Sánchez Reveals that the Housing Law will Extend Rentals to 5 Years

12 September 2018 – El Diario

The President of the Government, Pedro Sánchez (pictured below), has demanded agreement from the political groups this afternoon regarding the next Housing Law, which will include, amongst other measures, an increase in the terms of rental contracts, and their subsequent extensions, to 5 years from their current duration of 3 years.

Sánchez posted the request on his Facebook account, with a link to Twitter, where he indicated that he was “appealing to all political forces to reach a pact that will convert housing into a right for citizens, far removed from speculation”.

The President of the Government highlighted that he wants to “shield” the “social function” of housing and he revealed several aspects in this regard.

Besides the increase in the duration of rental contracts and their subsequent extensions to five years, Sánchez highlighted “a shock plan for 20,000 rental homes to increase supply and whereby reduce the pressure on prices”.

Similarly, he promised an “improvement in the fiscal framework to stimulate supply and moderate prices”, a “review of the aid programs for young people”, and the “regulation of tourist apartments”.

Sánchez also mentioned an “improvement in the financing of housing developments through the ICO”, the Official Credit Institute, as well as a “reorientation of the State Housing Plan to promote and protect a public housing stock that is sufficient and affordable, and which allows us to attend, in particular, to the needs of the most vulnerable people in society”.

As the Head of the Government concluded, “Achieving social progress that will change the lives of thousands of people is in our hands”.

The Minister for Development, José Luis Ábalos, reported last week that an inter-ministerial group was working on specific proposals for housing, and he said that in terms of addressing the rise in rental prices, they are studying legal reforms regarding rental contract terms and extensions, amongst other measures (…).

Original story: El Diario 

Translation: Carmel Drake

Spain’s New Gov’t to Promote Construction of 20,000 Affordable Homes for Rent

12 July 2018 – El País

The Ministry of Development is preparing an ambitious range of measures to increase the supply of rental homes, put a stop to escalating prices and facilitate access to housing for young people and low-income families. Its proposals include a plan to build 20,000 rental homes, which will be allocated at controlled prices in cities where prices have soared, according to sources speaking to El País. Moreover, the Ministry wants to extend the duration of rental contracts from three to five years, limit damage deposits and stimulate the supply of rental housing with tax incentives and the moderation of rents.

More funding, regulatory changes and a tax reform are the three components of a broad plan through which the Ministry of Development says it wants to give a social twist to the housing policies and whose main lines will be announced in Congress today by their owner, José Luis Ábalos. The objective is to avoid a new housing price bubble from destabilising the economy once again, according to government sources, and, in particular,  to help families with limited resources and young people.

The package includes urgent measures aimed at alleviating the increase in rental prices, which have soared by up to 50% in large cities over the last four years due to the emergence of tourist apartments and the reactivation of the real estate market. The Government is going to launch an inter-ministerial working group tasked with developing a set of urgent policies for housing and rent.

Amongst the initiatives that the Ministry of Development is going to implement is a plan to build 20,000 affordable rental homes over the next four to six years. The State will promote the construction of these 20,000, mostly public, homes (although this has not been finalised and all of the possible formulae are going to be considered because the most important thing is for the homes to be built quickly). The homes will be destined for rent or transfer of use, for an indefinite period, with a limited rent or price, in cities with accredited demand and where rental prices are higher.

Palma de Mallorca, Las Palmas, Barcelona, Valencia, Madrid, Málaga, San Sebastián and Sevilla are the cities that have experienced the largest increases in rental prices over the last four years, which have risen by up to 50% on the islands, according to data from Idealista.

Last year in Spain, work was completed on 48,853 private homes and 4,938 social housing properties, according to data from the Ministry of Development. At the height of the real estate bubble, in 2007, almost 650,000 homes were being constructed per year.

The plan will be carried out in collaboration with autonomous communities and town halls, which will be asked to identify and facilitate the most appropriate plots of land on which these housing developments can be built. The State will involve SEPES, the public land entity, in this program and will contribute its own momentum and financial support. The ICO will also play a role in the design of the policies (…).

Original story: El País (by Elsa García de Blas)

Translation: Carmel Drake

Judge Asks Reyal Urbis To Rectify Errors In Its Creditors’ Agreement

9 March 2015 – Expansión

The judge at the Commercial Court number 6 in Madrid has ruled that the real estate company Reyal Urbis must present additional documentation and perform “certain rectifications” to the draft agreement that the company presented to exit from its bankruptcy proceedings.

The real estate company, which filed for bankruptcy in February 2011, submitted a payment plan to the court, containing a proposal for the settlement of the €3,978 million debt that it owes.

Reyal Urbis has offered its creditors, which include banks such as Santander, Popular and RBS, as well as Sareb and ICO, a discount of more than 80% on its liabilities and to pay the remaining debt with assets.

The real estate company holds assets amounting to €1,474 million, after it sold several buildings such as the ABC Serrano shopping centre in Madrid. It has just agreed with the tax authorities that it will pay its debt in full, which amounts to around €400 million, but over a long period of time.

The request made by the Commercial Court suspends the period for achieving agreement, which would otherwise have become effective before 13 March.

Martinsa Fadesa

Meanwhile, the Commercial Court in La Coruña has announced the opening of the liquidation phase of Martinsa Fadesa, which owns €6,600 million, after the real estate company failed to obtain support from its creditor banks for a new banking agreement.

Original story: Expansión (by R. Ruiz)

Translation: Carmel Drake

Reyal Urbis Offers Its Banks 20% Of The Debt It Owes Them

13 February 2015 – Expansión

The listed real estate company Reyal Urbis will submit its payment proposal today to allow it to overcome the bankruptcy process in which it has been immersed for two years now.

The real estate company controlled by Rafael Santamaría will offer its creditors, which include entities such as Santander, Banco Popular and RBS, as well as Sareb and ICO, a haircut of 80% of the debt and the payment of the remainder through the transfer of assets.

The real estate company filed for bankruptcy in February 2013, after a string of up to four refinancing processes. According to the bankruptcy report, the company has a debt of €3,978 million, an equity deficit of €2,878 million and assets amounting to just €1,474 million. After selling off various iconic assets, such as the ABC Serrano and Castellana 200 shopping centres, both in Madrid, and the Diagonal Port Hotel in Barcelona, Reyal and its creditors have been working together to distribute the rest of its assets, in the form of lots, which will be awarded through a draw.

The tax authorities

The proposal for an 80% haircut will not apply to all of the creditors, since the real estate company will propose a different offer to the Tax Authorities.

Reyal Urbis will offer to pay the Public Administration the full amount it owes in cash (€400 million) over the long term, say sources close to the process.

Creditors have until 13 March to accept or reject Reyal Urbis’ proposal. If it does not obtain the agreement of the entities, the real estate company will end up with a small lot of assets and a manageable debt.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake

NPL Ratio Falls For Third Consecutive Month To Reach 12.77%

19 January 2015 – Expansión

The NPL ratio of Spanish banks decreased by 17 basis points in November, to reach 12.77%, its lowest level since September 2013.

The default rate declines in November, for the third consecutive month. The NPL ratio of banks, cajas, credit cooperatives and other financial entities dropped by 17 basis points to reach its lowest level since September 2013. The default rate of the sector as a whole, including companies such as the ICO (Official Credit Institute), amounted to 12.75%.

Doubtful assets decreased during the month by €2,115 million to reach €175,192 million, representing a reduction of 8.2% with respect to November 2013.

There was also good news on the credit side, which recorded a month-on-month rise of €6,014 million, although it was still down by 5.6% year-on-year. We have not seen a lower rate of decline since August 2012, which indicates that the “closed credit tap” is gradually starting to open.

The default rate in the banking sector peaked in December 2013, when it reached 13.689%. Last October, it fell below 13% for the first time since then. Experts and banks predict that the downward trend will intensify this year, although they point out that, whilst credit balances continue to fall, the reduction in doubtful assets will be transferred more slowly to the NPL ratio.

Original story: Expansión (by M. Romani)

Translation: Carmel Drake