State and Generalitat reach housing deal

On 2 November 2018 the Council of Ministers authorised asking the Prime Minister to withdraw the appeals brought by the previous Government before the Constitutional Court against laws 24/2015 and 4/2016 on housing emergency, passed by the Parliament of Catalonia. The withdrawals are the result of an interpretative agreement between the Government and the Generalitat, closed after several weeks of work by the legal teams of both sides.

The Generalitat accepted the Government’s proposal that the withdrawals be partial, since grounds of unconstitutionality persist in some articles on which the Constitutional Court has ruled in earlier judgments. It is a significant step, both legal and political, and it directly affects owners, financial institutions, tenants and families at risk of losing their homes.

What is saved and what is not

With the withdrawal of the challenges, and in line with the Constitutional Court’s doctrine, three essential protective measures of both laws remain: the proposal of social rent by banks to the person who, meeting certain requirements, is about to be evicted; temporary expropriation of the use of empty homes owned by banks or large corporations, with compulsory assignment of their use; and the obligation to rehouse in certain cases people or households at risk of residential exclusion.

By contrast, the withdrawal is partial because some provisions will remain challenged. The example cited by the Government is the possibility of expropriating the use of homes while the eviction procedure is under way, which the Constitutional Court had already found contrary to the Constitution in earlier judgments. In other words, it is not a blank cheque, but an agreement based on what case law already allows.

What it means in practice

For an owner, whether a financial institution or an investor with homes, the agreement clarifies what obligations can be demanded in Catalonia: offering social rent to the person about to be evicted, in certain cases, or temporarily assigning an empty home if it belongs to a bank or a large corporation. Legal certainty matters, because for years these laws have been in a state of uncertainty, with part of their content suspended.

For tenants and vulnerable families, the withdrawal confirms the validity of the measures that are considered compatible with the Constitution. For the Parliament and the Government of Catalonia, the agreement shows a route to resolving conflicts of competence through dialogue and not only before the courts. Housing, moreover, is an area where the competences of the State, such as civil and procedural law, and of the autonomous communities meet, which is why tensions are frequent.

What to review

Owners with homes in Catalonia, especially those with several properties, can review the state of their properties, their occupancy and eviction procedures open or planned, to know which obligations reach them according to their status. It is worth being clear whether one is an individual or a legal entity, how many homes are owned and in what situation, because the obligations depend on that information.

Those who invest in housing for rent or sale should add this information to their risk analysis, and those who are tenants or at risk of losing their home can find out about the social and municipal services available. In any case, the application of these rules is complex and advice should be taken before acting.

An agreement between administrations does not close the housing debate, but it does clarify which rules remain standing.

This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.