On 12 December 2008, the Spanish Council of Ministers (the “Consejo de Ministros”) approved by Royal Decree a law designed to regulate housing and redevelopment, the “Plan Estatal de Vivienda y Rehabilitación 2009-2012” (the "Plan") which, with a budget of 10,188 million euros, aims to (i) facilitate access to housing for less affluent citizens, (ii) take advantage of the excess production of private housing and (iii) encourage property developers to increase their activity in the market for protected housing.
A measure of particular note in the Plan is the impetus that it aims to give to rental market. At least 40% of new government protected housing “Viviendas de Protección Oficial” ("VPO") is intended for rent. To this end, the Plan outlines measures to create new housing figures, special regime, and accommodation protected for the most vulnerable. The Plan establishes a system to provide access for less affluent citizens to government protected housing so that they may purchase, rent or rent with an option to purchase in the same way that more affluent members of society can with private housing. The Plan provides for three different VPO regimes depending on family income: a special regime for citizens with incomes of up to 17,472 euros per year, a general regime for those with incomes of up to 31,449 euros, and another for those with incomes up to 45,500 euros per year.
Further, the quantity of properties to be offered for rent, with an option to purchase, on leases of 10 years will be increased. In these cases, the maximum sale price will be limited and the price paid reduced by at least 30% of the tenant’s rental payments.
The Plan further establishes a package of financial measures designed to aid citizens to purchase properties. By amending the financial conditions associated with Spanish council housing, “viviendas de precio concertado”, the Plan is designed to encourage the sale of currently unoccupied private properties as government protected housing.
Another key objective of the Plan is to regulate government grants. These grants will support the rehabilitation of historic areas, city centres and rural areas, include measures for demolition and replacement of buildings in rundown areas and support the construction of facilities and equipment in the event residents are required to be reallocate temporarily during construction. The Plan also aims to provide a stimulus to the RENOVE Plan by further encouraging energy efficiency and enhancing Spanish citizen’s access to affordable housing. In order to finance these plans, developers and property owners will be provided access to government loans with interest repayments below those obtainable from financial institutions.
In addition, the Plan will regulate a series of government grants to encourage the purchase and development of land for use as protected housing within 3 years.
Notably, at least 50% of the residential building must be designated for government protected housing. As such, the number of government protected properties to be built, their principal characteristics must be registered with the Spanish Property Register in order to qualify for any additional future government grants.
Provision is also made to establish a support and create information guides explaining the objectives and measures of the Plan. These will be distributed to the administrators and state bodies that will explain the Plan to relevant groups such as “Registros de demandantes”: government offices providing advice in relation to the Plan and its implementation and programs of publicly and growth of the Plan.
Finally, of note is that the transitory provision of the Plan establishes a series of measures designed to deal with the pervading economics of the real estate sector. These measures will be applied in the event that no order, setting out the application of the new financial systems foreseen in the Plan is published in the BOE. Of these certain measures are of particular note. These include financial grants for the promotions and acquisition of protected housing and development of land; the granting of agreed loans to developers and loans direct to purchasers as defined in Royal Decree 801/2005 as modified by Royal Decree 14/2008; and a serried of measures intended to classify properties whose building licences were granted before 1 September 2008, as protected properties.
There is no doubt that the Plan is ambitious in its attempt to create conditions in which every Spanish citizen is able to exercise his right to housing, acknowledged in Article 47 of the Spanish Constitution. However, it will be sometime before it is possible to evaluate the impact that these measures have had, particularly, the social impact on the current economic outlook.
The Plan entered into force on 25 December 2008 while the financial measures have had effect as of 1 January 2009.