Due to the huge impact of the economic crisis on the housing sector in Spain, several regional parliaments1 have recently issued resolutions involving changes in the priorities of housing policies developed by the public administration.
One region is Catalonia, whose government approved Decree Law 1/2015, on extraordinary and urgent measures for occupancy of residential units acqui red in foreclosure proceedings, on March 24, 20152 (“Decree Law 1/2015”).
TERM FOR FILING AT THE EMPTY FLAT REGISTRY IN CATALONIA EXPIRES
Decree Law 1/2015 created the Empty Flat Registry3 (Registro de viviendas vacías y de viviendas ocupadas sin título habilitante) and established the obligation to register residential units that are vacant, or occupied without a legal title to file , within three months from the date it came into force (by June 27, 2015).
Under Decree Law 1/2015, holders of properties that are vacant, or occupied without a legal title to file, and were acquired through foreclosure proceedings, or by offsetting or paying mortgage-backed debt, must file these properties at the Empty Flat Registry,4 submitting information on ownership, location, surface area, and on whether the property has a certificate of habitability ( cédula de habitabilidad).
This measure aims to reveal the exact number of empty properties in Catalonia and to reinforce the application of the unoccupied flat tax and the imposition of municipal fines, as explained below.
Besides this filing obligation, Decree Law 1/2015 includes the following significant housing issues in Catalonia:
- To prevent massive discount sales of mortgaged real estate portfolios owned by financial institutions, a right of first refusal is established for the administration for properties in areas of proven high housing demand. Thus, when holders of properties acquired after April 9, 20085, in foreclosure proceedings, or by offsetting or paying mortgage-backed debt, decide to sell them, they must notify the Catalan Housing Agency ( Agencia de la Vivienda de Cataluña). The administration can exercise its right of first refusal within two months from the owner’s notification for the same sale price and under the same conditions as those notified by the property holder. The exercise of this right will be prioritized in the case of (i) properties in good condition located in socially degraded neighborhoods that have a below market price, and (ii) properties acquired from individuals in foreclosure proceedings, or by offsetting or paying mortgage- backed debt.
Necessary rehabilitation works must be carried out on properties acquired in foreclosure proceedings, or by offsetting or paying mortgage-backed debt, to meet and maintain the housing habitability requirements. If the owner does not fulfil this obligation within six month s from the administration’s notification, the latter can revoke the usufruct (usufructo) for between four and ten years when the properties are located in municipalities considered areas with proven high residential demand that are vacant due to inadequate housing conditions. Expenditure the administration expects to spend on making the housing meet habitability requirements will be deducted from fair price to be paid (justi precio) for the usufruct Additionally, non-compliance can be considered a serious infringement and is punishable with a fine of between €3,000 and €90,000.
The Catalan Parliament is also discussing a draft vacant housing tax law, which will affect legal persons whose properties have been unreasonably unoccupied for over two years. The tax amount will range between €500 and €1,650 depending on the number of properties the taxpayer owns that are subject to tax. If a specific percentage of the unoccupied properties are allocated for leasing under conditions similar to those provided for social housing, the taxpayer will benefit from a tax discount.
The Basque Country’s Act 3/2015, on housing, approved on June 18, 2015, regulates:
- A right of first refusal for the administration over properties acquired in foreclosure proceedings, or by offsetting or paying mortgage-backed debt, in areas of proven high housing demand, to be exercised within 30 days from the date holders notify their intention to sell the properties.
- A compulsory expropriation (i) when rehabilitation works necessary to meet and maintain the housing habitability requirements are not carried out, (ii) when the property is abandoned or ruined, or (iii) when it has been unoccupied for two years and it is located in areas of proven high social housing demand.
- An annual ground rent of €10 per useable square meter and the mandatory lease of properties in areas of high residential demand, on properties that have been vacant for over two years.
This Act will come into effect on September 19, 2015.6