The Valencian government proposes fines for large homeowners who own vacant property in Valencia in order to increase stock and prevent market speculation…
A new decree that will be added to the Law of the Social Function of Housing is about to be put up for public debate, and it is an intriguing piece of regulation. It’s the Department of Housing’s idea, and it’s going to irritate a lot of big homeowners. Once this is approved, the government will be able to fine large homeowners if their property is left empty for more than six months or is not sold within a year.
The draught decree defines large homeowners as “natural or legal persons who engage in an economic activity in the real estate sector and own more than ten homes in any regime”. Their obligation will be to sell their properties under normal market conditions or face penalties. What is new is that the home will not be considered offered under normal market conditions “when a period of one year has elapsed without the home offered for sale being sold or within six months without the rental property being rented”.
The Department of Housing will create a registry of vacant homes, and once a property is added to the registry, the clock starts ticking, and the owners will have to decide whether to rent or sell. If they don’t, they’ll face a hefty fine: the Ministry’s proposal states that “the amount of the fine will be equivalent to the monthly price per square metre of a rent established for public protection housing multiplied by the number of useful square metres of surface and the number of months that have elapsed since the property was registered as empty”. This means that the same fine will be imposed on both unrented and unsold properties.
It may appear to be complicated, but it is not. The Spanish property crisis wreaked havoc on the market, and Valencia wants to put a stop to it. Many repossessed properties ended up in the stock of specialised Bank units that were supposed to sell them on the market, and the biggest culprit is the bad asset bank, Sareb, which has already missed two deadlines to sell its stock. When you look at some of the repossessed properties on the market, you will notice that they are frequently more expensive than regular properties.
Not only that they are more expensive, they are also notoriously difficult to obtain. In the building where this reporter has lived for well over a year in the heart of Ruzafa, prime estate, while apartments sell rapidly when the do come on to the market, there is one owned by a bank that has been boarded up with no viewings or access. Neighbours say that this is because with foreclosures, banks here prefer to wait for the market to rise so that they will make more profit without needing to make any investment.
Absence of transparency, limited access to these properties, and a general lack of interest on the part of banks to sell or rent them all point to the fact that there must be some financial incentive to keep them in stock rather than sell them. Furthermore, the longer banks keep these properties, the more difficult it is to acquire them. Some properties have been on the market since 2008 and are uninhabitable, with many more likely to follow suit soon.
According to the Department of Housing, there are approximately 20,000 vacant properties on Valencian territory that their owners do not care about. Once they are put on the market on market terms, they will be able to drastically change the housing situation in Valencia, which is currently marked by a complete lack of cheap and affordable housing.
This decree will take some time to be accepted, but once it does, six months after its implementation, a flood of cheap, repossessed, and ruined properties are expected to come on to the market. And at much lower prices than they are currently being offered.
It is unfortunate that the Department of Housing has yet to address the issue of vacant plots in Valencia. The application of such a measure to this problem would also solve one of the most serious issues in, for example, Ciutat Vella, where weeds grow in plots that could be used to build new homes, and thereby making Valencia a far more pleasant and attractive city.