Homes owned by banks as result of eviction may be preferentially bought by Catalan Government until 2021
In 72 municipalities with a high demand for housing, the Catalan Government and the affected town halls will be able to use a right of first refusal to buy flats and houses on sale that are now owned by financial entities as a result of home evictions carried out since April 2008. The measure will only be in place until 2021 in those 72 municipalities and the aim is to prevent investment funds from buying them solely for speculative purposes and not to rent them. The initiative comes after it was noticed that investment funds were buying a great number of empty flats from banks, who came to own them after the previous owners were unable to pay their mortgage during the years of economic crisis. The measure will be included in a decree that will enter into force immediately and is part of a wider plan to facilitate access to housing.
Barcelona (ACN).- In 72 municipalities with a high demand for housing, the Catalan Government and the affected town halls will be able to use a right of first refusal to buy flats and houses on sale that are now owned by financial entities as a result of home evictions carried out since April 2008. This means that when a financial entity puts one of these flats or houses up for sale, public entities will be able to meet offers previously made by third parties and have a preferential right to buy the property. The measure will only be in place until 2021 in those 72 municipalities and housing units located in areas with a high risk of social exclusion will be given preference, explained the Catalan Minister for Planning and Sustainability, Santi Vila, on Tuesday. Furthermore, there will be sanctions for keeping flats empty without renovating them. The measures will be included in a governmental decree that will enter into force immediately and is part of a wider plan to put empty flats on the rental market and facilitate access to housing.
The initiative comes after it was noticed that international investment funds were buying a great number of empty flats from banks, who came to own them after the previous owners were unable to pay their mortgage during the years of economic crisis. The aim is to prevent investment funds from buying such properties solely for speculative purposes and not to put them on the rental market. In addition, it will allow families affected by processes of eviction or deed of assignment in payment of debt to continue living in their home.
"We are facing a moment when we have significant property assets held by financial institutions that have been managing them for several months", stated Vila. "We noticed that, despite their management, many of these properties are not on the market", he added. "We have also realised – and this is a really important risk – that there is the possibility that international investment funds – if you allow me this moral judgement – that do not have a soul and will not have any special concern about which people may be living in these homes, may turn into the owners of these properties".
Financial entities will be obliged to inform the Catalan Government about any sale of a flat or house that has come into their possession after a home eviction process, if it is located within any of the 72 municipalities that have the highest demand for housing in Catalonia. Then, the Catalan Executive or the affected town hall will have the right to buy the property at the same price it was offered or was to be bought by a third party. If public entities finally buy the property, it will be for social housing purposes.
The Catalan Government has provided an initial €8 million to buy such properties in 2015. This amount will allow the Catalan Executive to buy a few dozen properties, but it is expected that the town halls of the affected 72 municipalities will also make a provision of funds for this purpose.
Sanctions for banks if they keep empty flats in bad condition
Furthermore, there will be sanctions for not renovating empty flats and houses acquired through processes of home eviction or deed for assignment in payment of debt, regardless of where the property is located. According to Vila, "a large amount of such properties owned by banks are not in good condition". Since the decree's approval, financial entities will have 6 months to plan renovation work if the flats or houses are in bad condition. The objective is to "stimulate" banks not to accumulate empty housing units in bad condition and push them to put them on the rental market in better condition. After this 6-month period, there will be sanctions ranging from €3,000 to €90,000 for not renovating any such empty flats, announced Vila.
In addition, if the flat or house is located in one of those 72 municipalities with a high demand for housing, the Catalan Government will be authorised to expropriate from the bank the housing units that are in bad condition and have come from a home eviction process. Such expropriation will be for a maximum of 10 years, after which time the property will be returned to the bank. During this time, the Catalan Government will take care of renovating the flat and put it on the market for social housing. Families at risk of social exclusion will be given priority to live in one of those properties. Besides this, families that have gone through a home eviction and are still living in the property through a social rental agreement will also be given the priority to stay and receive a grant in order to avoid a second eviction process.
664 empty flats and houses owned by banks
During last year, the Catalan Government identified 664 empty flats and houses owned by banks. Two-thirds of these were kept empty because they were in bad condition and not suitable for rental, as highlighted by Vila. In 2014, 14,230 home evictions took place in Catalonia.
On top of this, Vila announced that the Catalan Government will create a census of empty flats and houses, and financial entities will have 3 months to register their properties acquired through home eviction processes. Currently, there is an estimated 448,000 empty housing units in Catalonia, although the real figure may be slightly lower, recognised Vila, since they are not in line with the figures coming from the municipal population registers.