Government extends protection for mortgage debtors

Moncloa Palace, Madrid

The Minister for Economic Affairs, Industry and Competition, Luis de Guindos, stressed that the Royal Decree approved on Friday with a moratorium on evictions is part of the measures the government has been adopting since 2012 to tackle this problem deriving from the economic crisis.

Luis de Guindos pointed out that, in March 2012, the government approved the Code of Good Practices, which offered those families on the "threshold of exclusion" the possibility of negotiating to restructure their debt with financial institutions, establishing a write-off or re-possession in lieu of payment. Almost all the banks signed up to this Code. He also pointed out that, in November 2012, it was agreed to suspend evictions, an agreement that still remains in force, and that, in January 2013, 10,000 properties at very low rental prices were made available to the most vulnerable groups.

The minister underlined that almost 80,000 families have been the beneficiaries of these initiatives. Specifically, more than 24,000 evictions have been suspended and 45,600 families have benefitted from the Code of Good Practices, of which 38,500 have re-structured their debt and 7,000 have passed on title to their property in lieu of payment. The Social Housing Fund has also awarded more than 9,000 homes.

Greater protection for debtors

Pool Moncloa/J.M.CuadradoLuis de Guindos highlighted that the new legislation agreed on Friday extends the suspension on evictions for a further three years until 2020. It also makes the criteria more flexible for determining which mortgage debtors are more vulnerable and can thus benefit from the protection measures.

In this regard, those family units with minors will be considered more vulnerable, instead of minors up to the age of three, which was the situation to date, as well as single-parent families with one of more minors in their care. Other recipients include family units including one or more people in a personal situation of disability, long-term care, serious illness or a victim of gender-based violence. Furthermore, as regards evictions, the requirement of having used up unemployment benefits is removed.

Property rentals

The minister explained that the Code of Good Practices introduces the option to rent out repossessed primary dwellings. During the period in which the suspension on evictions remains in force, the mortgage debtor within the threshold of exclusion may request to rent out the property from the financial creditor for a period of five years under favourable conditions, which may be extended for another five years.

Within a period of eight months from the entry into force of the Royal Decree-Law, the government will propose measures designed to facilitate the recovery of the ownership of the primary dwelling by mortgage debtors included within the scope of application of the law.

Luis de Guindos stressed that this law has been negotiated with the PSOE [Spanish Socialist Workers' Party], Ciudadanos, the PNV [Basque Nationalist Party], the CC [Canary Island Coalition] and discussed with other parliamentary groups, and hence trusts that it will receive widespread parliamentary support.

Pool Moncloa/J.M.CuadradoIn his opinion, "the mitigating measures are not the most important issues", although they are indeed important, but rather that "the last two years have seen a fall in the number of evictions from primary residences in year-on-year terms", thanks to the economic recovery and job creation.

Luis de Guindos concluded by pointing out that 95% of Spanish families pay their mortgage every month, and hence these actions only apply to the remaining 5%. "The most encouraging figure is that evictions from primary dwellings are falling at a year-on-year rate of 30% as a result of the economic recovery".

Loans for the industrial sector

The Council of Ministers authorised a call for proposals for loans for industrial investment under the Programme to Strengthen Industrial Competitiveness in 2017. Accordingly, 606.04 million euros will be made available to the business sector.

Loans will be granted to industrial enterprises to implement material investments aimed at the creation or transfer of establishments and to increase the capacity of installed production, and to improve and/or modify production lines. They also seek to incentivise investments made in the area of industrial digitalisation in coordination with the strategy established by the "Connected Industry 4.0" initiative.

The Minister for Education, Culture and Sport, and Government Spokesperson, Íñigo Méndez de Vigo, stated that this could generate "10,000 jobs between direct and indirect employment" and that the call for proposals is in line with "fostering jobs in SMEs".

Other agreements by the Council of Ministers

Pool Moncloa/J.M.CuadradoThe government approved a Royal Decree authorising emergency works for the sum of 16,050,000 euros, to repair the damage caused by the heavy storms at the end of November and December 2016 in Castellon, Valencia, Alicante, Murcia, Almeria, Cadiz and Malaga. Other emergency works were authorised, for a sum of 11,555,000 euros, to repair the damage caused by the heavy storms in January in Catalonia, the Region of Valencia, the Region of Murcia, the Balearic Islands and the provinces of Almeria and Cadiz in Andalusia.

The Government Spokesperson explained that this "swift and effective" ability to adopt urgent measures is made possible thanks to the provision contained in Royal Decree-Law 2/2017, of 27 January.

The government also agreed to submit the cooperation agreement on the issue of the fight against crime between the Kingdom of Spain and the Republic of Niger to Parliament and to support its ratification. The aim of the two countries is to fight crime in all its guises to tackle the security challenge.

In order to enhance the national list of professional qualifications within the area of vocational training, the Council of Ministers approved a Royal Decree updating the professional qualification of the field of electricity and electronics. It also approved a Declaration on the International Day for the Elimination of Racial Discrimination, to be held on 21 March, and appointed Miguel Falomir Faus as Director of the Prado National Museum.

Economic situation in Spain

Pool Moncloa/ JM CuadradoÍñigo Méndez de Vigo highlighted the figures reflected in the report issued by the Organisation for Economic Co-operation and Development (OECD), published this week, on the economic situation in Spain and its outlook for the future. According to the Government Spokesperson, the most significant figure is the upward revision, by two tenths, to 2.5%, of the economic outlook for 2017, and the fall in the unemployment rate to 17.5% (10 points lower than the 2013 figure).

The OECD report highlights "the sound recovery, indicating that this is due, to a very great extent, to the reforms introduced, to Spanish fiscal consolidation - which it describes as correct - to the clean-up and re-structuring of the financial system - carried out by 2012 - and to the labour reform", declared Íñigo Méndez de Vigo. The Government Spokesperson also underlined the reduction in the poverty rate, mainly as a result of job creation.

The "positive view" of the OECD has been reinforced, pointed out Íñigo Méndez de Vigo, by various public indicators in recent days. Among these, he quoted the total spending of inbound tourists in the month of January (up 14% of the same month of 2016), sales by major non-financial corporations (up 3.6% year-on-year) and retail trade, with 30 straight months of growth. The industrial production index (up 2.5% on the same month last year) and property sales (up 18% in January year-on-year) have all also grown.

The minister underlined that in order for economic recovery to continue, "political stability and the guarantee of governability - which allows reforms to be undertaken - are important, in order to generate credibility and confidence in economic growth".

Current affairs

Pool Moncloa/J.M.CuadradoIn light of the announcement by the terrorist group ETA that it intends to definitively cease its activities on 8 April, Íñigo Méndez de Vigo stressed that "the government never speculates on the intentions of terrorist groups", and reiterates what has always been its "firm and solid" position since 2011: what the terrorist group ETA must do is "disarm and dissolve".

In relation to the non-ratification in the Lower House of Parliament of the Royal Decree-Law modifying the regime for stevedores, the Government Spokesperson remarked that the government made an "ambitious and generous" proposal and that it will "continue working to reach a satisfactory agreement" because complying with our international obligations is an "imperative requirement", as is "avoiding a fine that would come out of the pockets of all the people of Spain".

Íñigo Méndez de Vigo denied that this parliamentary defeat will have other consequences. "The government will continue to govern because that is in Spain's interest, and hence early elections will not be called".
The Government Spokesperson announced that "with the aim of providing a positive response, in terms of public employment, to those offering and studying public entrance examinations, the government is studying the way to present a major public employment offer in relation to school education and other areas such as "military academies".

Luis de Guindos, when asked about the reasons why the government opted to merge Bankia and BMV (Banco Mare Nostrum), instead of using other formulas such as a bailout, explained that this alternative "generates some 400 million euros" and, consequently, it is better for its shareholder, the FROB (Fund for Orderly Bank Re-structuring) which, in turn, "means for all of us citizens". This has been justified, he added, by the rise in the share value of Bankia "since the start of the merger process".

In relation to the liquidation by the Government of Colombia of the company Electricaribe, a subsidiary of the Spanish company Gas Natural Fenosa, Luis de Guindos stated that the government "supports the company" and that legal certainty is a "vital intangible asset".