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Decree Law No. 1/2020


Publication: Republic Diary No. 6/2020, Series I of 2020-01-09
  • Issuer: Presidency of the Council of Ministers
  • Diploma Type: Decree Law
  • Number: 1/2020
  • Pages: 2 - 11

Summary in plain english

What is it?

This decree-law creates the real right to durable housing (DHD) within the framework of the New Generation of Housing Policies (NGPH).

The DHD allows one or more persons to reside permanently and for life in a dwelling by paying the owner an initial deposit and a monthly instalment. The DHD is thus an alternative to solutions for the purchase of own or leased housing.

What is going to change?

The housing is delivered by the owner to the resident, with a minimum medium and free of charge level of conservation, through the signing of a contract.

The resident has the obligation to pay the owner an initial deposit - which can be returned, in part or in full, if he/she waives the DHD during the first 30 years of residence in the dwelling - and a monthly payment.

The value of the deposit is established by an agreement between the resident and the owner and must be between 10% and 20% of the median sale value of the housing market, according to its location and size. This median value is calculated based on the sales price per m2 indicator published by the National Statistics Institute.

The value of the monthly payment is freely established between the resident and the owner.

What advantages does it bring?

This decree-law makes it possible to reconcile the housing needs of families in terms of stability and security with the flexibility and mobility resulting from people's life paths.

For the owner of the dwelling, the DHD has the following advantages:

    • Stable and secure profitability, given that the guarantee of the deposit paid by the resident extinguishes the risk of non-payment by the latter of the compensation due or of not carrying out the works to be carried out;
    • Significant reduction in the management costs of its built heritage, as it is the resident who is in charge of carrying out ordinary maintenance works and paying the costs related thereto, municipal taxes and the municipal tax on property;
    • Possibility of managing and making profitable the capital corresponding to the deposit paid by the resident;
    • Right to recover the dwelling in a medium state of conservation, at least, in case of extinction of the right. When recovering the dwelling, if the resident has not ensured at least an average state of conservation of the dwelling, the owner may deduct the costs of the works from the balance of the deposit to be returned to the resident.

For the resident, the DHD has the following advantages:

    • Right to live in a dwelling for life. The resident has a lifetime right, which can only be extinguished if he or she so wishes or if he or she definitively breaches the contract;
    • Much less need for investment (and indebtedness, if any) in comparison with the purchase of a home;
    • An alternative solution in conditions of stability and security for situations in which the acquisition with recourse to credit is not possible or desirable;
    • Solution for occupying owners who wish to sell their home without compromising access to a new housing solution under stable conditions: by reinvesting only a small part of the sale value they have access to a new home on a stable basis, releasing the remaining money to supplement the family budget or reinvest;
    • The right to a full or partial return of the deposit if you choose to waive the DHD in the first 30 years of its validity, and subsequently reuse this amount to access another housing solution more appropriate to your personal, family or professional path;
    • Possibility of mortgaging the DHD if you need to contract a credit to pay the deposit.
When does it enter into force?

This decree-law enters into force on 10 january 2020.

Original Version

LEGAL TRANSLATOR

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CONSOLIDATED LEGISLATION

Legislative consolidation integrates the various amendments and rectifications made into an original legal diploma in order to make its consultation more accessible to the citizen.