The new Law for the Promotion of Social Housing in the Community of Madrid enters into force

On 4 July 2024, the Law 3/2024, of 28 June, of the Community of Madrid on Urban Development Measures to Promote Social Housing in the Community of Madrid (the Law for the Promotion of Social Housing in the Community of Madrid) will finally enter into force. For more information on the legislative process of this initiative, please refer to The Preliminary Draft Bill on Urban Development Measures to Promote Social Housing in the Community of Madrid is submitted for public information.

The final text was published in the Official Gazette of the Community of Madrid on 3 July 2024 and is available in Spanish at this link.

The Law for the Promotion of Social Housing of the Community of Madrid includes, as the most important measure, a new temporary regime of change of use of land classified as tertiary office use for the implementation of social housing units under the lease regime (second article). It also amends some provisions of Law 9/2001 of 17 July 2001 on the Land of the Community of Madrid (first article).

1. Special regime for the change of use of land classified as tertiary office use for the implementation of social housing for rent

The Law for the Promotion of Social Housing in the Community of Madrid includes a new special regime for the change of use of land and even already built plots classified with a tertiary office use for the implementation of residential use as an alternative use. Please note that, for these purposes, an alternative use is considered to be one that can replace the principal use of a plot and develop the specific buildability regulated, where appropriate, for its implementation.

The limitations on the implementation of residential use in the text finally approved are very similar to those of the initially proposed preliminary draft bill. The main novelty is the inclusion of a maximum building percentage of 30% of the overall tertiary use of the area or sector.

More specifically, the regime of conditions for the implementation of the social housing would be as follows:

(a) Destination as social housing for rent: The new use must be for one of the existing types of social housing for rent in the Autonomous Community of Madrid.

(b) Regime of associated and complementary uses: When the alternative use is implemented, the regime of associated and complementary uses will be that permitted in the particular urban ordinance applicable to the principle use, and may not exceed 20% of the buildable area that materialises.

(c) Requirement of urbanisation or at least simultaneity: The unbuilt land on which the new residential use is to be implemented must be urbanised (to be considered as ready to build land) or the construction works should have been authorised under a simultaneous regime together with the execution of the urbanisation works.

(d) Partial implementations are not permitted: The implementation of the use of the residential use must be for the whole building, although the compatibility of uses regime established in the relevant urban ordinances will still apply.

(e) Maximum of 30% of the overall buildable area: The alternative use of social housing that is implemented shall not exceed 30% of the overall buildable tertiary use of the area or sector.

(f) Deadline for licence applications: Licences for change of use may be applied after four months have elapsed since the entry into force of the Law and for a maximum term of two years thereafter, unless the Governing Council decides to extend this period. The four-month period corresponds to the time available to City Councils to decide whether to exclude all or part of this special regime within their territories or to impose additional conditions.

(g) Maximum limit for works' execution: The relevant works must be executed, duly completed and suitable for their specific use in accordance with town planning, environmental and safety regulations within a maximum period of three years from the date of commencement of the works, unless an extension of the deadline is agreed by the Governing Council.

(h) Compliance with urban planning obligations: The implementation of residential use on these plots will oblige the developer to transfer the land intended for local public networks in favour of the relevant City Council or, alternatively, to substitute this obligation with a monetary payment. This transfer, once materialised, will be consolidated. Likewise, if this implantation entails the need to extend the infrastructures and public networks outside the plot, the responsibility and cost of carrying out these works will be borne by the licence applicant.

If the above conditions are met, the new regime allows the application for a direct licence, without the need to amend the urban planning (i.e. the applicable general master plan). Such licences must describe the new alternative use and the social rent scheme to be applied, and must be registered with the Land Registry. The alternative use will not increase or decrease the buildable rights recognised by the urban planning, nor will it be counted for density purposes in those cases in which the urban planning establishes a maximum limit of residential units for the urban area in question.

The final text eliminates the need foreseen in the Preliminary Draft Bill to apply to the City Council for the change of the classification or the incorporation on the plots of the alternative residential use to tertiary use once the maximum period of the public housing protection regime has expired. It seems, therefore, that the consolidation of the new use will be automatic and without time limit, which makes this regime much more attractive.

Finally, as mentioned above, City Councils have a period of four months from the entry into force of the Law to decide not to apply, totally or partially the special regime in their territories, to establish additional conditions or to define the territorial areas for implementation.

2. Amendment of the Law on the Land of the Community of Madrid

The Law for the Promotion of Social Housing in the Community of Madrid also amends some provisions of Law 9/2001 of 17 July 2001 on the Land of the Community of Madrid. According to the explanatory memorandum to the Law for the Promotion of Social Housing in the Community of Madrid, the purpose of these amendments is to eliminate unnecessary burdens on urban development burdens and to adapt urban development activity to the new social and economic demands, especially in the area of social housing.

The three main changes are as follows:

(a) The supra-municipal public housing networks are now excluded from the requirements of buildability of the use of less than 5% of the residential buildability established by the urban planning and from the mandatory compliance with the provision of public networks (amendment to section 36.2.c).2º.2º.1).

(b) The standard number of parking spaces required for social housing is set at one space per unit (new paragraph in section 36.3.d).

(c) A special plan is no longer required for the Autonomous Community to be able to modify the urban planning determinations in the development of supra-municipal public networks of public housing subject to a protection regime (amendment to section 67.1).

3. Entry into force

The Law for the Promotion of Social Housing in the Community of Madrid shall enter into force on 4 July 2024, the day following its publication in the Official Gazette of the Community of Madrid.
After this date, and for a period of four months, i.e. until 4 November 2024, City Councils may decide not to apply the special regime for the change of use (from offices to social housing units for rent), as well as to establish additional conditions or to define the territorial areas for its implementation. Until these four months have elapsed, no licences may be applied for, so that the application period also begins on 4 November 2024.

With regard to the amendment to the Law on the Land of the Community of Madrid, it is directly applicable from 4 July 2024. As transitional regime, in relation to the procedures initiated under section 36 (referring to the definition and establishment of public networks), the new regulation is directly applicable to public housing in supra-municipal networks in process and the interested parties may request the continuation of the procedure already initiated and not yet completed, in accordance with the legislation in force at the time of the initial approval.

4. Our services

Ashurst Madrid has professionals who are experts in the legal regulation of the housing sector and in the urban planning process of your development. We will be happy to review any particular situation or portfolio of assets and the implications that this new Law may have for it, as well as to recommend the most appropriate actions in each case.

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