Tag: housing&law

MOF Checks On 3 Million Homes With View to Property Tax Hikes

4/11/2014 – El Mundo

The Spanish Cadastre workers have sent out letters to detached home and flat owners from over 1.000 municipalities. The notices inform about a lawsuit upon lack of reporting about property enlargement fined with €60. By 2016, more than three million homes will receive the notice letter.

The regulation came into force on the extraordinary basis in 2013 but will be extended until 2016 in order to draw a reliable picture of properties in Spain. The prolongation will also mean increased collection for city halls as the law allows to put a fine if the size of the property is greater than written on the Property Tax bill.

Therefore, the real tax, the only contribution which has risen exponentially during the recession, would steer upwards. Local authorities are the only public administration units that register a surplus boosted by this tax.

Moreover, the municipalities may demand payment of the proportioned part underlying the new cadastral value from the last four years, let alone the interest on the late payment.

This amendment also modifies the Personal Tax imputation for non-main homes as the taxpayers currently pay between 1% and 2.1% and that is to go up. Also, in case of sale, the tax on capital gains linked to the cadastral value would be hiked.

Specifically, thanks to the bird’s eye imagery, the arm of the Ministry of Finance may now prove any unreported change in properties, involving the most common renovations, known to the city halls as they themselves issued building permits for them, or unknown as the home owners aimed at dodging the tax. As an example may serve a house built on a non-urban piece of land.

In large majority of cases, the authority discovers swimming pools, storage rooms, booths, covered balconies and terraces, extension of the house by taking more square meters from the garden, or garages constructed on the parcel. Terraces on the rooftops converted into dwellings complete the list. The Law of Real Estate Cadastre states that any change must be reported within two months’ term after completion. Then, the city hall would increase the cadastral value of the property, as well as the taxation.

This is the perfect scenario. However, often alternations have not been reported or the Cadastre made a mistake taking amendments included in the original plan as enlargement. What makes things worse, contruction sketches from the 80s were frequently done through agents and firms that took the measurments at a guess.

The massive checking which will roll out throught the entire country (excluding the Basque Country and Navarre) started in 2013 by scrutinizing 176 municipalities. In 2014, the investigation embraced one thousand towns more and affected 1.5 million homeowners. In 2o15, another 1.5 million notice letters are expected to be sent.

Firstly, the regulation executors aimed at towns having large urbanizations and multiple detached and semi-detached homes (the best visible and easy to detect), for example Oropesa (Castellon), Fuengirola and Benalmadena (Malaga), or Benidorm, Calpe or Denia (Alicante).

However, it has not been done yet in large cities which gather the population and the ask for the notices. Only house areas in Alicante, Salamanca or Murcia are being checked. Possibly, the helicopters will fly over Madrid or Barcelona next year or even in 2016.

Although the income of the public administration the tax will bring in is unknown, it must be significant as the management and processing costs of the checking amount to more than €124 million.

In opinion of real estate experts, in spite of the Cadastre’s mandate to impose the law, the process ‘exclusively aims at tax collection’. They point out the investigation could have been done in a way that the owners of the areas would not be retrospectively punished and the city halls would be obliged to lower their rates on the real property tax to lighten the burden of the taxpayers.

 

Original article: El Mundo (by Francisco Núñez)

Translation: AURA REE

Husa Group Shown at Least €153.3 Mn in the Red

30/10/2014 – Cinco Dias

Six companies of the Husa group that are currently undergoing the brankruptcy process jointly show a €153.3 million financial deficit, states a report by the insolvency authorities of Barcelona.

The remainder proceeds from €68.5 million in assets and €221.8 million in accrued liabilities of the firms. Another €50 million shall be taken into consideration, deriving from pending lawsuits and claims. If all added up, the total debt of the group could amount to €202.6 million.

The group chaired by Joan Gaspart (pictured) shows a €221.8 million in the red, 40.2% owed to the Treasury and the Social Security, 26.4% to principal lenders: CaixaBank and Banco Sabadell, and the remaining 31.3% to general creditors.

Both the judge and other official receivers believe the debt may increase as more companies from the group are very likely to voluntarily present bankruptcy petitions.

Hosteleria Unida fell into insolvency in February this year and as a result several hotels were sold. Among them, the iconic Palace de Barcelona. Moreover, 300 employees lost their jobs.

The firm accrues the biggest deficit, €115.7 million, as it owns a €34.7 million worth of assets – initially declared to be worth €145 million – and €150.4 million in liabilities.

The other companies from the group that face tough financial situation are: CCIB Catering with €2.2 million in the red, Cadena Menta with €6.3 million, Banquetes Reunidos with €17.6 million, Hosteleria Unida Dos with €2.8 million and Jardines de Albia with €8.7 million. The penultimate one operates on normal basis, holding the Imperial Tarraco hotel.

The court foresees closing the Bankruptcy Order stage before the Christmas break and opening the creditors’ meeting just after that.

 

Original article: Cinco Días

Translation: AURA REE

Spanish Banks Get Good Marks at ECB’s Stress Test

28/10/2014 – Expansion

Spanish banks pass the ‘stress test’ by the European Central Bank (ECB) and the European Banking Authority (EBA), taken by the eurozone entities across the continent. The examination was failed by 25 out of 123 scrutinized banks, mostly located in Italy, Greece and Cyprus. When it comes to Spain, all fifteen entites were successful, with Liberbank showing a €32 million deficit in 2013 for which it has already intended €637 million. None of them showed need of capital.

The Bank of Spain’s Governor Luis María Linde assured the good marks were no coincidence as the State undertook meaningful measures to remove the toxic assets, cover the refinancing and obtaining the €50 billion European bail-out. Out of the supervised entities, BFA-Bankia, NCG (now Abanca), Catalunya Banc, BMN and Liberbank have received a direct support from the Government.

‘If marks were given, Spain would get the best one in the part of balance revision’, said Mr Linde. In fact, this country has shown the smallest adjustment in risky assets in Europe (0.2%).

All the entities preserve a wide margin in case of an adverse economic scenario, ranging from 5.5% to 8% and representing around €56 billion in total.

‘The banks have got a solid solvency position but no guarantee for the next 15-20 years’, warned the Governor. Fernando Restoy, vice-governor, added that the sector faces ‘not at all negligible challenges’ such as infavorable regulations and ‘flimsy’ economic circumstances which harm profitability.

Lending

In line with the cautiousness displayed above, the Bank of Spain would rather say the confidence and lending will return but not abruptly. The central entity also revealed that once the Asset Quality Review (AQR) is finished, the bank will welcome any activity leading to risk reduction.

Original article: Expansión (by M. Martínez & J. Zuloaga)

Translation: AURA REE

Permission Granted For Exclusive Apartments in Edificio España

24/10/2014 – El Confidencial

At the plenary session scheduled for the end of November, Madrid City Council is going to approve an amendment in the General Planning Scheme (PGOUM by its acronym in Spanish) for Madrid which will give the green light to Chinese tycoon Wang Jianlin to carry out refurbishment of the Edificio España building and design high-end dwellings on several floors of the property.

According to spokeswoman of the Urban Planning and Housing department, Paz Gonzalez, the modification will permit construction of a hotel, luxury apartments and a shopping area.

The change, approved at the end of July, downgraded the unit in listing from II* (in Spain 2nd structural) to II (3rd partial) with the proviso that it will preserve its original facade and parts of sides.

It also obliged the buyer to renovate the chamfer situated between the Los Reyes and Maestro Guerrero streets, as well as several elements inside on the ground level.

The First Skyscraper in Spain

The Edificio España building, towering over a square of the same name, was sold by Banco Santander for €265 million to vehicle Renville Invest, belonging to Chinese magnate Wang Jianlin, the owner of Dalian Wanda.

The richest man of China is not solely interested in this project as in parallel he is considering creation if a huge retail and entertainment park somewhere in the Community of Madrid.

Although right now the iconic property stands unused, it was the first skyscraper raised in Spain and at the moment of its opening, in 1953, it was also the tallest in Europe (117 meters high).

 

Original article: El Confidencial (after: Efe)

Translation: AURA REE

Andalusia Fines Sareb With €120.000 For Impairing Social Function of Its Properties

21/10/2014 – Expansion

The Public Works and Housing Department of the Andalusia Territorial Office led by Elena Cortes (IULV-CA, pictured), has penalized Sareb, Spain’s bad bank, with a 120.000 euro fine for ‘impeding administrative measures necessary for ensuring social funcion of the subsidized properties’.

This is the first sanction imposed by the Council in the framework of the Law for Social Function of Housing, commonly known as ‘the anti-eviction law‘, a regulation that obliges financial entities to provide the public administration with an inventory of the subsidized units in their possession.

According to the department led by Elena Cortes, Sareb has got 911 subsidized homes in Andalusia, while the bad bank maintains it owns only 98 units of this sort in that region. The fine arising from not meeting the requirement to register the properties in the municipal books could amount to €11.7 million in the second set of preceedings.

Mrs. Cortes insists that ‘no matter who the owner is, all subsidized properties must be placed at the disposal of families in need who look for them in local registries’. She pointed out ‘the extreme severity’ of the deed of Sareb that said the basis of the accusation on the part of the Andalusian authorities were ‘totally false’ as that was just an estimated number. Then, she asked, ‘how a law can be based on estimated figures’?

Moreover, in her view, ‘the Government of Spain has partially suspended the law in order to protect Sareb in line with the number of properties in its ownership. In other words, the Constitutional court was deceived to enforce the precautionary suspension of the regulation’.

Finally, the Public Works Department reminds that the Law on Social Housing has not been entirely questioned but so have been only several precepts, such as penalizations for the entites that hold empty homes for more than 6 months or the temporary expropriations of the dwelling use to avoid evictions of families at the risk of social exclusion.

Original article: Expansión 

Translation: AURA REE

Sareb Succumbs to REO Property Re-Appraisal & Three-Year Provisions

17/10/2014 – El Economista

The bad bank of Spain, known as Sareb by the abbreviation of its name in Spanish, gets ready to repeat appraisals of its entire repossessed asset portfolio consisting of more than 400.000 (mostly collateral) properties. The firm has got a bit more than a two-year deadline to provide the results to the Bank of Spain.

Sareb shall not only value the units received from the nine bailed-out banks and savings banks one by one, but also provision them in case when their current value is lower than at the moment of transfer.

The toxic assets of Bankia, Catalunya Caixa, Novagalicia, Banco de Valencia y Gallego, Ceiss, BMN, Liberbank and Caja3 were transferred to Sareb in bulk in order to set the operating ball of the bad bank rolling as fast as possible.

The central entity of Spain obliged the bad bank to re-appraise its entire portfolio as follows: 30% of the total it in 2014, reaching 60% at the end of 2015, and the rest of the real estate volume by the end of 2016.

Resigned Sareb decided leastwise to gain some time. However, it also braces for the worst and considers making some provisions like it did in 2013.

That decision cost the bad bank €259 million and dragged its final result to €261 million in the red, while it hoped for some gains. Sareb’s Ebitda for the first half of 2014 showed €429 million, by 23% more than last year and merely a half of what it earned in the second half of 2013 (€847 million).

Sources from Sareb warn about comparisons made between the periods as the beginning of last year was much poorer than the other half of it in terms of sales.

Apart from the legal obligation, the bad bank will have to name the winners of the bidding for its asset management called the ‘Project Ibero‘. Servicers like Altamira (owned by Apollo and Banco Santander), Aktua (Centerbridge), Servihabitat (CaixaBank and TPG), Solvia (Sabadell), Abanca and Haya Real Estate (Cerberus and Blackstone) wish for being given one of the 5- to 7- year, lucrative contracts.

Sareb asks for a deposit from the funds which will be paid off or given out depending on the asset sales. The €1 billion amount will neither be accounted as the revenues nor be included in the results, not even employed to patch the provision – damaged capital. In 2013, the bad bank paid almost €200 million to the REO property’s banking managers in shape of commissions.

Sales to Private Investors

Recently observed housing sales reactivation enhances the activity of Sareb. The firm sold 10.800 dwellings to individual buyers year-to-date, and conveyed more than 10.000 units, meeting the 2014 target 93%.

The principal source of income for the bad bank is loan administration as this type of asset represents 80% of its entire REO scope. In the first half of 2014, the firm earned almost €1.7 billion, with this service accounting for 74% of the total.

 

Original article: El Economista (by E. Contreras)

Translation: AURA REE

Catalonian Independence & Its Possible Impact on the RE Sector of Spain

16/10/2014 – El Economista

The threat of Catalonia going independent stirred the real estate market of Spain up. Sources from the banking and property management areas admit that the uncertainty invoked by the independence movement could result in a halt of the sector’s activity, as well as in price depression.

Experts indicate that the real impact would be seen in the first years of the hipothetical independence with recovery to be observed in mid-term.

If that followed by stagnation in the real estate market, the specialists advise further price slash of REO properties as an indispensable move for the Spanish entities to meet their annual targets.

Mortgages

Mortgages are the next issue which should be carefully approached in case of the region’s separation from the Kingdom of Spain. The odds for Catalonia of coming to an agreement with the European Union seem very low and for this reason the loans granted in Euro (€) might be affected.

The contracts shall be revised in terms of conditions permitting currency change. However, even if such exists therein, the mortgages still could be loss-generating due to possible currency rate fluctuations.

Furthermore, as Catalonia would not belong to the eurozone, the Euribor could no more serve as the benchmark of varaible interest loans. Nevertheless, bankers suppose that the contracts signed before the political border change and especially those sealed with the entities based outside of the region in question, will retain the indicator.

Artur Mas, the brain of the ‘operation independence’ and the president of the local government, foresees creation of a central bank to control monetary policy in the new country in imitation of the Bank of Spain.

Looking at what happened in Scotland, with a sudden August price fall after three years of increase on the forefront, the insecurity provoked by the referendum on independence pulled the housing values down 0.2% more.

 

Original article: El Economista

Translation: AURA REE

Spain’s Government Extends Concessions for Coastal Homes by 75 Years

13/10/2014 – Expansion

The Coastal Act approved on Friday brings about many important amendments for the housing development field. The most significant one extends concessions for over 35.000 property developer companies found within the public domain zone.

The 1988 Law issued concessions for 30 years, a term which now will be prolonged by 75 years more (in case of dwellings) in exchange for an annual fee. There are some 40.000 buildings within the maritime-terrestrial public domain, out of which 24.000 are houses.

Besides, there are 100 hotels – plus 900 in the protective constraints area – whose concessions have been renewed for 50 years more. The thousand of establishments may now prolong their business activity, carry our refurbishments and gain in service quality, provided that they do not enlarge their size and improve their environmental efficiency, above all in terms of possible pollution generation.

The same renewal term will be granted to 1.700 industrial units. Moreover, some 3.000 beach bars (chiringuitos in Spanish) which give around 50.000 direct jobs can now obtain additional 30 years of concession validity. Not for free, though, as they must meet the followig requirements: on the natural beaches, they neither can have an area greater than 20 square meters nor more than 50 square meters of the terrace space and they must be separated from each other by a minimum 300 meter distance so that the occupancy does not exceed 10%.

Nº Beneficiaries: 500.000

If it comes to the urban beaches, the requirements are much milder. Moreover, permitted are general interest events involving positive impact on tourism.

At the moment, merely 4.600 out of the total of 40.000 buildings found within the public domain areas have got concessions (600 are dwellings). The regulation update will allow 35.000 companies and 500.000 people to benefit from the amendment as the Government aims at full legalization of 90% of the units, no matter what their situation is.

The Coastal Act helps to dodge demolition of coastal properties as the 30-year term consessions expire in 2018. Until now sentenced to becoming a heap of debris, 13.000 dwellings will not only remain standing but also can be sold, inherited, mortgaged, etc.

Tax & Collection

However, the properties will not be treated as regular residential units for the reason that they occupy the public land. Their owners will be obliged to pay a 6% tax on their cadastre value. Given an average of €60.000 per house, the contribution may empty the taxpayers’ pockets by €3.600 annually or €300 monthly.

The Ministry led by Isabel Garcia Tejerina believes that the amendment will facilitate creation of around 150.000 direct jobs and will generate over €2 billion cash flows on the coasts.

 

Original article: Expansión (by Juanma Lamet)

Translation: AURA REE

Bankia Sells Hotel-Backed Loans to Starwood & Sankaty For €400 Mn

7/10/2014 – El Confidencial

Starwood Capital and Sankaty outbid Cerberus at the bidding for Bankia’s hotel and logistics asset portfolio called Amazona. The investment funds paid about €400 million for the non-performing, real estate backed loans of a par value of €800 million.

Collaterals are mostly represented by hotels (27 establishments) but also by logistics and residential units said located in Catalonia, Madrid, Valencia and the Canaries. Looking closely to the assets, one comes across such noteworthy establishments as the 5-star, 250-room Gran Atlantis Bahia Real in Fuerteventura (pictured) or Hotel Mercure Santo Domingo, standing at the Gran Via street in Madrid.

The sale process was kick-started at the beginning of summer and in the meantime the third bidder, Fortress, withdrew its offer.

Thanks to the investment, Starwood Capital finally debuted on the Spanish real estate market as the firm has been scanning emerging opportunities for months. For instance, it took part in the Octopus project tender (by Eurohypo) but it was unsuccessful. The property fund has got considerable experience in the hotel sector acquired through its arm established in 2000, Starwood Hotels & Resorts.

The other buyer, Sankaty Advisors – the branch of Boston-based Bain Capital – has got six offices in the most important cities in the world and manages a €24 billion worth of real estate assets. In its March 2014 report, the company said that Spain had become the principal desire of international investors.

Cerberus has missed the chance to strengthen its position in the country. Back in July, the fund purchased the Sotogrande Hotel and was awarded management of REO assets of Bankia encompassed by its servicer Bankia Habitat.

 

Original article: El Confidencial (by Elena Sanz & Carlos Hernanz)

Translation: AURA REE

Building Permits For New Houses Up For First Time Since 2011

2/10/2014 – El Mundo

The number of new residential building permits in Spain allowed construction of 22.624 houses from January throughout July 2014. If compared to the same period of time last year (22.316 housing units), it improved by 1.3%. It is necessary to look back to 2011 to see the last statistical rise.

According to the latest update by the Ministry of Public Works, out of the total of the permits handed over during these seven months, 15.383 corresponded to apartments in blocks (up 1.2% year-on-year) and 7.229 to single-family homes. Moreover, there were 12 building permit applications concerning non-residential building construction.

The rise in the permits number has broken the downward tendency haunting the housing market of Spain over the last years. This fact makes the building permits another indicator confirming the market recovery.

In 2013, the index showed a record low (33.869 units) and linked seven years of an uniterrupted slump. Since the 2006 peak, when 865.561 permits were issued, the decline hit 96% at the end of 2013.

 

Original article: El Mundo

Translation: AURA REE