Today the Government has set the conditions to access the 2,500 million in guarantees that the Official Credit Institute (ICO) will offer to young people up to 35 years old and families with children who take out a mortgage with a bank. The objective of the decision, which has caused controversy in the Council of Ministers because Sumar does not agree with it, is to promote the transfer of the rental market to the purchase of people who, despite having a stable job, cannot today agree to become in homeowners, as explained by the minister of the sector, Isabel Rodríguez.
The Executive has detected that there are places in Spain “where paying rent is more expensive than paying a mortgage,” Rodríguez stated. The Minister of Housing has cited large cities and rural areas, where the option of purchasing a home seems complicated due to the difficulties of accessing private financing.
For the Housing owner, the ICO line of guarantees will also contribute to “buffering” the rental market so that young people and families who are now living in a rental regime can opt to own a home and free up that property on the market. For Rodríguez, the objective is that “no citizen dedicates more than 30% of his income” to his housing expenses.
The State will become a “guarantor” for young people and couples with children and will give “a guarantee to the banks for granting your mortgage,” Minister Rodríguez stated after the Council of Ministers. Financial entities will have to adhere to the agreement. The Government has already established with them to accelerate these agreements.
The conditions of the line of guarantees, which have been established by the Council of Ministers, are as follows: the ICO will guarantee up to 20% of the amount of the mortgage, unless the home purchased has an energy rating of D or higher, in which case up to 25% can be guaranteed. The maximum term will be 10 years until the operation is formalized, regardless of the amortization of the loan. The home for which the guarantee is granted must be the habitual residence.
The Government has established some clauses to try to prevent the public guarantee from being used to do business with housing. In this way, if the owner wants to rent property, he will have to justify changing housing due to a marriage, a separation, a job transfer or obtaining a more advantageous job. Likewise, in the agreement that the ICO and the Ministry of Housing will sign, a maximum limit for the sale price or appraisal of the home will be set, depending on the territory where the property is located.
Home buyers who have these public guarantees must be natural persons of legal age, with legal residence in Spain, and must prove it continuously and uninterruptedly during the two years prior to applying for the loan.
Individual income may not exceed 37,800 euros gross per year (4.5 times the IPREM). In the event that the home is purchased by two people, the income limit will be doubled. These limits will increase by 2,520 euros gross per year for each dependent minor and, in the case of a single-parent family, they may be increased by an additional 70%.
The equity limit of the guarantor will be 100,000 euros and those who already own another home will not be able to benefit from this public line. However, if that first home is the result of an inheritance, co-ownership or a separated or divorced marriage, there will be exceptions.
The decision to promote the property market approved today by the coalition Government is not shared. The second vice president and Minister of Labor and Social Economy, Yolanda Díaz, has stated that these guarantees will have “a probable impact of continuing to raise the price of housing.” Sumar does not support prioritizing the purchase of housing and ensures that the immediate thing should be to regulate rental prices in stressed areas. The only autonomy that has advanced procedures is Catalonia. However, guarantees to buy housing is a measure that was contemplated in the coalition agreement signed between PSOE and Sumar.
