On Monday 20 January, the Decree regarding the financial partnership between credit institutions and the Administration of the Basque Autonomous Community for housing and land and amending the housing statutory provisions was published in the BOPV [Official Gazette of the Basque Country]. It came into force on Tuesday 21 January.
This Decree regulates the terms and conditions of the financial partnership with credit institutions for protectable housing and land measures in 2019 and 2020, and for refurbishment, through the Special Financial Instrument for Refurbishment, from 2019 to 2023. This decree expands the range of financial instruments and funding modalities, under advantageous rates and terms, for people who implement the wide array of protectable housing measures.
Special mention should be made of the creation of the Special Financial Instrument for Refurbishment, which defines the partnership between the Basque Government’s Ministry of Housing, the Basque Finance Institute and the signatory credit institutions, to finance the refurbishing of housing and buildings, universal accessibility and the improving of energy efficiency. This Instrument envisages a Guarantee Fund, provided by the Ministry of Housing, which will cover 16% of each failed loan.
KEY ASPECTS OF THE PARTNERSHIP BETWEEN THE BASQUE MINISTRY OF HOUSING AND FINANCIAL INSTITUTIONS
- New grant and subsidy lines are being set up by the Housing Ministry for the interests on loans entered into the finance accessibility actions and, also, all the renovation and remodelling undertaken by owners of empty dwellings for the property to be used in the Bizigune and ASAP public rental programmes.
- Unlike earlier calls, new mixed and fixed rates, both with personal collateral and mortgage. See summary table.
- A specific Special Fund to Foster Accessibility for the over 65s and people with disability on low incomes or difficulties in accessing funding, aimed at facilitating the execution of accessibility works. This fund can be used to defray up to 100% of the accessibility remodelling not covered by the public subsidies for that purpose. The specific percentage will depend on the annual income and the number of members in the dwelling unit, as established in the following table:
| NUMBER OF MEMBERS OF THE DWELLING UNIT | |||
| WEIGHTED INCOME | 1 Member | 2 Members | 3 or more Members |
| Up to €9,000 | 100% | 100% | 100% |
| From €9,001 to €12,000 | 75% | 100% | 100% |
| From €12,001 to €15,000 | 25% | 50% | 100% |
| From €15,001 to €18,000 | 0% | 25% | 50% |
| From €18,001 to €25,000 | 0% | 0% | 25% |
Housing and premises that have received direct grants worth €6,000 or over for their purchase or refurbishment (private individuals, community) may not be voluntarily disposed of inter vivos, or transferred mortis causa, within 10 years from the execution of the public deed of sale or the work completion certification, without the prior accreditation of the reimbursement of the grants received together with the relevant statutory interest.
After duly notifying the ruling granting direct grants worth €6,000 or over, the owner of the dwelling or premises shall establish and register in the Land Registry a unilateral mortgage in favour of the Autonomous Community of the Basque Country, to ensure the reimbursement of the subsidised amounts.
Summary table of the conditions established in Decree 210/2019, of 26 December, regarding the financial partnership between credit institution and the Administration of the Basque Autonomous Community for housing and land and amending housing statutory provisions.
|
TYPE OF OPERATION
|
Maximum variable interest rate of the operation
(spread of the 12-month Euribor) |
Mixed/fixed interest rate |
Annual effective interest rate of the operation, once subsidised |
Maximum financing percentage in relation to the appraised value
|
Maximum term of the operation |
Maximum grace period |
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| Refurbishment of buildings and dwellings
Accessibility
|
o Mortgages
200 basic points
o Personal: < 7 years: 250 basic points > 7 years: 300 basic points |
o Mortgages:
<=15 years:1.75%
o Personal: <7 years: 3% >7 years: 4% |
The same of the maximum interest rate of the operation.
Accessibility: 0%
|
80% Appraised Value. |
o Mortgage: 15 years
o Personal: 10 years
|
o Mortgage 3 years included
o Personal: 3 years included |
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| Refurbishment of dwellings and buildings when the refurbishment is linked to their immediate entitlement to the public brokerage programmes on the rental market | o Mortgages
200 basic points
o Personal: < 7 years: 250 basic points > 7 years: 300 basic points |
o Mortgages:
<=15 years:1.75%
o Personal: <7 years: 3% >7 years: 4% |
1% subsidised |
80% Appraised Value. |
o Mortgage: 15 years
o Personal: 10 years
|
o Mortgage 3 years included
o Personal: 3 years included |
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| LOAN APPROVAL | BENCHMARK MONTH | |||||||||
| 01/01-31/03 | December | |||||||||
| 01/04-30/06 | March | |||||||||
| 01/07-30/09 | June | |||||||||
| 01/10-31/12 | September | |||||||||
Maximum arrangement fee: 0.20%
Additional commission on undrawn balance: 0.05%
Syndication commission: 0.05%
B.- SPECIAL FINANCIAL INSTRUMENT FOR REFURBISHMENT
Special financial instrument for refurbishment is complementary to the financial partnership agreement, even though its guarantees are greater for the credit institutions, which allows the latter to grant loans to private individuals, home-owners associations and other beneficiaries, under more favourable terms and conditions to those of the financial partnership agreement. Specifically, the special financial instrument shall have a guarantee fund to cover failed loans, set up by the Ministry of the Environment, Territorial Planning and Housing and managed by the Basque Institute of Finances.
The text of the Special Financial Instrument for Refurbishment defines the partnership between the Basque Government’s Ministry of the Environment, Territorial Planning and Housing, the Basque Finance Institute and the signatory credit institutions, to finance the refurbishing of housing and buildings, universal accessibility and improving energy efficiency.
The beneficiaries of this grant programme are the owners of dwellings or home-owners associations of grouped buildings making up blocks of flats or street blocks, which were built prior to 1980 and have already undergone urban or structural upgrading, along with the local councils, minor local authorities and public housing promoter or companies are the owners of the buildings and rent them out.
Given that the agreement and the instrument are going to coexist, it should be clarified that the first will be applicable to all protected housing and land measures, while the second is only used for protected refurbishment measures. However, loans in this regard can be granted both against the financial partnership agreement and the special financial instrument for refurbishment. In both cases, the repayment terms and the interest rates are the same, but the amount not. Unlike the agreement, which only covers 80% of the appraised value, after discounting any subsidies from the Public Administrations, the special financial instrument covers of the 100% of the protectable estimate of the refurbishment work, also discounting the subsidies, but with a limit of €18,000 per loan and home or dwelling.
100% of the loan can be drawn at the time of its formalisation.
