Gov’t Approves New Mortgage Bill That Favours Borrowers

7 November 2017 – Inmodiario

The Government has approved the Mortgage Bill, which transposes the corresponding European Directive and seeks to increase the transparency of mortgage contracts, according to explanations provided by the Minister for the Economy, Industry and Competitiveness, Luis de Guindos (pictured below, left).

In terms of the transposition, De Guindos said that the legislation has opted for the alternatives that are most favourable for the mortgage holder in every case. In this way, commissions for the early repayment of variable rate loans will be reduced, and even cancelled from the fifth year onwards; a maximum commission (cap) will be set for fixed-rate loans, compared to the current situation where up to two commissions may be applied, one of which has no kind of limit.

Moreover, the legislation establishes the right of consumers to change the currency of a loan taken out in a foreign currency to the domestic currency or any other; plus it prohibits cross-selling – which obliges the consumer to contract a series of financial products as conditions to obtaining a mortgage – and it regulates the legal framework for mortgage brokers.

The Ministry of Economy has said that the bill is not limited to simply transposing the EU Directive, but also responds to legal rulings that have expressed the need for greater transparency in terms of mortgage regulation.

In this sense, the legislation facilitates the conversion of variable rate mortgages to fixed-rate products, for both new mortgages as well as those already underway. The commissions for making such a change will be cancelled from the third year and the notary and registration fees will be reduced.

Other changes mean that the lender must provide the client with detailed documentation about the mortgage, including the most “sensitive” clauses and scenarios showing the evolution of instalments. Moreover, the borrower will be entitled to receive free advice from the notary about the contents of the contract for seven days prior to signing.

The legislation also regulates the early repayment of loans, “in such a way that it avoids any kind of discretion when it comes to agreeing this clause”, according to Luis de Guindos. The requirement for a financial entity to be able to initiate the foreclosure of a mortgage is extended to nine unpaid monthly instalments or an amount that exceeds 2% of the capital granted during the first half of the mortgage term; and 4% or twelve unpaid instalments during the second half.

Original story: Inmodiario

Translation: Carmel Drake

The New Testa Prepares For Its IPO In Q2 2018

18 September 2017 – Cinco Días

On Thursday, the General Shareholders’ Meeting of Testa Residencial approved the non-monetary capital increase for its integration with Acciona’s rental housing business, in an operation worth €341 million.

In this way, a real estate giant of the highest calibre has been born. Testa Residencial, the rental home Socimi in which Santander, BBVA and now Acciona all hold a stake, is considering debuting on the stock market in the second quarter of 2018, between April and May, according to comments from market sources on Thursday (…). The company will thus debut on the stock market after becoming the largest rental home company in the country.

On the basis of the operation that was approved by the General Shareholders’ Meeting on Thursday, the group chaired by José Manuel Entrecanales will enter Testa’s share capital with a stake of 21%, which will turn it into the Socimi’s second-largest shareholder after Santander (36%), in exchange for it transferring 1,000 homes to the company.

The assembly also approved the entry of Acciona onto the Socimi’s Board of Directors, where it will be represented by Isabel Antúnez, the Director General of the Real Estate Development area at the construction and renewable energy group. Testa’s shareholders also gave the green light to the appointment of Javier Alarcó Canoso as an independent director, according to sources at the company.

The operation forms part of the growth strategy that Testa established following its constitution in October 2016, after the merger of Merlin and Metrovacesa. The ultimate goal of this “roadmap” is the debut of the firm on the stock market, as required by its status as a Socimi.

By virtue of the legal framework governing Socimis, the firm has until 30 September 2018 to debut on the stock market, and so the company plans to start working on its IPO at the beginning of next year, with the plan to be ready by the second quarter of the year.

In terms of the growth strategy, the integration of Acciona’s rental business constitutes the second major operation that Testa has completed in its first year of life. The first took place at the beginning of this year when its shareholder banks transferred it a package of 3,300 homes.

Now, once the operation with Acciona has been completed, Testa Residencial will have a stock of 9,041 homes to rent to individuals, spread over 118 buildings and worth around €1,816 million.

The company will generate revenues of around €70 million per year from renting out its portfolio of homes, more than half of which (51%) are located in the Comunidad de Madrid. The operation will thus give rise to a new, unprecedented real estate giant in Spain, as it will constitute the largest rental home company in the country (…).

Original story: Cinco Días

Translation: Carmel Drake

Chinese Investors Await Edificio España Verdict

3 June 2016 – Expansión

The negotiations between the Town Hall of Madrid and the Wanda investment group, the owner of the property, over the future of Edificio España, has had the sector on tenterhooks, and not only the main players involved, but also the Chinese investment community in general, which is waiting for the outcome before deciding whether Spain is an appropriate destination for their capital.

The Chairman of Wanda, Wang Jianlin, said recently in an interview with Chinese state television CCTV that he is waiting for “written” permission from the Town Hall of Madrid to demolish Edificio España, whilst, in parallel, he analyses offers to resell the building. In the interview, Wang Jianlin complained about the change in the conditions surrounding the building’s renovation following the arrival of the new mayoress.

Recently, the Chinese ambassador to Spain, Lyu Fan, acknowledged that some Chinese companies are determining their future plans on the negotiations being held by the Chinese giant in Madrid.

Investments in 2015

Interest from Chinese capital in Spain has grown considerably in recent years. The Director of the Economics Department at Casa Asia, Amadeo Jensana, explained that in 2015, total investment (by Chinese players) amounted to €850 million, compared with an average of around €100 million five years earlier. (…).

The Head of Development and Expansion of the company Christie & Co in Asia, Joanne Jia, said that Spain has always been a very active market, but she acknowledged that what is happening with Wanda will undoubtedly have an effect. According to Jia, investors are waiting to see what will happen with Edificio España before they take their investment decisions. “If it is resolved favourably, it will be promising. If not, it could cause some investors to stop looking for opportunities”…given that a blockage in negotiations would mean less confidence in the legal system, in addition to the cultural barriers. (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake