La Generalitat Approves a Law that Provides for the Expropriation of Vacant Homes

5 March 2019 – La Vanguardia

The Government of Cataluña has approved a decree law establishing around thirty urgent measures to improve access to housing in the region.

The objective of the law is three-fold: to address the lack of social housing available for rent; to facilitate instruments to combat emergency situations and evictions; and to moderate increases in residential rental prices.

The measures range from fines to the expropriation of homes that have been empty for two years (from large property owners at a reduced price, which is no case may exceed 50% of the market price), to forcing the banks to rehouse in social housing properties any residents that they choose to evict.

Another measure in the pipeline, for introduction later this year, includes a plan to increase the minimum rental term, which currently stands at three years, to increase it to between six and ten years, depending on whether the owner is a private individual or a real estate company. Moreover, efforts are being made to limit rental price increases to CPI.

Original story: La Vanguardia (by Luis B. García)

Summary/Translation: Carmel Drake

PSOE & Podemos to Save the Rental Reform without Price Limits

27 February 2019 – Cinco Días

Despite the initial disagreements and failures, all indications are that the Government and Podemos are going to end up rescuing the Rental Act. The Executive is expected to present new text to the Council of Ministers on Friday, which will not include limitations on rental prices, but which will reflect significant changes with respect to the text that was toppled a month ago. Those changes include: the compilation of an official price index in large cities; updates to rents subject to CPI; and greater guarantees against evictions, according to reports from El País yesterday.

The draft being finalised by the Executive does not include any measures regarding limits on rental price increases, but it does propose compiling some official price indices to serve as a tool for autonomous regions to establish their own housing policies, since they have the authority in this regard.

Podemos, a key partner to enable the validation of the Act regards this measure as insufficient but sources in the party acknowledge that they would have to concede to save the other improvements proposed by the text and reverse the harmful measures introduced by the PP in 2013. One option being considered is an 80% discount on the IBI charge for those owners who comply with the price index (…).

Another feature of the new text is that the update to rental prices during the term of a contract may only be subject to CPI, something that used to be included in the Urban Rental Act until the PP eliminated it in 2013.

The Act also recovers the increase in the duration of contracts from three to five years, or seven in those cases where the owner is a company, but also adds that all contracts will be valid, regardless of whether they are registered in the Property Registry (…). Another initiative included in the draft text, to provide greater security to tenants, are the notice periods for the non-renewal of contracts, which increase from one to four months in the case of owners and from one to two months for tenants.

The new regulation will also include enhanced guarantees against evictions (…).

Original story: Cinco Días (by E.C.)

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

Gov’t Extends Eviction Moratorium Until 2020

21 March 2017 – Rtve

On Friday, the Government approved the extension of the anti-eviction moratorium for vulnerable families from their normal homes until 2020 – the initiative had been in force since 2013 and was due to expire in May of this year. From now on, the measure will include families with dependent children aged under 18. That is according the Ministry of the Economy, Industry and Competitivity, Luis de Guindos (pictured above), following the Council of Ministers meeting. He said that the aforementioned law “would be expanded and deepened” in order to protect the most vulnerable groups following the crisis.

De Guindos said that the Royal Decree Law will now cover other (new) cases so that more families can benefit from these measures. It will include vulnerable families with dependent children aged under 18 (not only those aged under 3 years old, like until now); single-parent families with dependent children (removing the need for there to be two children in single-parent families); unemployed people (without having used up the benefit); disabled people; dependent people; those with a serious illness; and cases where there is a victim of gender violence in the family unit.

The Minister for the Economy also explained that the Code of Good Practice – which financial institutions can voluntarily sign up to – includes the option of renting foreclosed normal homes at a discounted price. (…).

Agreement with the opposition parties

The text in the Royal Decree Law has been prepared with a “broad consensus” according to the Minister in a statement. De Guindos said at a press conference that all of the main parliamentary groups have been involved in the negotiations, and so he has ensured that there is a “very strong consensus to approve it”.

In fact, the Government had initially announced the extension of the moratorium on evictions of vulnerable families from their usual homes until 15 May 2019, although it was in favour of extending it for another year, as reflected in a non-legislative motion, approved by the Congress of Deputies, and that is what it has done in the end.

Socialist sources cited by Europa Press have indicated that the PSOE and the Government have agreed this decree and have also reached an agreement to submit a plan, within eight months, containing measures directed at facilitating the recovery of home ownership from people in situations of economic vulnerability that are immersed in eviction processes, unable to pay their mortgages. (…)

In any case, De Guindos confirmed that “the most important things are not the palliative measures. Instead, in order to put an end to the drama of evictions, the economic recovery needs to continue”. In his opinion, the main reasons for the 30% decrease in the number of evictions in the last year have been economic growth and the creation of employment.

Original story: Rtve

Translation: Carmel Drake

Gov’t To Extend Suspension Of Evictions For Vulnerable Families

6 February 2017 – RTVE

Last Wednesday, the Minister for the Economy, Luis de Guindos, announced that the Government will extend the moratorium that prevents families in vulnerable situations from being evicted from their primary residences. The moratorium was due to expire on 15 May this year and its extension had also been requested by the Socialist Party.

“Yes, we will do so again now (extend the moratorium), like we did in 2015. We are open to negotiations”, said De Guindos, after confirming that 24,000 families have now benefitted from this measures, which favours certain groups.

The Minister was responding to questions from the Socialist congresswoman María del Mar Rominguera (…), who asked him about the Government’s intention to extend the deadline for the suspension of evictions of the most vulnerable families from their homes.

De Guindos said that the Government has protected the people who have suffered the most during the economic crisis and pointed out that some of the measures undertaken in this regard, such as the Code of Good Practice and the Social Housing Fund, approved by the Government, have benefitted more than 76,000 vulnerable families.

Evictions from primary residences have decreased by almost 30%

De Guindos said that the Government is willing to continue with these actions because they are having a “positive” effect, although he pointed out that the most recent statistics indicate that evictions from primary residences have decreased by around 30% “and that is a result of the economic recovery”.

De Guindos insisted that the creation of employment is what will confirm the economic recovery, given that “it is not only a matter of establishing palliative measures, although they are also important”.

“If employment improves in Spain, if there are increasingly more possibilities, if we increasingly see that house prices are not collapsing, we will see how situations involving evicted families will become increasingly marginal”, he said.

The PSOE supports the extension

Meanwhile, the Socialist congresswoman said she appreciated the fact that the Government has extended the moratorium for anti-evictions, which was due to expire in May (…).

The PSOE had requested an extension of the moratorium, four years after it first came into force. Nevertheless, De Guindos did not specify how long the moratorium would be extended for. (…).

Original story: RTVE 

Translation: Carmel Drake

Landlords Demand Revival Of Express Evictions For Rental Homes

6 December 2016 – Cinco Días

The u-turn made by Mariano Rajoy’s first Government regarding housing policy was accompanied by several draft legislative changes. In this way, in 2012 the Ministry of Development decided to stop financing the construction of subsidised homes (VPO) for ownership, to focus instead on boosting the rental sector (Spain is one of the countries with the lowest percentage of households living in rental properties in Europe) and the renovation of homes.

To this end, in 2013, it undertook a comprehensive reform of the Urban Leasing Law (LAU), which provided for the speeding up of the periods for processing evictions, amongst other things, with the aim of making it possible for owners to recover their homes sooner once judges order tenants to leave properties due to non-payment.

Nevertheless, in the opinion of some operators in the sector, the results, more than three years later, are quite disappointing given that the processes that culminate in the eviction of delinquent tenants are still taking between eight and nine months on average. That is now the main concern for many landlords.

“In a market in which demand clearly exceeds supply, the most urgent thing is to provide more legal security for the owners of homes that are susceptible to being rented out and to implement new incentives that favour both landlords and tenants who fulfil all their obligations”, said David Caraballa, Commercial Director at the brokerage company Alquiler Seguro.

In this sense, that company is demanding three specific measures: the approval of new incentives for leasing in the form of IPRF exemptions; the regulation of tourist rentals; and the creation of specific courts to handle cases involving non-payments and evictions.

In the case of tax incentives, Alquiler Seguro explains that during the last legislature, not only were incentives increased to encourage more owners to lease their properties, but also the fiscal pressures that they have to bear have increased, given that some of the benefits that they used to enjoy (such as from leasing homes to people younger than 35 years old) have disappeared. In this regard, they consider that it is very important that these exemptions be recovered and that progress be made in this vein so that leasing a home is attractive from a tax point of view, like acquiring a property used to be.

The second aspect that requires urgent reform, in Alquiler Seguro’s opinion, is the tourist rental sector. “There is a legal vacuum and a disparity in the rules between those autonomous regions that have decided to introduce regulations, which means that we have clients who admit that it is more profitable for them to rent their properties to tourists than as regular homes”, explained Caraballo. In this sense, the firm is in favour of emulating actions such as the one carried out in New York, where the minimum period for renting a tourist flat has now been set at one month.

In terms of the third aspect, Sergio Lusilla, Managing Partner at Pluslegal Abogados, says that although the timeframes for resolving evictions have been reduced (before the reform of the LAU such cases could take more than two years), the current average of 8-9 months could be reduced to just three with an increase in human resources dedicated to the activity.

“I think that a term of three months would be reasonable for both parties. On the one hand, the owner would recover his home without having to wait as long to put it up for rent again, and, on the other hand, it would give social services sufficient time to analyse the case of the tenant who is unable to pay the rent and take a decision in that regard”, said Lusilla.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake

Sareb & CaixaBank: The RE Recovery Is Proving “Selective”

6 October 2016 – El Mundo

Some of the main players in the real estate and finance sector, such as Sareb and CaixaBank, have commented that the recovery that will take place in the housing sector over the next few years will be “selective”. They call for “caution” because the “wounds” of the last decade “are still healing”.

That was one of the conclusions to emerge from the panel debate about financing in the real estate sector at the National Conference of the Association of Property Developers and Constructors in Spain (APCE), which is currently being attended by 400 professionals in Madrid (5 and 6 October).

The Chairman of Sareb, Jaime Echegoyen, has confirmed that although the recovery in the real estate sector is still “selective”, we are seeing “favourable signs that indicate that it is here to stay”. Echegoyen described the current situation in the real estate market as a “sweet moment” thanks to the “favourable factors” at play, such as low interest rates, the professionalization of the sector and growing demand, which is why he highlighted that “it seems like the real estate recovery will last”.

We are doing everything right between us, we have learned the lessons of the past and we are benefitting well from economic growth”, said the Chairman of the bad bank, who added that it is “a reflection of the past and of what we hope for the future”.

Nevertheless, Echegoyen encouraged the sector to work to avoid repeating the erroneous actions of the past, without falling into the trap of financing innovations and, he asked that players “exert caution and a watchful eye”, given that “low interest rates have helped a lot, but they may not last for long”.

In the same vein, the Director General of CaixaBank, Juan Antonio Alcaraz, said that “the wounds are still healing” and he pointed out that entities are still recording a “steady decline” in their mortgage loans to individuals, as they are not “able” to replenish them. Moreover, he criticised the new regulatory standards, such as the code of good practice for the sector, which “have profoundly changed the rules of the game in terms of the relationship between banks and borrowers”, and contributed to the decrease of the loan book.

Nevertheless, Alcaraz clarified that mortgages to individuals are rising at a rate of 50%, but from historical lows, and he explained that we are currently seeing a change in the way that mortgages are granted, with more importance being given to people’s borrowing capacity and to interest rates.

In terms of financing, he warned that the new online platforms that facilitate financing may mean that a time comes when “we tear our hair out”, just like in the past, when it comes to the “problem of regulating” these sources of financing.

In this sense, Alcaraz referred to the impact of changes such as the introduction of floor clauses and the suspension of evictions, which means that legal uncertainty sits at the top of the list of factors that may harm the sector, followed by regulatory and digital issues. (…).

Original story: El Mundo

Translation: Carmel Drake

Carmena To Construct 4,000 Social Homes By End Of Term

19 April 2016 – 20 Minutos

After the Europa Press Breakfast on Monday, the mayoress of Madrid, Manuela Carmena, announced that the Town Hall has set itself the objective of ending its term with 4,000 social homes, as part of its efforts to alleviate “the humanitarian disaster resulting from mortgages foreclosures”. She argues that in a society with the level of wealth and development such as ours, it should be possible to achieve the objective of “ensuring a home for everyone that needs one”.

Carmena revealed the preliminary details of her social housing construction plan, which will be formally announced “in September or earlier” because she considers that it is “quite embarrassing” to talk to the mayors of Paris and New York and tell them how “little social housing the Town Hall of Madrid has to offer”. Especially given that the Municipal Home and Land Company (EMVS) has 6,000 applicants at the moment.

One of the options proposed by Carmena involves “increasing the buildability” of renovation projects. To that she adds the possibility of the banks allowing some of their foreclosed homes to be rented out, as well as the option of building on land that the Town Hall has available. The Town Hall is also exploring ways of providing more security to owners who grant their properties for social use.

The option of offering a “zero rent” arrangement is also being considered for cases of “absolute emergency” and Carmena announced the new configuration of the Mortgage Mediation Office, which will provide support and advice to affected citizens from 1 September. (…).

Original story: 20 Minutos

Translation: Carmel Drake

Colau Warns Of RE Bubble Danger In Barcelona

3 March 2016 – Público

The mayoress of Barcelona, Ada Colau, has warned about the imminent “danger of a real estate bubble” in the city, driven by an increase in the price of rental housing since 2014-2015.

The town hall has submitted a report about the increase in rental prices in Barcleona, whose results show an increase of more than 6% in rental housing across the city as a whole, especially where tourism is most concentrated. The neighbourhoods most affected by the rises are Les Corts (8.7%), Sant Martí (8.6%), Sarrià-Sant Gervasi (6.9%) and Eixample (6.7%). “Rental prices in Barcelona have risen by more than in any other city in Spain”, she said.

In light of this increase, the mayoress has asked both the Generalitat de Catalunya and the Spanish State to act to limit future rental price rises, especially in areas where tourism demand is the highest, and to modify housing regulations to “avoid a new speculative cycle”. “We want to raise the alarm because the housing laws have not been modified and that is facilitating new speculation about the housing market, which means that rental prices are increasing in areas where income levels have not improved”, she said at a press conference.

Colau made reference to Germany as an example of good practice in the protection of the right to housing, given that there, the “State allows limits to be placed on rental prices”, depending on the income levels in the areas where prices are on the rise. “We urge the relevant authorities, at both the Catalan and Spanish level, to follow the European example regarding limitations on rental prices in places where there is significant residential demand”, she said.

The mayoress also acknowledged that progress has been made in the battle against evictions and the increase in rental housing in Catalunya, thanks to the approval of law 24 2015, by popular initiative. But, according to Colau, this regulation still needs to be applied to “put an end to mortgage foreclosures and to put a stop to the speculation”. Even so, she considers that “collaboration with the State is necessary” and she took the opportunity to denounce the limited profile the housing crisis is having in the investiture debate.

The mayoress and the councillor for housing, Josep Maria Montaner, announced that the Town Hall has increased the number of homes in the city’s public housing stock by 255, thanks to acquisitions from financial institutions. It is the second batch of homes that the banks have transferred or sold to the town hall, below market value, to increase the city’s pool of rental housing and to resolve the social emergency. Specifically, 50 flats have been transferred in 8 years, 131 homes have been purchased below the market price and the right of first refusal has been granted on another 28 homes.

With these, the municipal government has now obtained 455 homes from the banks for inclusion in the public housing stock, during the course of its mandate (in addition to the 200 granted by Sareb and the 50 from CaixaBank). (…).

Original story: Público (by Laura Safont)

Translation: Carmel Drake

Moody’s: Cataluña’s Anti-Eviction Law Will Deter Investment

2 February 2016 – Expansión

The ratings agency Moody’s considers that the Law for urgent measures against evictions and energy poverty carries a serious risk of affecting real estate investment and the mortgage market in both the autonomous region, as well as across Spain. In its report, to which Expansión has had access, the entity says that the legislation, approved by the Catalan Parliament in July 2015, “has a negative impact” on the mortgage funds in the Spanish residential market.

According to the ratings agency, the Catalan law, processed through a Popular Legislative Initiative (ILP), promoted by the Platform for those Affected by Mortgages (PAH), contains an additional provision that may seriously harm transactions involving mortgage portfolios. Specifically, the law establishes that if, for example, a bank sells a mortgage to a third party, then the debtor may be freed from the loan originally contracted and will only have to repay the third party the amount that said third party has paid to acquire the debt.

Many investment funds have entered the Spanish market (in recent years) to buy mortgage portfolios from the banks at significant discounts. They typically buy risky mortgages, overdue mortgages, and those that are at risk of default, but the investors entering into these operations focus on the yield that they may be able to obtain for the difference between the loan value originally contracted and the price that they have effectively paid to acquire the debt. But that difference may now disappear. “The new law is likely to discourage potential buyers from acquiring delinquent mortgage loans”, say Moody’s in their report. The reason is that “the law potentially deprives the buyer from receiving any kind of profit from these types of transactions”.

The ratings agency says that if an operation is completed at a price below the contracted price, then this “situation may result in part of the mortgage effectively being subject to a discount”.

Moreover, the agency says that a similar measure already exists in the Spanish Civil Code, although there are “significant differences”. According to the state law, the debtor may only exercise this right if he/she pursues it through a judicial dispute and he/she may only exercise this right during the first nine days immediately following the operation. In the Catalan case, although it applies only to primary residences, no legal action is required and no term is established for settling the debt.

The Housing Minister for the Generalitat in Cataluña, Carles Sala, said to this newspaper that he understands the position of the ratings agency, but he highlights that the solution chosen by the Catalan Parliament is based on the fact “that a problem exists that must be addressed”.

When the law was approved, the Government announced that it expected to submit the bill to the Constitutional Court, although that has not happened yet and the law “is now being deployed”, say sources at the Generalitat. The law was passed unanimously, including by the PP.

Nevertheless, its backers consider that the regional Government, led by Carles Puigdemont, is not making enough effort to implement it. The group, which presented the ILP on the housing crisis, has recently demanded another meeting with the new regional president to force the application of the legislative initiative.

In a letter sent to Puigdemont, the backers of the bill, namely, the Platform for those Affected by Mortgages (PAH), the Alliance against Energy Poverty and the DESC Observatory, claim that the right to housing is still being violated and energy poverty is still growing.

After the “historical milestone”, namely, the unanimous approval of the housing ILP in July, the backers say that Puigdemont now seems “vague” and “confused” about the “importance of the legislation”; they demand that he progresses with its implementation.

Original story: Expansión (by Bernat García)

Translation: Carmel Drake