, equivalent to 25% of the amount offered, in other words, almost €8.4 million, and then pay the remaining 75% over the coming months, after deducting the deposit paid in order to be able to bid, which amounts to €850,000.

Vía Célere also submitted an offer (€23.7 million), exactly two years after submitting the only offer for another plot of land owned by the Treasury, in the same place, on Avenida Santo Ángel de la Guarda. The company chaired by Juan Antonio Gómez-Pintado is a familiar face in this type of action. In fact, just a few days after that auction, it was awarded the Adif and Repsol plots in Méndez Álvaro. On that occasion, its bid was also the only one.

In terms of the other names called out in the room, they included traditional property developers such as Ebrosa (€20.53 million), which submitted the most conservative bid; Grupo Premier, which put €25.16 million on the table through the company Cajandral; and Grupo Lar, which bid €30.13 million through Desarrollos Residenciales Madrid Norte. Pryconsa, another of the real estate firms that typically participates in these types of procedures, offered €23.1 million through Cogein, and Renta Corporación, with €22.15 million.

The surprise bidders included Inmo Frieria, a company backed by Manuel Jove, the former President of Fadesa, with a bid amounting to €24.7 million. And the listed company Aedas Homes, which offered €25 million through the company SPV Reoco 1, in its first major auction in Madrid. The long list of interested parties was completed by Global Nostromo (€28.5 million), Golego ITG (€22.12 million), Taz Real Estate (owned by Alza Real Estate, €24 million), Misodi Rent (owned by the Huguet family, with €23.2 million), Torre Rioja Madrid (€25.1 million) and Denoti Investment, a company owned by Irvine Alan Stewart Laidlaw, a British businessman and one of the richest people in the United Kingdom, whose bid amounted to €31 million.

A cooperative wins again

Like happened exactly four years ago, in November 2014, with the auctions of the plots on Raimundo Fernández Villaverde (owned by the Ministry of Defence) and the former metro depots in Cuatro Caminos (owned by Metro de Madrid), it is a cooperative – which saves on the property developer margin – that has managed to put the most competitive offer on the table, to fight off seasoned property developers such as Premier, Pryconsa, Ebrosa and Aedas Homes in a bid that the experts are describing as the auction of the year in Madrid. Not because of its size or its features, but because of its location, just 500m from the Retiro Park, this was one of the most sought-after plots in the capital, and its new owner may build up to 100 homes on its 4,500 m2 – 9,000 m2 of buildable space (…).

The cooperative managed by Grupo Ibosa currently comprises 60 cooperative members and its plans involve the construction of 94 homes. The 4 bedroom homes with two parking spaces and a storeroom will cost between €806,000 and €1,175,000, whilst the 3-bedroom homes will cost between €670,000 and €688,000 (…). The 2-bedroom homes will cost between €490,000 and €498,000, and the 1-bedroom homes will cost between €309,000 and €354,000. The complex will also have a swimming pool, a padel court, a gastroteque, a mini-crossfit studio, a sports pitch, a gym, changing rooms, a spa, a sauna and a jacuzzi.

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

HardRock to Invest €2bn in Future Leisure Mega-Complex in Tarragona

25 May 2018 – Eje Prime

Hard Rock has been given the green light to build its gaming and leisure mega-complex in Tarragona. The Generalitat de Cataluña has unblocked the plans of the US group, which is going to invest €2 billion in this complex. The economic plan includes one line item amounting to €300 million for the purchase of land, located in Vila-seca, from CaixaBank.

The Ministry of Economy reported on Friday that it had awarded the US company the authorisation to install and operate a gaming casino, which will be located at the centre of the project and which is going to be called Hard Rock Entertainment World.

The next step that the group must take is to make a €10 million deposit within the next ten days, although that amount includes the €3 million that the company already paid in June last year to guarantee its involvement in the project.

Despite those assurances, Hard Rock has not had a rival in the public tender that was opened to develop the complex. The first multi-national leisure project in Spain will have a gaming area spanning 7,595 m2, as well as two large hotels with a surface area of 63,000 m2.

Similarly, the US company will promote a commercial space measuring 15,000 m2 in which 6,000 m2 will be dedicated to an extensive restaurant offering and the same amount of space will be used for the centre itself, where leisure and live entertainment spaces will also be opened.

€700 million to begin with

During the first phase of the project, Hard Rock is going to invest €700 million to purchase the land, cover the construction and financing costs and to acquire furniture, amongst other aspects.

The group expects that its multi-million euro investment to set up this mega-complex, will allow it to reach an economic impact in the tourist area of Tarragona, where it is located, on the Costa Dorada, of €1.3 billion. The Port Aventura World leisure resort is located in the vicinity of the future Hard Rock Entertainment World.

Original story: Eje Prime

Translation: Carmel Drake

Valencia’s New Home Stock Has Fallen By 35% Since 2009

5 December 2016 – Levante EMV

According to a report by the Spanish Confederation of Construction Product Manufacturer Associations, the stock of new homes has decreased by 35% in the Community of Valencia since the collapse of the construction sector in 2009. The market has digested 26,926 properties in Valencia’s three provinces, leaving 92,782 unsold. The sales figures are very uneven, but the sector is now recovering on the Costa Blanca and in Alicante capital and the city of Valencia. In Valencia capital, there are just three hundred new unsold homes left, with some analysts estimating that as few as one hundred homes have yet to be sold; and the first developments to be promoted by Sareb, investment funds, financial institutions, cooperatives and overseas funds have already started.

The situation for Valencia’s construction companies is still complicated, to the extent that the President of the Association of Valencian Property Developers (APCV), José Luis Miguel, acknowledged yesterday that “anyone who owns land should hold onto it. A good decision would be to do nothing”, said José Luis Miguel, as he presented a study about the situation in the sector.

The property developers have commissioned a study to obtain a detailed understanding of how the sector is performing following the crisis, at a time when the “rules of the game have changed to allow the entry of new competitors, such as investment funds and financial institutions”. The author of the study pointed out that the sector is still at “historical lows”, despite the first signs of recovery being seen along the coast in Alicante and Valencia capital. “We are at the beginning of the (upwards) curve, but it is clear that the recovery is now being felt in certain areas”.

José Manuel Luis added that the volume of sales in the second-hand market are similar to those recorded in 2006 and 2007, but at that time they accounted for just 38% of all transactions, whereas now they account for 88%, compared with 12% involving new homes.

Weakness in demand

The head of the study underlined that the sector still perceives a weakness in terms of demand due to the difficulties involved in obtaining financing and because the banks are requesting deposits of 20% before they are prepared to grant mortgages. In any case, the greatest problem is that 40% of Valencians admit that they are unable to afford extraordinary expenses of €650 per month, which means that they are not able to buy. The only option for these people is to rent.

Nevertheless, the property developers are reluctant to commit themselves to building homes for rent because that requires the freezing of assets for a long time and the repayment period for such operations is twenty-five years.

José Luis Miguel lamented the situation in the sector and the disappearance of 90% of the property developers that existed before the crisis. “Many property developers were small and the crisis did away with them. The association used to have four hundred members and there are now only forty left”, he said.

Original story: Levante EMV

Translation: Carmel Drake

Madrileños Are Willing To Invest More In Homes

14 July 2016 – Expansión

The average amount that Madrileños are willing to pay to acquire a property in the Community of Madrid currently stands at €306,000, which represents an increase of 28%  compared to 2015, according a study, ‘Demand for housing in Spain’, compiled by Casaktua, based on more than 1,100 interviews.

The study also found that the average price Madrileños are willing to pay to rent a property is €584/month, which represents a 10% increase compared to last year, when the figure amounted to €532/month.

According to the document, “(On average), Madrileños have saved 37% of the cost of the property they want to buy, showing that few expect to be able to obtain financing for 100% of their properties when it comes to buying a home”. Nationally, average savings amount to 35%.

On the other hand, the study reveals that “the average budget that Madrileños allocate to the purchase or rental of a home has increased by 19% in the last twelve months, above the average (increase) for Spain as a whole (12%).

In addition, “the number of Madrileños (renters and owners) who are thinking about moving home in the short and medium term, has increased by three percentage points in the last year (from 48% to 51%)” says the report.

On the other hand, “73% of the residents of the Community of Madrid who want to move home started looking less than two and a half years ago” and the main reasons Spaniards wish to move home are “the number of bedrooms in the home and the area in which it is located”.

Meanwhile, the Consumer Price Index (CPI) in the Community of Madrid increased by 0.5% in June with respect to the previous month, whereas prices decreased by -0.8% compared with the same period last year, according to data published on Wednesday by the National Statistics Institute (INE).

At the national level, CPI rose by 0.5% in June with respect to the previous month and increased its YoY growth rate by two tenths to -0.8%, as the price of electricity, petrol and organised trips all rose. In this way, CPI recorded two consecutive months of YoY increases.

Original story: Expansión (by Roberto Bécares)

Translation: Carmel Drake

The Auction Opens For 2 Residential Plots In Valdebebas

1 July 2015 – El Confidencial

The countdown has begun. The Valdebebas Compensation Board has approved the terms and conditions for the auction of two plots of land destined for residential use measuring 18,000 m2 in this urban development, where 190 social housing homes will be built. The Board expects to receive at least €14 million for both plots, i.e. around €700 per square metre.

The plots, which will be auctioned individually, are located next to the site that will house the future Valdebebas shopping centre. One of them, which the Compensation Board has set an asking price for of at least €5.6 million, contains 7,400 m2 of land for residential use, whilst the other measures 10,200 m2 and will have an initial auction price of €8.3 million. (…).

In order to participate in the auction, interested parties must pay a deposit of €300,000 – before the first week of September – which will be deducted from the final auction price in the case of the winning bidder and returned upon completion of the process to all other bidders.

The interested parties, expressly invited by the Compensation Board, will have access to all of the legal, economic and environmental information about the plots and must submit their bids before 12:00 (midday) on 30 September, when all of the envelopes will be opened. On 1 October, the Advisory Council of the Compensation Board will award the plots and one day later, the sale and purchase deeds will be signed. All of the auction details are available on the Valdebebas website.

The plots owned by the Compensation Board have aroused interest from the cooperative manager Ibosa, which was hoping to offer €70 million for all of the land owned by the Compensation Board – with the exception of one of the plots up for auction that has been promised to FCC -. An agreement that has not yet been finalised, although discussions are continuing with the Board for the purchase of the remaining land that will not be auctioned.

Payment options: in cash, deferred or by instalment

The terms and conditions stipulate three possible forms of payment: in cash, deferred or by instalment. Cash offers will prevail over deferred payments, unless the latter exceeds the former by 2.5%. Cash offers will also prevail over payments by instalment, except when the latter exceeds the former by 5.5%. Finally, deferred payments will prevail over payments by instalment, provided the party that chooses the latter option does not present an offer that exceeds the former by more 3%.

If any bidders choose the deferred payment option, then they must pay the total amount, i.e. 100%, five months after the plot of land is awarded, i.e. by 2 March 2016. Meanwhile, 70% of any payment by instalment must be paid by March 2016 and the remaining 30% by September 2016. (…).

Original story: El Confidencial (by Elena Sanz)

Translation: Carmel Drake

Sareb Will Receive €177M From Its Asset Managers In June

16 June 2015 – Cinco Días

Haya, Solvia, Altamira and Servihabitat must pay Sareb €177 million before 30 June 2015 to make good the total amount (€588.6 million) that they agreed to pay as a deposit for taking over the management of the bulk of the bad bank’s assets. The asset transfer has already been completed in the case of Sabadell’s platform and will be completed this year for the remainder.

Sareb is immersed in the so-called “Project Híspalis”, the transfer of the management of 169,461 assets worth €48,200 million to four real estate platforms, which won the tender opened by the bad bank last December to professionalise the marketing of its assets.

The four platforms are: Solvia, the real estate arm of Banco Sabadell; Haya Real Estate, the platform created by the fund Cerberus to manage the property portfolio that it was awarded by Bankia; Altamira, in which the fund Apollo holds a 85% stake following its purchase from Banco Santander; and Servihabitat, the real estate arm of CaixaBank, in which the fund TPG holds a 51% stake. On the basis of the commercial agreement signed, these four firms must pay Sareb €177 million before the end of the month.

This is the last outstanding payment of the total amount (€588.6 million) that the four platforms agreed to pay Sareb as collateral for the contract awarded. The asset managers will recover these funds, together with the commission agreed, as they begin to fulfil the sales objectives that were set.

The four companies had already paid €411.85 million by the end of last year and according to Sareb’s annual accounts, they must pay “the outstanding amount no later than 30 June 2015”. Although this income would represent a significant boost to Sareb’s results, which has recorded losses in each of the last two years and is awaiting (the publication of) an accounting circular, the company has stated that it will set this income aside given that, sooner or later, it will have to return it.

The assets transferred have more than four million documents associated with them and involve the hand over of 352,000 keys – a complex operation involving 200 people from Sareb and one thousand people from the management platforms. Hence the handovers are happening progressively and, according to sources close to the process, will not be completed until at least the autumn and in some cases, until the end of the year.

(…)

Original story: Cinco Días (by Juande Portillo)

Translation: Carmel Drake