Main consequences of the approval of the Decree Law 17/2019 by the Parliament of Catalonia
Analysis of the main measures introduced by Decree-Law 17/2019, of 23 December, on urgent measures to improve access to housing, approved by the Parliament of Catalonia on 5 February.
On February 5, the Parliament of Catalonia approved and validated the Decree Law 17/2019, of December 23, on urgent measures for the improvement of access to housing (DL 17/2019), which includes a large number of reforms to various regulatory texts concerning legislation on empty housing, social renting, expropriation, public housing, urban planning and the Catalan Administration’s right of first refusal for housing awarded in foreclosure procedures. This document will try to summarize the most relevant novelties introduced by DL 17/2019.
The three main objectives of the Decree Law are: to increase the social housing stock to 15 percent in municipalities with a high residential demand; to help people and families excluded from the housing market to access it in conditions that they can afford and that at least 5 percent of the main housing stock in all of Catalonia is used for social renting.
Thus, in order to meet the indicated objectives, one of the main modifications introduced by DL 17/2019 is the change in the parameter established for a property owner to be considered a large holder. While previously it was established as a large holder all those legal entities that had more than 1,250 square meters of living space, due to the new decree, from now on those who own more than 15 homes will be considered large holders, bringing the novelty that the possibility of considering individuals and venture capital and asset-backed funds as large holders is extended.
In accordance with the modifications introduced by DL 17/2019, said subjects will be obliged to propose a social rental offer before filing a foreclosure and eviction petition for non-payment of rent, as long as the procedure affects persons or family units that do not have their own housing alternative and are within the parameters of risk of social exclusion, even if they are tenants who do not hold any legal title that enables the occupation of the dwelling, if they are able to prove that said occupation occurs before 30 June 2019. There must also be requirements that the housing is in a situation of permanent unjustified unemployment and that the occupants have not rejected any social relocation option in the last two years.
The offer of compulsory social renting is also extended to cases in which foreclosure actions for the claiming of mortgage debts and eviction demands are exercised by the owner of the dwelling on the occasion of the expiry of the duration of the legal title that enables the occupation of the dwelling, within the three years following the entry into force of the decree law. In addition, the minimum period of social renting is presumably extended to 7 years when the lessor is a legal entity and 5 years for individuals, in accordance with the LAU, and the right to a single mandatory renewal of the social renting contract is included for cases in which the occupants continue in a situation of residential exclusion.
Failure to carry out the proposal for compulsory social renting, when applicable, or which, if carried out, does not contain the requirements demanded, would imply the commission of a serious infringement in accordance with the provisions of Law 18/2007, of 28 December, on the right to housing, and could lead to a fine of up to 90,000 euros.
Another way of meeting the objectives indicated above by DL 17/2019 is the amendment of Article 15 of Law 4/2016, on measures for the protection of persons at risk of residential exclusion, concerning compulsory purchase.
The amendment to article 15 means that compulsory purchase by reason of failure to fulfil the social function of the property may be applied in the case, firstly, of properties located in the areas declared to have a strong and accredited residential demand by the corresponding territorial and local housing plans; and, secondly, in the case of housing registered or likely to be registered in the Register of Empty Housing and Housing Occupied without a Qualifying Title. In this sense, dwellings that remain permanently unoccupied for more than two years without justification, and unfinished properties that were to be used as dwellings, are susceptible to being registered in said register, as long as at least 80 percent of the work has been carried out and more than two years have passed since the maximum period for completion of the work. Likewise, a dwelling will also be considered empty if it is occupied without a legitimate title, unless the owner has initiated a judicial procedure to recover possession before the two years required for the dwelling to be registered in the aforementioned register have elapsed.
It is worth mentioning that the Government approved Decree Law 1/2020, which modifies the definition of empty housing provided for in DL 17/2019, to the extent that the initiation of legal proceedings to recover possession by the owner does not constitute a justified cause of permanent unemployment. The Consell de Garanties Estatutàries issued an opinion on 17 February in which it considered the modification provided for by Decree Law 1/2020, which has not yet been validated by Parliament, to be unconstitutional.
In the event that the two aforementioned cases occur and the owner of the housing in question has not accredited the occupation of the same within a month of the request by the expropriating administration, it will be considered that the social function of the property has been breached and then the competent administration would be empowered to initiate the expropriation procedure, in which the owner will have the content of his property right reduced by 50 percent in favour of the administration. Within three months of the start of the expropriation procedure, the owner and the administration may agree on the destination of the social rental housing through the acquisition of the housing or its temporary use, thus concluding the procedure. When the forced expropriation is limited to the use of the dwelling, the maximum duration will be ten years.
Another noteworthy variation concerns the right of first refusal and retraction provided for in Decree Law 1/2015, of 24 March, on extraordinary and urgent measures for the mobilisation of housing from foreclosure proceedings, granted in favour of the Catalan administration for the transfer of housing acquired in a foreclosure process or through compensation or payment of debt with a mortgage guarantee. It was initially available for municipalities included in the areas of strong and accredited residential demand, but is now extended to all Catalan municipalities and its application, initially scheduled to last until 2021, is now extended until 27 March 2027.
The new DL 17/2019 also makes reference to the public housing, which provides that its qualification will have an indefinite character while the urban planning reserves the use of public housing for them or they are integrated in a public patrimony of land and housing. Furthermore, it establishes for these some parameters to set a maximum sale price and income. In order to determine the maximum sale price, the basis will be 7.5 euros per square metre, and an annual rate of return of 4.8% will be applied to the maximum sale price to determine the maximum rental income.
On the other hand, with the intention of moderating the rental prices of unoccupied dwellings, the non-inclusion of the reference index of housing rental prices used for advertising announcements that include the price, offers and urban housing rental contracts is established as a minor infraction, and therefore punishable by a fine of up to 9,000 euros.
At a town planning level, important measures are also introduced with the intention of increasing the stock of public housing. In this sense, article 57.3 of the Merged Text of the Urban Planning Law is modified, which establishes that municipal urban planning plans and their modifications must reserve a minimum of 30 percent of the roof that qualifies for new residential use, to be used for the construction of public housing.
Likewise, the fourth final provision of DL 17/2019 includes a mandate to the Government of the Generalitat to approve the Sectorial Territorial Plan for Housing within one year, according to which, in the municipalities included in the areas of strong and accredited residential demand, standards must be established that are superior to the Merged Text of the Urban Planning Law with regard to the reservation of land for public protection. Thus, it sets a minimum of 50 percent of the reserve of the roof that qualifies for new residential use on delimited developable land, while it will be 40 percent in the case of unconsolidated urban land, with the provision in the latter case that it can be reduced to 30 percent in cases where the economic viability of the operation cannot be guaranteed. Half of these reserves must be used for renting.
The approval of Decree Law 17/2019 has been surrounded by controversy since its publication. On the one hand, the Platform of People Affected by Mortgages considers the measures adopted to be positive, while Foment del Treball considers that they undermine the right to property and, finally, as indicated above, the Consell de Garanties Estatutàries (Council of Statutory Guarantees) considered the definition of empty housing provided by Decree-Law 1/2020, which modified the definition introduced in DL 17/2019, to be unconstitutional in its opinion issued on February 17.
AddVANTE will be attentive to the development of the norm, as well as its practical impact.
