It is getting every time crazier with these politicians. In the Covid year, in the state of Valencia, they have thought of giving certain municipalities a first right of purchase on houses that have been put up for auction, or houses that have been repossessed by banks. The idea is to give municipalities a better opportunity to add certain houses to their stock of social housing.
This is an illusion. Municipalities or provinces have no money to expand their supply of social housing. The actual reality for years now has been that project developers build these houses, not the municipality or province. Buyers and tenants are then subsidised when they buy or rent these houses. In practice, therefore, the new scheme probably only generates more bureaucracy, without actually being a solution for social housing.
One effect of the law is that innocent buyers can lose their homes if the home was bought at auction or from a bank at some point after 2005.
As you can imagine, thousands of homes have been bought in this category in the past few years of crisis. Here lurks a potential danger for any buyer. The circumstances under which a house was bought have not been published in any way. Imagine that a property has changed hands three or four times. To find out in those cases whether the house was bought at any time after 2005 from a bank or at the auction will be a difficult, perhaps impossible, task.
If the investigation shows that the property was auctioned or the keys returned to to a bank at any time after 2005, then the seller must notify the State of Valencia of the intention to sell the property. Of course, all the details of the property, the personal details of the current owners, the price, personal details of the buyers and other information must be provided. From the moment of notification, the Generalitat Valenciana has 60 days to exercise the right of first refusal. If Valencia does not respond within 60 days, the sale may proceed, but the buyer must give notice again within 15 days of the sale.
Not complying with this regulation can lead to fines, or to expropriation of the property. Of course, no one wants to take that risk. So this will lead to a delay in the execution of purchase/sale transactions.
Requests have already been made to the Constitutional Court that this law infringes property rights and it is very likely that the regulation will be declared null and void in a few years’ time. All the costs, fines and other adverse consequences of implementing this law will probably end up in the hands of the overburdened court system, with claims for liability against the Valencian State, which will then tax more extensively in order to pay for it all. In the end, the bill will be passed on to the citizens. In the meantime, professional investors will be discouraged and may move to other states. All in all, this is not a positive development. It is therefore important to pay attention when buying a home in the state of Valencia.
Roeland van Passel