Tag: PSOE

Centricus Still Leads Race to Acquire Haya Real Estate

10 December 2019 – The potential sale of the real estate asset manager Haya Real Estate is firming up as the new Spanish government coalition has made reassuring statements regarding the sale and the sector. After the elections on November 10, the left-leaning political parties PSOE and Unidos Podemos signed a pre-agreement to form a government. Market watchers feared that the new government would look unkindly at the sale.

Centricus is currently leading the race to acquire Haya, though DoBank, Intrum and Centerbridge are still seen to be in contention. Cerberus, which owns Haya Real Estate, is looking to finalise the deal by the end of the year.

The US firm’s sale of the servicer has suffered a serious of reversals.  Cerberus initially looked to list the firm on the Spanish stock market with a preliminary valuation of €1.3 billion. In March, the listing was cancelled due to doubts regarding Haya’s asset management contract with Sareb, and the price lowered to €1,2 billion.

Bids for Haya’s €42.431-billion portfolio are currently said to range between 600 and 700 million euros.

Original Story: Cinco Diás

Adaptation/Translation: Richard D. K. Turner

 

Podemos Pushes Increased Social Housing in Pact with PSOE

18 November 2019 – Podemos, the left-wing populist political party led by the political scientist Pablo Iglesias, signed a pre-agreement with the PSOE to create a governing coalition. The accord includes topics that the party, which was created in 2014, has espoused throughout its short life. One of the ten points included in the platform is a constitutional right to housing. Iglesias added that his party had not agreed to enter into a coalition with the centre-left PSOE because they were unable to agree on the subject beforehand.

Podemos is now looking to create a right to housing as a basis of the country’s constitution, with legal guarantees. Some of the proposed measures would directly affect the rental market, with indefinite rental contracts, with transparent grounds for justified termination and automatic extensions where the tenant is especially vulnerable and the landlord a large property owner. The party also supports increasing the stock of social housing by 50,000 flats per year through the compulsory transfer of empty homes held by funds, banks and Sareb, for example, for use in the rental market.

The announcement led to share declines for some of the largest Spanish socimis, including Merlin and Colonial.

Original Story: El Confidencial – Ruth Ugalde

Adaptation/Translation: Richard D. K. Turner

Town Hall of Madrid Approves Legislation to Close 10,000+ VUTs

27 March 2019 – El País

On Wednesday, the Town Hall of Madrid approved a special plan to regulate the licences required to operate tourist apartments (“viviendas de uso turístico” or VUTs).

To obtain a licence, a VUT must now have a separate access from the other homes in the building, which means, in practice, that 95% of the establishments of this kind in Madrid will have to close. More than 10,000 VUTs will be affected, according to municipal calculations. The legislation applies to those properties defined as VUT by the Community of Madrid, which are effectively those that are leased for 90 days or more per year.

The new legislation, which was supported by Ahora Madrid and the PSOE, will enter into force within the next few days. Non-compliance will trigger a process to cease the activity in that property, like in the case of a bar operating without a licence, rather than the imposition of a fine.

It was in January 2018 that the Town Hall of Madrid established that VUTs – homes that are leased for three months or more – represent an economic activity and, therefore, require a licence. At the same time, a moratorium was declared on the granting of licences whilst the new legislation was drafted, which has now been approved.

The impact on the more than 40,000 reservations that have been made in accommodation of this kind for the Gay Pride celebrations in July 2019 is far from clear.

Original story: El País (by Gloria Rodríguez-Pina)

Translation/Summary: 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

The PSOE Proposes that Town Halls Buy Homes to Rent Them Out

21 February 2019 – Eje Prime

The PSOE wants to create a public stock of rental homes, with reference prices, which will end up affecting market prices. To this end, in its framework program for the municipal elections to be held on 26 May, the party led by Pedro Sánchez is proposing that Town Halls purchase (already built) homes for rental, although without considering those that come from evictions executed by the banks.

The text reflects the “absolute priority” of creating a public rental stock that is “sufficiently large” with which to develop active policies that facilitate access to housing for citizens and which “affect the prices in the rental market”, according to reports from Europa Press (…).

In terms of public subsidies for the rental sector, the socialists propose taking into account the different life needs of each cohort, such as young people who want to buy their first home and older people who are looking for family consolidation projects. Similarly, they foresee the creation of a stock of rental homes for young people (…).

Original story: Eje Prime 

Translation: Carmel Drake

Spain’s Large Socimis are not Perturbed by Podemos’s Proposed Tax Legislation

14 October 2018 – La Información

The Socimis, one of the great tax regimes currently booming in our country, suffered a serious blow on Thursday after an agreement was published between PSOE and Podemos to push ahead with the State’s General Budgets. As a result, the Socimis are going to have to pay tax (at a rate of 15%) on any profits that they do not distribute as dividends, in other words, the funds that remain in the companies to increase their capitalisation. But, which companies are going to be most affected? Only the smallest ones.

In recent months, the large real estate companies on the Ibex and the Continuous Stock Market have been distributing significant dividends, in some cases even exceeding their accounting profits by two or three times. Therefore, the new measure will not affect them, given that only undistributed profits will be taxed. By contrast, the small entities that are listed on the Alternative Investment Market – where they have their own segment – barely exceeded the obligatory dividend distribution of 80% of the profits for that type of company in most cases.

If we take Merlin – a giant in the tertiary sector –by way of example. Last year, it obtained a profit of €114.5 million (after discounting the appreciation of its assets) and it dedicated 205% of its profits to dividends. Even high figures were recorded by Colonial, which distributed 267% of its profits to its shareholders, and Lar España, which is listed on the main stock market, and which distributed 236% of its results after taxes to the owners of its shares.

By contrast, the small companies on the MAB complied with the law in a comprehensive way but without distributing such significant figures. Such was the case of AP67, a Socimi whose assets are primarily residential, commercial and office-based, which distributed just over €240,000 of its total profits of €300,000.

Why do the small companies only distribute the legal minimum? Most of the companies listed on this market are owned by a small number of shareholders, normally those who have been with the entity since the beginning and, therefore, they have no commitment to the owners of those shares. In fact, the movement in shares is so small in the majority of cases that the volume is almost nil.

By distributing 80% of their profits as dividends, they pay tax of up to 25% on those earnings, whilst the remaining 20% is posted to reserves and, previously, there was no requirement to pay any tax on that. With this proposal, the money that is not distributed to the shareholders (in other words, that 20%) would be subject to a tax rate of 15%.

For tax experts, these measures may scare off foreign investors, especially funds, which regard Spain as a good opportunity for investing after the framework for Socimis was brought into line with those governing REITs in countries such as France and Germany. Moreover, “other countries have an advantage over Spain going back many years and they offer more beneficial tax frameworks”, something that the new tax will only serve to dent in the Spanish system.

In light of the possible approval of the draft presented on Thursday by Unidos Podemos and PSOE, the Socimis “will distribute all of their profits as dividends to avoid the double taxation of the same money”, said a high-profile tax advisor consulted by La Información.

Original story: La Información (by Lucía Gómez)

Translation: Carmel Drake

Government & Podemos Agree to Allow Town Halls to Regulate Rental Prices

11 October 2018 – Eje Prime

The Government has said yes to public control of the rental market in Spain. The Executive led by Pedro Sánchez (below left) has agreed to the regulation of rental prices by Town Halls, according to explanations provided in a Budget agreement reached on Thursday by the PSOE and Unidos Podemos. The measure is established provided its application is “temporary and exceptional” and is carried out only in those urban areas where there has previously been an “abusive increase” in rents.

Rent has formed the focus of the new Government’s action plan in terms of housing. In parallel to the regulation of prices, the Executive has announced that it will advocate the extension of the minimum term of lease contracts from three years to five, and, in those cases where the owner is a legal entity, the lengthening of the commitment between landlords and tenants to seven years. Moreover, the tacit renewal of contracts will be increased from one year to three, provided the intention to not renew the agreement is communicated by either of the two parties at least six months before it is due to terminate.

In addition, the PSOE and Unidos Podemos have agreed that damage deposits (fianzas) to enter rental flats will be capped at a maximum of two months and that the signing of bank guarantees will no longer be demandable by landlords. In the event that an owner wants to recover his home before the term agreed with the tenant, then that scenario must be formally explained in the contract in force.

More funding for the development of rental housing

The agreement, which will now have to be approved by Congress, includes a measure that supports the development of public housing. In the event that it receives the green light from the chamber, the Government will increase the housing budget for next year to €630 million. In 2020, it will increase that pot further still to €700 million and in 2021, to €1 billion. According to the text, in ten years, Spain will invest between 1% and 1.5% of its Gross Domestic Product (GDP) in public housing.

One of the objectives of the public housing plan is “to avoid “homes” from being sold to vulture funds or sold for a profit”, so as to ensure that “particularly vulnerable people” have the possibility of accessing a rental home.

Original story: Eje Prime

Translation: Carmel Drake

Spain’s Government Wants to Prohibit the Sale of Public Housing to Vulture Funds

12 September 2018 – El Mundo

The Government wants to give a new impetus to the housing policy in Spain and has placed social housing at the centre of its strategy. In this context, the President of the Executive, Pedro Sánchez (pictured below), has announced to the Congress of Deputies, that the new law he is preparing will configure social housing as a public service to ensure access to it for all citizens and moreover, to put a stop to the sale of public homes to the so-called venture funds.

During his speech at the control session of the Government, Sánchez announced that the State Attorney will appear in court regarding a criminal case into the investigation of the sale of 5,000 public rental homes undertaken by PP governments in the Community of Madrid and the Town Hall of the Spanish capital to private equity funds in 2012 and 2013.

The Institute of Housing in Madrid (Ivima), of the regional Government of Madrid, sold 2,935 public rental homes in 2013, whilst the Town Hall of Madrid, through the Municipal Housing and Land Company (EMVS), sold 1,860 homes of the same kind in 2012, according to Efe.

“We are not going to stop until the administrations that are behind this intolerable abuse, which has affected so many people of limited means, assume their political and economic responsibilities”, said the President.

The demands of Iglesias

Sánchez responded in that way to the Secretary-General of Podemos, Pablo Iglesias, who has also called for other measures to put a stop to the rise in residential sale and rental prices in Spain, including, “ending the privileges afforded to Socimis, the commercial companies that operate in the real estate market and which are taxed at 0%”.

The leader of Podemos also requested that “large owners and venture funds, who own more than ten homes” be forced “to put those properties on the market”, and he proposed that “it is fundamental that the Town Halls be given authority to declare certain urban areas as “stressed markets” so that rental prices there can be regulated”.

Original story: El Mundo (by María Hernández)

Translation: Carmel Drake

Spain’s New Government Proposes an Action Plan to Alleviate the Rental Market

18 June 2018 – El Confidencial

The rental market is, without doubt, the issue that Pedro Sánchez, the new President of Spain, and José Luis Ábanols, the new Minister for Development, will have to face in light of the price boom being experienced in certain areas of the country. According to sources close to the PSOE, the new Executive is going to focus its housing policy on: facilitating access to rental homes for young and older people; and curbing the rise in house prices, leaving to one side those measures destined to buying a home (…). For this, the new Executive is going to need support from other parliamentary groups, including Podemos, which is amongst its main allies, with very similar proposals to those put forward by the socialists to tackle the rental problem.

In terms of the State Housing Plan for 2018-2021 approved in March, when the Government was still under the mandate of the PP, the same sources confirm that the agreements with the autonomous regions have not yet been signed and, therefore, its execution is still pending (…).

Rental prices are the most pressing issue of the day. During Mariano Rajoy’s mandate, not only was it in the background, but also several draft bills presented to the Congress to tackle the boom in rental prices were defeated. The first one that failed to pass Congress’s filter was the Platform for those Affected by Mortgages (PAH), whilst proposals put forward by the PSOE were also initially vetoed by the PP, although the veto was not only not ratified, it was also lifted last Friday and so it will return to parliamentary debate, where a consensus with the other political parties will be needed to push it ahead.

The socialists propose restoring the duration of five-year rental contracts, limiting rental price rises – in the case of renewals – to the evolution of CPI, as well as introducing significant tax relief for those who decide to rent their homes below certain thresholds or by limiting the deposits required. All of these proposals are susceptible to being supported by the political parties that supported Pedro Sánchez’s no-confidence motion, in particular, Podemos (…).

Limiting rentals

(…). In its proposal, the PSOE is committed to offering tax incentives to those landlords who let out their flats on the basis of a public price reference system, depending on the area in which their property is located. Such a system would have to be fixed by the town halls. All landlords who respect those limits could benefit from a 60% deduction on their income tax returns (…).

To facilitate access to rental housing for young people, the PSOE proposes that if a home is let to a young person aged between 18 and 30 on a low income, then the tax treatment available to the landlord would be even more favourable, with deductions of 100% (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Balearic Government Doubles its Tourist Eco-Tax from 1 May 2018

3 May 2018 – Expansión

Tourists enjoying their holidays on the Balearic Islands awoke on Tuesday to news that isn’t going to completely ruin their fun, but which is certainly going to affect their wallets. The tax that tourists have to pay for each overnight stay on the islands, also known as the eco-tax, had doubled overnight. That was the result of the entry into force of the new tariffs for the Balearic Island Government’s Sustainable Tourism Tax. The increase has been criticised by hoteliers on the islands, which regard it “as frankly wrong, given that any kind of extraordinary tax reduces our competitiveness”, explains María José Aguiló, Executive Vice-President of the Hotel Business Federation of Mallorca (FEHM) in statements to this newspaper.

The government team led by Francina Armengol (PSOE) announced that this new tariff would enter into force from 1 May onwards. Specifically, during the high season, which runs from 1 May until 31 October, any tourist staying in a hotel ranked 4-stars or above will have to pay an eco-tax of €4 per night, which is twice as much as they had to pay during the same period last year (€2) and €3 more than the amount charged during the low season – from 1 November until 30 April.

One of the risks related to the rise is that, with the recovery of other markets in the Mediterranean Arc, such as Egypt and Turkey, the increase in the final cost of each stay will cause tourists to flee to other more competitive destinations.

Although the news is not new – the rise was announced in September last year – it has still surprised many tourists and critics alike, including hoteliers. By mid-morning yesterday, one tourist staying in a hotel in Palma had refused to pay the tax, claiming that he had not been informed about the doubling of the tariff and expressing his doubts over the use that would be made of the funds raised. Although the problem did not go any further – the hotel decided to bear the cost of the tax on this occasion – the situation clearly raises an important issue, relating to the information that is being offered.

Sources close to the Vice-President of the Balearic Government explain that communication efforts have been carried out in the media, as well as through tour operators and trade associations. Nevertheless, hoteliers are asking for a greater push. “Some customers book their trips directly and are unaware of the news”, explains Aguiló, who said that “more specific material” needs to be provided to inform people.

On the other hand, “customers are asking us what this money is being used for”, added Aguiló, which may lead to a reluctance to pay it. For now, they propose that the Government intensifies its communication effort in source markets.

Armengol’s Government expects to raise around €120 million this year through this tax, which will also be applied to tourists who arrive on cruise ships, regardless of how long they stay for – previously, it was only applied to visitors who stayed for more than 12 hours -. The aim, explain Government sources is “to offset tourist pressure and to conserve the eco-system and heritage, so that we can all still enjoy the islands in 10 years time” (…).

Original story: Expansión (by Inma Benedito)

Translation: Carmel Drake