Presentation

Since 2009, the  Housing Research Group has been working on the so-called “intermediate tenures”, that is, on the conceptualisation and design of the legal framework and regulation of new ways of  property, especially housing. The research ended up into two new types of ownership: the shared ownership and the temporal ownership, 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 edited by Prof. Sergio Nasarre Aznar, El acceso a la vivienda en un contexto de crisis, Madrid, Edisofer, 2011.

This research did not become official until late 2011, when the Research Group was commissioned to provide a draft bill for the Catalan Government on these intermediate tenures, to use it as a basis for their effective regulation. This work was delivered in July 2012 and included a first proposal for the regulation of both types of tenures.

A later decision led this research work to be incorporated into the Catalan Civil Code. Thus, its works continued within the Catalan Codification Commission, Sub-commission on Rights in Rem , which issued its version for the Plenary of the Commission on 21-12-2012. The Law on shared and temporal ownership was finally passed by Act 19/2015.

Both shared and temporary ownership  are designed to have a double efficacy. On the one hand, they are intended to create a third housing market that could act as a real alternative to buying and renting, neither of which have worked or are working in an optimal way since 2007. On the other hand, they can be easily adaptable to be used as ways of promoting social housing.

Both shared and temporal ownership are stable, affordable and flexible ways of accessing to housing and other property and certain goods.

In 2013 and 2014, the Project “Intermediate tenures as a way of facilitating access to housing” was awarded funding by the Ministry of Economy (DER2012-31409) in order to study the extent of intermediate tenures in the rest of Spain.

A complete explanation can be found here (only in Catalan). In English they are explained at: Héctor Simón Moreno, Núria Lambea Llop, Rosa Maria Garcia Teruel, (2017) “Shared ownership and temporal ownership in Catalan law”, International Journal of Law in the Built Environment, Vol. 9 Issue: 1, pp.63-78, https://doi.org/10.1108/IJLBE-09-2016-0015.

Shared Ownership

“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

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.

Bibliography

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.