Barcelona seeks partners to expand its protected housing portfolio

BarcelonaBarcelona continues to seek ways to expand the city's subsidized housing portfolio. A key role in this objective is the right of first refusal, the tool that for several years has allowed City Council to have the final say on every entire block of buildings sold in the Catalan capital. This instrument allows for the expansion of public housing stock without waiting for the slow construction process and is now in need of reinforcement. For this reason, the right of first refusal ordinance is being processed, which should make it easier for City Council to seek partners to take these blocks off the open market and convert them into subsidized housing.

To expedite the involvement of these partners and provide legal certainty to the process, the new regulation—pending since the modification of the Metropolitan General Plan (MPGM) and which Jaume Collboni's government hopes to bring to final plenary approval by the end of the year—provides for the possibility of City Council transferring these properties to third parties. That is, actors other than the city council have the option of stopping the sale of a building between private individuals, acquiring it for the price agreed on the open market, and allocating it to social housing.

In this way, they hope to minimize cases like the one in 2021. That year, in the Eixample district alone, thirty purchases of entire buildings between private individuals were made, worth 260 million euros. Despite having the final say on all of them, the City Council only exercised its right of first refusal and redemption on five blocks. With a limited budget, the municipal government had to prioritize, and the remaining 25 blocks remained in private hands and within the open market. Among those blogs that could not be purchased at that time was the Orsola House, which the council has ended up acquiring four years ago later.

With the future ordinance, that 2021 decision on the iconic Consell de Cent estate could have been different. Once the new regulation is approved, the council's refusal to exercise its right of first refusal and redemption will not entail de facto not only give the green light to the sale between private parties, but a second phase will open in which third parties will have the right to keep the block to use it as social housing.

And who are these third parties? To begin with, the public housing development entities and entities linked to the public administration; the natural persons legally occupying the property being sold—provided they meet the conditions for access to the Registry of Applicants for Social Housing—and private or non-profit development entities whose purpose is to build social housing for rental.

In the case of public and private entities that wish to opt for this right of first refusal and redemption, they will first have to receive prior approval from Barcelona City Council. This type of card, which must be renewed every two years, will give them access to a website where they can view listings for all properties subject to the right of first refusal and redemption that the Catalan capital's city council has ruled out acquiring in the first instance.

However, the new regulations also stipulate that the tenants of the building being sold may exercise this right of first refusal and redemption. This option has some peculiarities. Initially, the owner who is willing to sell the property must first notify the neighbors, who will have fifteen days to decide whether they want to acquire the blog and inform both the owner and the City Council. There is also the possibility of a joint purchase between the neighbors and the city council.

To be eligible to acquire the building, however, several additional requirements must be met. First, at least 60% of the apartments in the building must agree. And then, tenants interested in acquiring the property must meet the conditions for access to the registry of applicants for Officially Protected Housing (VPO) – including not exceeding a certain income level – but at the same time prove sufficient financial solvency to face the transaction.

A compressed schedule to avoid delays

In an attempt to curb criticism from the real estate sector—which claims that the right of first refusal and redemption delays the process and paralyzes the market—the ordinance establishes a maximum of two and a half months for the entire procedure once the property owner notifies the City Council that they have a buyer for their blog. From then on, the City Council has a few days to decide whether to exercise the right of first refusal and redemption before it is published on the portal, which can be consulted by approved companies and entities.

The creation of this web portal—and the need to allow time for the approval of public and private entities and companies that wish to participate—will mean that the ordinance will take another half year to be implemented once it is finally approved by the City Council plenary session. Furthermore, once the regulation comes into force, the City Council will have a year and a half to compile a census of all properties subject to the right of first refusal. That is, all the apartment blocks with vertical ownership that exist in the city.

Clarify purchasing criteria

Beyond defining the process by which the City Council can assign its right of first refusal and right of redemption to third parties, the ordinance also seeks to clarify the criteria by which the council decides to purchase a blog or another. In this regard, among the factors to be taken into account is prioritizing the purchase of properties with more than ten units and where there are empty apartments, where there are people with contracts with forced extensions, or where vulnerable groups such as people at risk of social exclusion or disabilities, the elderly, victims of gender-based violence, or single mothers are present. The importance of acquiring buildings in areas "at greater risk of gentrification" will also be taken into account, where few buildings have been acquired in recent years, where there are few affordable housing alternatives, or where they are in poor condition.