The President of the Government, Pedro Sánchez, has chaired the event on Monday where the agreements between the Ministry of Housing and Urban Agenda and the Ministry of Economy, Trade and Business, by their respective heads, Isabel Rodríguez and Carlos Cuerpo, have been signed, mobilizing 6 billion euros through the Official Credit Institute (ICO) for the construction of affordable rental housing.
These 6 billion euros are divided into two lines of investments: first, 4 billion euros in loans for public and private developers, from the Addendum to the Recovery, Transformation and Resilience Plan (PRTR); and second, a line endowed with 2 billion euros that will guarantee up to 50% of these loans, promoted by the Spanish Government and managed through the ICO.
The first of the signed agreements launches the 4 billion euros in loans to public and private developers for projects aimed at increasing the stock of social rental housing or energy-efficient affordable housing via new construction or rehabilitation, which also includes financing for the purchase of land or buildings.
The signed agreement includes the financing of operations from January 1, 2022 that meet the conditions set for loan access. These loans must be requested before June 1, 2026 and formalized before August 31, 2026.
There will be two ways to access project financing, depending on demand. Initially, it is planned that the ICO will mobilize 2 billion euros and the financial institutions adhering to the loan line will mobilize the remaining 2 billion euros. However, this distribution may vary depending on demand.
If the ICO is the entity granting the loan, the operation will only require verifying compliance with the requirements and the risk of the operation, for the subsequent granting of the loan. On the other hand, financial institutions will analyze the risk of the operation according to their own risk policy, as it is the entity that assumes the risk of default. If the financial institutions route is used, once the institution and the developer agree on the loan and it is granted, the ICO will transfer the amount of the operation to the financial institution to proceed with the loan to the developer.
The final recipient must apply for this “social housing” loan through their financial institution or directly with the ICO. They will be used for projects aimed at increasing the stock of social rental housing or rehabilitating existing housing, including actions from the Program for the construction of affordable rental housing in energy-efficient buildings of the Recovery Plan (C02.I02), newly constructed homes on public and private land, the rehabilitation of buildings intended for affordable or social rental, the purchase of land for later construction or assets owned by SAREB.
Those homes built through these loans must be intended for social or affordable rental, or leased for this purpose, for a minimum period of 50 years.
Additionally, the projects must be completed on different dates, depending on the type of project funded. Specifically, the financing for the Recovery Plan construction Program must be completed by June 30, 2026. The construction of buildings on urbanized land must be completed within 4 years of loan formalization, with the possibility of extending it for another 2 years. In the case of non-urbanized land, the deadline is 8 years, with the possibility of requesting an extension of an additional 4 years. And a deadline of 4 years, with the possibility of requesting an extension of 2 more years, for rehabilitation.
The funded projects must meet certain climate requirements in which the constructed buildings must achieve consumption of less than 20% of primary energy established for nearly zero-energy buildings according to national guidelines; and the rehabilitated ones must reduce at least 30% of non-renewable primary energy.
On December 27, 2023, the Council of Ministers approved the creation of a credit line to cover on behalf of the State the financing to increase the stock of social rental housing or affordable price, as well as to improve existing ones.
The guarantee covers up to 50% of the loan capital and will be managed by the ICO. The guarantee is free and is granted automatically once the loan is granted, whether accessed through the ICO or from a financial institution adhering to the financing line.
The guarantee granted by the Ministry of Housing and Urban Agenda (MIVAU) has the same term as the loan repayment period or, if longer, 30 years.
Referrer: MiMub in Spanish
