New housing policies to favor rented and subsidised housing

The Ministry for Housing looking at ways of helping divorced and separated couples

The Ministry for Housing has announced that it will look at ways of expanding public assistance for young people as well as divorced or separated couples in the new State Plan 2009-2012.

The Ministry of Housing also confirmed that it expected property prices to ‘moderate’ further, although it insisted that it preferred any drop in prices to keep in line with inflation.

According to the latest figures published by the Housing Department, directed by Beatriz Corredor, the price of housing rose by 4% in the first 3 months of this year which is slightly lower than the inflation rate of 4.5% recorded for March.
Nevertheless, sources close to the Ministry of Housing have ruled out a sharp fall in property prices and have assured that the housing sector will recover in 2010, when the demand and supply of housing will readjust itself.

Although property promoters have presented numerous proposals to the government to try and revive the demand for properties and the housing sector the Ministry for Housing has confirmed that its priority is to help those who have difficulties finding a property to live and to help these people gain access to housing through state subsidised housing, known as VPO (Vivienda Protegida Oficial). In this respect it hopes to work together with local town halls and regional governments.

In the short term the Ministry of Housing is aiming to design a new housing plan, dominated by VPO’s and the rental market. The government also denied that its subsidy of 210 euros for young people renting property was not affecting the price of renting and that there are several measures to ensure that rental prices do not rise excessively.

Most applications for rent subsidies will be accepted

Housing Minister predicts 97% of applications for help towards renting will be accepted

Recently the Spanish government set up a scheme for those aged between 22 and 30 years old under which they can receive up to 210 euros per month Spanish subsidies towards the cost of renting (Renta Básica de Emancipación). Today the Spanish Housing Minister, Carme Chacón, said that she believes that up to 97% of applications for Renta Básica de Emancipación will be accepted.

Chacón, who is currently on a visit to Segovia where she will sign a plan to renovate the Cervantes theatre, explained that almost all of the applications received so far meet the necessary requirements needed to be eligible for government help.

Nevertheless, Chacón said that it was up to each individual region to manage and authorize proceedings which then needed to be submitted to the Housing Ministry for final approval.

Chacón said that 33,199 applications had been received so far - on average more than 1000 per day – a figure which is in line with her department’s forecasts. She stated that around 360,000 young people could benefit from the government subsidy during its first year.

Excess of new housing in Spain

The crisis in the property sector causes developers to find alternative use for the empty properties and they are trying to negotiate an agreement with the government renting agency set up by the Socialist government two years ago.

In little more than 2 months the Public Agency for Renting in Spain (SPA) created by the Ministry of Housing has received the offer of 6000 newly built flats from property developers interested in renting them out because they can’t find enough buyers.

According to figures released yesterday, over half of flats that are offered to the SPA for rent come from estate agents rather than from private owners. In general it is usually flats from small to medium sized property developers that are being offered.

Advantages for property owners renting property in Spain

Property owners in Spain who rent out their Flats could save 70% in Insurance Costs
In an interview on Spanish television, the Spanish Housing Minister, Carme Chacón, spoke about government plans to help property owners rent out their flats. In the latest proposals landlords could save up to 70% on multi-risk household insurance which would protect their property against defects and damage.

The Minister explained that under these proposals the costs of taking out insurance on a 70 m2 flat would drop from 170 euros to just 55 euros. She said that reduction in insurance costs would be available through the Public Renting Society.

Furthermore Chacón said that these proposals would be included in the State Plan for Housing, so that the highest number of people would be able to benefit from a grant of 6000 euros, already in place, destined for property owners who rent out their empty flats or houses. All landlords who rent out empty property will be entitled to this grant regardless of how large the property is or how much the rent costs.

The Housing Minister said that these proposals which are intended to get more flats and houses onto the rental market will be formally presented by the Housing Ministry next week.

Chacón explained that for many people in Spain housing was the second most important social issue but for the young it was the first. Moreover, as well as supporting ‘vivienda protegida’ (council housing) destined for sale Chacón is also in favour of publicly rented public housing in an effort to put an end to what she called ‘Spain’s sad record of having the oldest age for leaving home in Europe’.

Incentives to rent property in Spain

Spanish Government to offer new incentives to rent

The government is planning to introduce new measures to promote renting flats and houses.

Firstly the Public Agency for Renting Property (la Sociedad Pública de Alquiler - SPA) is to give tenants a special type of guarantee to offer landlords.

Secondly SPA is currently trying to get more properties onto the rental market by offering property owners with empty flats insurance against possible non payment of rent, damage to the property or legal costs if the owner needs to go to court to evict tenants. The cost of this insurance would be lower than if a landlord takes out their own private insurance.

Furthermore, this association is hoping to be able to provide thousands of properties, belonging to property investment groups such as banks, for rent. At present it is in negotiation with property investment groups regarding this issue. For example SPA has reached an agreement with Santander Bank which is going to offer 8000 properties for rent. Sabadell will also add a further 2000 properties to this figure. SPA also hopes to reach a similar agreement with BBVA.

Housing policies for young house buyers

Zapatero to help the young by making housing more accessible

The Spanish president, José Luis Rodríguez Zapatero, has promised that the government will make housing policy a priority in order to make more housing available to a high number of young people.

Zapatero made these declarations yesterday in the closing ceremony of the 23rd Young Socialists Federal Congress in which he indicated that housing was part of PSOE’s electoral commitment and that it was an issue that especially affected young people as well as many workers which is why he assured that the government was intending to make a great effort to help young people get access to housing.

In his cabinet shuffle earlier this month, Rodriguez Zapatero substituted the previous Housing Minister for Carme Chacon. One of the new minister's first initiatives on occupying her post was to name a new director of the Public Renting agency. The agency was created during the first year of the Socialist Government and was meant to present youngsters with affordable rented accommodation, but has as yet failed to have any great impact on the Spanish real estate market.

Related: Property for sale and rent in Spain

Rented student flats in Spain

‘Mini flats’ for students available from 2009

María Antonia Trujillo, Spain's Housing Minister, has announced that under the Government’s housing programme, up to 10,000 student ‘mini flats’ will be built on university campus’s all over Spain.

The Vice president, María Teresa Fernández de la Vega, recognised that 80% of rented housing was rented out to young people. It is estimated that there are approximately 1.2 million University students in Spain out of which between 20 and 30% live away from home, mostly in shared student flats or residences.

The government-subsidised student flats will measure between 30 and 45 square metres and consist of one or two bedrooms with a communal living area. They will cost between 75 to 200 euros per month depending on the city and type of flat and the government intends to invest 300 million euros in the construction of up to 10,000 flats under on land owned by universities.

According to the Spanish housing minister, the programme, which forms part of the Spanish Government Housing Programme, is designed to help the mobility of students and encourage more equality of opportunity.

The mini-flats will be available to rent for up to five years in rotation and will be managed by each university. Madrid's Carlos III University will be one of the first to have mini flats available to rent - at present it is awaiting approval to start constructing its first mini flats.

New state property rental agency ready for business in Spain

The Spanish Housing Minister, Maria Antonia Trujillo, yesterday announced that Spain's new public property rental agency is ready for business with 1,500 properties to rent which will be available for rental as from October.

1,200 properties have been registered with the agency by private owners, and the rest are flats and apartments in state-owned buildings.

Trujillo said that several Spanish ministries owned buildings which would be converted into flats and registered for private rental with the state agency. The minister said the agency would use this month to make any last-minute improvements and reforms to the properties on the new register, and to negotiate the rent with owners. She said the rent fixed by the agency would be just below market rates. In October a campaign will get underway to promote the properties and attract tenants.

When the government announced the creation of this new property rental agency in Spain a few months ago, its objective was to rent 1,000 properties during the first year, and 25,000 by the end of the legislature in an attempt to encourage and professionalise the property rental market in Spain.

Related:
The right of tenants to purchase rented property in Spain

Rights of tenants to buy rented property in Spain

We received this email from a Euro-resident in Spain last week:

"We have been living in rented accommodation ever since we moved to Madrid 8 years ago, simply because prices here meant we couldn't possibly afford to buy a flat. We found a lovely top-floor flat, within walking distance of our work, shops, parks, cinemas, belonging to a women who earns a living from renting out several flats she owns in Madrid. She lives in the same building, and we have always had a good relationship with her and, during the past 8 years, we have made the attic into our home, changed the floor, put heating in, decorated, changed the bathroom..... All at our own initiative because we understood that this was going to be our home for a long time. Our 2 girls were both born here. Four years ago we purchased a small house near Cadiz which we use for holidays and rent out to family and friends. We decided to do this rather than buy somewhere in Madrid because we love our flat so much. Last week to our horror, the flat owner told us she had put our atico up for sale and we had 3 months to find somewhere else to live. The original contract we signed states that either party has to give notice of 3 months, but we assumed this was just a formality and she has always said that we could live in the flat for as long as we wanted. Is there anything we can do to stop her from selling the flat, or have we acquired any rights during the 8 years we have lived here?"

The answer to the first question is no, you cannot stop her from selling her property, unless a clause in the contract you signed 8 years ago specifically gives you the right to do so (this is very improbable). If however, as seems likely, the contract makes no reference to any possible ownership rights of the tenants, and simply mentions a 3-month eviction notice, then the owner has complied with her side of the deal.

The answer to the second question is yes, you have acquired a very important right as tenants: the right to buy your home in the event of the owner putting it up for sale.

In Spanish this right is called "el derecho de tanteo y retracto". The first part "tanteo" refers to the fact that a tenant has the right to buy the property he/she is renting and should be given preference over any other potential buyers. The second "retracto" refers to the right of a tenant who discovers that his or her rented home has been sold to a third party, to re-purchase the property from the third party at the same price.

According to Spanish law, all property owners must give their long-term tenants 30 days notice if they decide to put their rented property on the market. In theory this gives tenants time to either find a new home or negotiate a purchase price with the owner and buy the property themselves. If the property owner fails to give the 30-days notice, then tenants can resort to their second right and purchase the property from the new owners (which is one reason why it is very important, if you are a buyer, to find out the exact conditions of any property you decide to purchase in Spain).

In your circumstances we suggest you try to negotiate a deal with the owner of your property based on your right, as long-term tenants, to have preference over other potential buyers. The fact that you have a good relationship with her should work in your favour. And you will have to decide whether you love your home enough to sell the house you have bought in Cadiz and use the money you make on it as a down payment.

Good luck!