Urgent measures to improve access to housing.

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On December 23, 2019, the Government of the Generalitat de Catalunya approved the Decree Law 17/2019, on urgent measures to improve access to housing, published in the Diari Oficial de la Generalitat de Catalunya on December 30, 2019 (No. 8032), and whose entry into force, according to its seventh final provision, is from the day following publication in the Diari Oficial de la Generalitat de Catalunya, i.e. December 31, 2019 (hereinafter "Decree Law 17/2019").

Decree Law 17/2019 modifies a series of regulations of the Generalitat de Catalunya in the area of housing, such as, among others, the following:

(i) Law 18/2007 of December 28, 2007, on the right to housing; (ii) Decree-Law 1/2015, of March 24, on extraordinary and urgent measures for the mobilization of housing resulting from foreclosure proceedings; (iii) Law 24/2015, of July 29, on urgent measures to address the emergency in the field of housing and energy poverty; (iv) Law 4/2016, of December 23, on measures to protect the right to housing of persons at risk of residential exclusion; (v) Legislative Decree 1/2010, of August 3, approving the Urban Development Act.

Among the main modifications to the legislation on housing, we can find the following:

(i) Empty housing

The concept of empty housing is maintained, as is the case of housing that "remains permanently unoccupied, without just cause, for a period of more than two years. For this purpose, justified causes include transfer for work reasons, change of address due to a situation of dependence, abandonment of the dwelling in a rural area in the process of losing population, and the fact that the ownership or possession of the dwelling is the subject of a pending legal dispute".

It adds that the occupation of a dwelling without a title does not prevent the dwelling from being considered empty "except in the case that the owner of the dwelling can prove that he has initiated the appropriate legal action for the effective recovery of possession before the deadline for considering the dwelling empty has expired".

(ii) Transfer to the new owner of the position of the previous owner for the purpose of assuming the consequences of non-compliance with the social function of the property

It is established that, in the event of transfer of the dwelling, the new owner is subrogated to the position of the previous owner for the purpose of assuming the consequences of the non-fulfilment of the social function of the property, regardless of when the non-use began.

(iii) Right of pre-emption and withdrawal in favor of the Administration of the Generalitat in cases of transfer of housing acquired in a foreclosure process or through compensation or payment of debt with a mortgage guarantee

The right of pre-emption and withdrawal in favor of the Administration of the Generalitat, in cases of transfer of housing acquired in a process of mortgage foreclosure or by means of compensation or payment of debt with a mortgage guarantee, is maintained for subsequent transfers. This right, which was acquired after the entry into force of Law 18/2007, of December 28, on the right to housing, now clarifies the number of transfers affected, by establishing that the "right of preferential acquisition affects the first and subsequent transfers of housing during the validity of this Decree Law".Therefore, the doubt raised by the establishment of this right in cases of transfer of housing acquired in a foreclosure process or through compensation or payment of debt with mortgage guarantee, which was introduced by Art. 2.1 of Decree Law 1/2015, of March 24, on extraordinary and urgent measures for the mobilization of housing from foreclosure processes, has been clarified by expressly establishing that it applies to subsequent transfers of housing.

For practical purposes, in cases of transfer of housing, it will be necessary to know the chain of previous transfers, starting from the entry into force of Law 18/2007, of December 28 (which took place on April 9, 2008), in order to rule out or confirm the existence of the right of preferential acquisition in favor of the Administration, even if the transferor of the property analyzed has not acquired it in a foreclosure process or through compensation or payment of debt with a mortgage guarantee.

This measure will have a duration of 12 years from the entry into force of Decree-Law 17/2019 ofDecember 23.  

(iv) Establishment of a new concept of "large house holder”

A new parameter is established to define a "large dwelling holder": If the previous criterion was the ownership of a living area of more than 1,250m2, now the criterion will be the ownership of "more than 15 dwellings".

A "large dwelling holder" is defined as the following "legal persons":

  1. Financial institutions, their property subsidiaries, investment funds and asset management companies, including those arising from bank restructuring, in accordance with commercial law.
  2. Legal persons, which, alone or through a group of undertakings, own more than 15 dwellings, with the following exceptions:
  1. The social promoters referred to in letters a and b of article 51.2 of Law 18/2007, of December 28, on the right to housing.
  2. Persons who own more than 15 percent of the living area of the property qualified as subsidized housing intended for rent.

(v) Forced expropriation of housing

The system of forced expropriation of housing is modified, establishing that forced expropriation for reasons of social interest may be applied for the purpose of providing the competent administrations in the area with a social stock of affordable rental housing to meet, on a preferential basis, the housing needs of people who are in a situation of residential exclusion or are at risk of it.

A "cause of social interest" is understood to be non-compliance with the social function of property, relating to the legal and effective occupation of housing to constitute the residence of people. When the forced expropriation is only for the use of the dwelling, its duration must be for a period of 10 years at most.

The requirements to apply the forced expropriation of housing will be the following:

  1. That the properties are located in the areas indicated by the Sectorial Territorial Plan for Housing;
  2. That the dwellings are registered in the Register of empty dwellings and dwellings occupied without a qualifying title, or are susceptible to being registered, or belong to legal entities that have acquired them from an owner of dwellings registered in the Register in the first or subsequent transfers, even though the current owner is an asset securitization fund or the acquisition has been made through the transfer of shares or holdings in commercial companies.

(vi) Renewal of compulsory social rental contracts

In relation to the cases of social rentals established by Law 24/2015, of July 29, on urgent measures to deal with the emergency in the field of housing and energy poverty, it is established that in cases of social rentals that reach the end of the contractual period set, the persons or family units affected have the right to formalize, for one time only, a new contract according to the conditions established by the law, provided that they continue to be within the parameters of residential exclusion established in Article 5.7 and that this is accredited by the affected parties themselves. To this end, the owner of the property must require those affected to present the documentation that corroborates this four months before the date of expiry of the contract.

(vii) Obligatory social rent

The obligation to offer social rent prior to the filing of actions is extended to any enforcement action arising from the claim of a mortgage debt and to the following eviction suits:

  1. Due to the expiration of the duration of the legal title that enables the occupation of the dwelling. The proposal of social rent is enforceable for a period of three years from the entry into force of the Decree Law of December 23, 2019, on urgent measures to improve access to housing;
  2. For lack of a legal title enabling occupation, where the applicant is a large holder within the meaning of Article 5(9)(a) and paragraph 3(a) of this provision, provided that the following circumstances are met:
    • That the dwelling is in the situation of abnormal use referred to in article 41.1.a of Law 18/2007, of December 28, on the right to housing;
    • That the occupants prove by any means admitted by law that occupation without a title began at least six months before the entry into force of the Decree-Law of December 23, 2019 on urgent measures to improve access to housing.
  3. That the occupants have not rejected any social rehousing option in the last two years offered by any public administration or in accordance with article 5.2.
  4. That the municipal services report favorably on the compliance by the occupants with the parameters of risk of residential exclusion and on the establishment and coexistence in the neighborhood.

The minimum duration of the social rental contracts to be signed in accordance with the provisions of this Law must be at least the same as that established in the urban rental legislation and, in any case, cannot be less than five years if the owner of the dwelling is an individual, and seven years if it is a legal entity.

The definition of large holder referred to in Article 5.9 is extended in the same terms to:

  1. Venture capital and asset-backed funds;
  2. Natural persons holding more than 15 residential units, with the same exceptions as for legal persons under Article 5(9)(b).

Therefore, the obligation to make a social rental offer shall also apply:

  1. With regard to landlords, not only to legal persons but also to natural persons who own more than 15 dwellings;
    1. With respect to evictions, it applies:

      ii.i. To evictions due to expiration of the term of the lease (previously it was only applied to evictions for non-payment);

      ii.ii. To precarious dwellings, provided that, among other requirements, an empty dwelling has been occupied and the occupation is at least six months prior to the entry into force of the Decree-Law of December 23, 2019

The obligation to offer social rentals also applies to legal proceedings initiated before the entry into force of this Decree-Law and still in progress. It therefore applies retroactively if the eviction process has not been completed.

The mandatory social rental offer must be communicated, within three working days of its completion, to the town hall of the municipality where the housing is located and to the Catalan Housing Agency.

(viii) Obligation to relocate persons or family units at risk of residential exclusion

The period for which rent must be offered in certain cases of persons or family units at risk of residential exclusion is changed from three years to "a period equal to the minimum duration provided for in urban rental legislation depending on the type of lessor".

According to Article 9 of the LAU, the minimum duration of a housing rental contract will be five years if the lessor is an individual or seven years if the lessor is a legal entity.

Remember that the obligation to relocate applying to cases of loss of housing established by this article are as follows:

  1. The transfer of housing derived from compensation agreements or dation in payment of loans or mortgage credits on the habitual residence or the signing of the purchase and sale of a housing that has as a cause of the sale the impossibility of the borrower to return the loan or mortgage credit;
  2. Foreclosure of a mortgage or other type of foreclosure resulting from the claim of a mortgage debt and eviction due to non-payment of rental income.

The parties obliged to offer this type of contract are the "purchasers of the dwellings and the parties to the legal proceedings for foreclosure of a mortgage or other type of foreclosure deriving from the claim of a mortgage debt, or eviction due to non-payment of rental income referred to in letters a and b which, at the same time, are, in accordance with Law 24/2015, of July 29, on urgent measures to deal with the emergency in the field of housing and energy poverty, large holders of dwellings registered in the Register of Empty Dwellings and of dwellings occupied without a qualifying title, or that are susceptible to being registered, or legal persons that own dwellings that they have acquired from an owner of dwellings registered in the Register in the first or subsequent transfers, even though the current owner is an asset securitization fund or the acquisition has been made through the transfer of shares or holdings in commercial companies".

(ix) Inclusion of the reference index of rental prices for dwellings in offers of rental contracts for dwellings and rental contracts

The obligation to include the reference index of rental prices for dwellings in rental offers is established when the advertisement includes the price of rent, and in rental contracts.

(x) Establishment of a right of first refusal for the government in cases of transfer of rented housing

A legal right of first refusal is established in favor of the administration for onerous transfers affecting the following assets:

  1. Privatelyowned land reserved for the use of public housing by urban planning;
  2. Dwellings rented when, in accordance with the legislation on urban leases, they are transferred together with the rest of the dwellings or premises that form part of the same property

In compliance with this right, the person who wishes to sell the property affected for a fee must notify the Administration that holds the right of the conditions of transfer of the property. The exercise of the right of first refusal implies that the administration or the beneficiaries acquire the property under the conditions communicated.

The right of first refusal expires if, from the communication referred to in section 1, the administration does not exercise it within a period of two months.

The transfer of the property concerned without fulfilling the obligation of communication or, once this obligation has been fulfilled, before the right of first refusal expires or under conditions less onerous than those communicated, implies the right of withdrawal. The deadline for exercising this right is three months from the date of registration of the transfer in the Land Registry or from the moment the Administration becomes aware of the sale. The exercise of the right of withdrawal implies that the Administration or the beneficiary acquires the affected property for the same price and under the same conditions as the acquirer.

With respect to the city of Barcelona, the City Council is the holder of this preferential acquisition right.

The legislation on urban leases is applicable for these purposes.

If, in relation to the same transfer of a property, several pre-emptive rights are granted to different administrations, the transferring party may communicate the conditions of the transfer to any of them without distinction. The administration receiving the communication is obliged to send it to the other administrations involved in order to coordinate their actions in the exercise of the right of first refusal.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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