Rovira i Virgili University, through its Research Group on Access to Housing, since 2009 has been working on research into so-called “intermediate tenancies”, in other words, the conceptualisation and design of the legal framework and regulation of new ways to hold property, especially housing. These new types of possession are shared ownership and leaseholding, which are a major innovation in the conceptualisation of private property law in our legal – private system.
The research work undertaken in this first phase was published in the book by Dr. Sergio Nasarre Aznar, L’accés a l’habitatge en un context de crisi, Madrid, Edisofer, 2011.
This research did not become official in nature until late 2011, the research group undertaking to provide a draft bill for the Generalitat de Catalunya [Catalonian Regional Government] (2011 Agreement with the Secretariat for Housing, Catalonian Housing Agency) on shared and temporary tenure, with the aim of making it a basis for it to be regulated in Catalonian Civil Law. This work was delivered in July 2012 and included a first proposal for the regulation of both types of property tenure. A later decision led to this research work being developed in order to be incorporated into the Catalonian Civil Code through the Catalonian Codification Commission, Sub-commission on Rights in Rem, which issued its version for the plenary session of the Commission on 21-12-2012. The text is currently in the final pre-legislative stage, waiting to be introduced in Parliament for its incorporation into the Catalonian Civil Code in the last quarter of 2013.
Both shared and temporary ownership (or leaseholding) are designed to have a double efficacy. On the one hand, they are intended to create a third private property market that could act as a real alternative to buying and renting , neither of which have worked or are working in an optimal way. Furthermore, these are two variants of property possession that are easily adaptable to being used as ways of having social housing, and they are also alternatives to social housing for sale.
To summarise, intermediate tenancies are intended to help overcome the obstacles currently lying in the way of access to housing in our cities. A stable but limited tenure (limited in time or in the progressive way in which it is acquired) represents a less daunting financial effort than buying a home, while at the same time it requires less effort in terms of liquidity on the part of lending institutions. It is also a good way to reduce the number of empty homes in a city, given that it provides more alternatives in terms of finding people to live in such homes.
In 2013 and 2014, the Project “Intermediate tenures as a way of facilitating access to housing” was awarded funding by the Ministry of the Economy and Competition (Fundamental Non-oriented Research Project, DER2012-31409) in order to study the extent of intermediate tenures in the rest of Spain. In the last quarter of 2013 meetings and work sessions were held with the Ministry of Justice and the Ministry of Public Works.
“Shared ownership” is basically the “transfer of ownership of one part of a home” with the owner holding on to the rest of the home, with the buyer having the option to gradually increase the portion held until he has purchased the entire home. The seller may or may not be a public entity. In the event that the seller is a public entity, this would make the whole process more flexible, making it possible to have a public and private housing market with shared ownership.
As explained by Dr. Nasarre “shared ownership consists of a new owner having access to a part of the property that is already owned by another original owner, both coexisting as owners” (see NASARRE, Sergio, Les tinences intermitges: combinant assequibilitat, flexibilitat i estabilitat en l’accés a l’habitatge. http://www.diba.cat/web/hua/documents-material-de-treball)
The principal characteristics of this kind of property tenure are:
- The person who needs the home is an owner from the very beginning, which makes this kind of possession different from other options, such as renting with an option to buy or having surface rights (where one becomes a holder of surface rights, rather than an owner).
- It bestows proprietary rights on the buyer: the right to use and enjoy the entire property, exclusively so (the new owner cannot be disturbed by the original owner) and availability (intervivos and mortis causa), with liens only on the part of the property actually held by the owner. Ownership is accredited by the right of the new owner to attend Homeowners Meetings as full members of the same.
- As for the lien, this could be a mortgage, which would be the way to finance the progressive purchase of the home, without this leading a family into excessive debt.
- If this type of property tenure is to be adapted to use in social housing, availability of the same could be limited to people who meet the requirements for having access to such homes (showing evidence of minimum and maximum income, for example). The use of the property could also be limited (for example, limited to use as a habitual residence) as could the destination of the same (if it is forbidden to rent it out or assign usufruct).
- The buyer has the right and, if so agreed, the obligation to gradually buy more of a stake in the ownership of the home. In the case of social housing the framework proposed would also allow buyers to do the opposite, i.e. the buyers would be able to reduce their stakes in the home according to the possibilities and their financial needs.
While this type of tenure is designed to give a person in need of housing all the proprietary powers necessary to feel like and, indeed, to be the owner of the property from the beginning, it must also have certain limits that protect the original owner (public developer or private individual), and indirectly, the financing entity, from any possible negligent behaviour that may cause a decrease in the value of the property. Thus, the purchaser (joint owner) cannot alter the substance of the property and must use the same for the agreed purpose (eg habitual residence in the case of social housing) and will not be able to alter the structural elements of the property. Moreover, the counter balance to having full use of the property is having to bear those expenses and taxes related to such use
As regards the original owner (such as a developer), this owner will also be able to sell inter vivos and mortis causa the part of the property that it still owns, and will have different powers to verify that the property is not depreciating due to actions or omissions by the new owner. If either the original owner or the new owner transfers its part, the other owner will have the right of first refusal.
Leaseholding occurs when a new owner acquires ownership of a property from an original owner for a certain and set time (from 10 to 99 years, in the current version), which provides significant stability in tenure and greatly increases access to such property.
During this time the new owner has all proprietary rights over the property (use, enjoyment, lien and availability), which, naturally, could be compromised if this type of tenure is used to promote social housing. In contrast, of course, the new owner should take care of all the expenses generated by the property.
Once the above number of years has elapsed, ownership of the property will revert to the original owner, unless extensions are agreed. The original owner will have the right to be compensated for any depreciation suffered by the property that has been caused by negligence on the part of the new owner.
Calculating the effort made by a family in intermediate tenures
On this subject we should refer to the work carried out by Ms. Mª José Soler Tarradellas of the Barcelona Provincial Council.
NASARRE AZNAR, Sergio, “A legal perspective of the origin and the globalization of the current financial crisis and the resulting reforms in Spain”, Contemporary Housing Issues in a Globalized World, Padraic Kenna (Ed.), Ashgate Publishing, 2014.
NASARRE AZNAR, Sergio and SIMÓN MORENO, Héctor, Fraccionando el dominio: las tenencias intermedias para facilitar el acceso a la vivienda, “RCDI”, 2013, no. 739, pp. 3063 to 3122.
PÉREZ RIVARÉS, Juan A., La ‘propiedad temporal’ o leasehold, posible fórmula para facilitar la inversión privada en inmuebles ocupados por la Administración, “La Ley”, no. 7930, 25-9-2012.
NASARRE AZNAR, Sergio, “Les tinences intermitges: combinant assequibilitat, flexibilitat i estabilitat en l’accés a l’habitatge”, Articles d’opinió, Observatorio Local de la Vivienda, Diputació de Barcelona, pp. 1 to 19. Available at: http://www.diba.cat/c/document_library/get_file?uuid=79662ac0-c003-48c5-8242-432d8885b0af&groupId=479934
NASARRE AZNAR, Sergio (dir.), “El acceso a la vivienda en un contexto de crisis”, Ed. Edisofer, 2011.
FERRÁNDIZ, Carlos and NASARRE, Sergio, “Métodos alternativos de acceso a la vivienda en derecho privado”, Iuris, no. 158, March 2011, pp. 36 to 42 and 80 to 82.