The Government will update the maximum price of privately-initiated social housing in order to encourage its construction

Mar 31, 2022 | Current affairs, Featured, Revista Lloseta, Thursday Daily Bulletin, Tradition

The President of the Government of the Balearic Islands, Francina Armengol, accompanied by the Councillor for Mobility and Housing, Josep Marí, and the Councillor for Finance and External Relations, Rosario Sánchez, met this afternoon with representatives of different associations of builders and developers of the Balearic Islands to inform them about the implementation of a measure that will allow the Government to update the maximum price of privately-initiated subsidised housing.

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This measure is included in the Decree-Law of extraordinary and urgent measures to alleviate the economic and social crisis caused by the effects of the war, which was approved in an extraordinary Council of Government this morning and is part of the Balearic Islands’ shock plan to deal with the consequences of the war.

With this measure, the Governing Council is empowered to adjust the maximum price of private VPO to the effective construction prices, provided that this adjustment is justified with a technical report. The aim is to make the construction of VPOs by private developers viable and, in this way, introduce more affordable housing into the market.

The councillor Josep Marí stressed that: “the increase in the price of construction made it unfeasible for private VPOs to be built at the current maximum price”. With this price review “we guarantee its viability with the aim of meeting the demands of the middle class to have access to housing at affordable prices,” added the councillor. The current general VPO regime sets the maximum price at 1,940 €/m² and this regulatory change will allow this price to be increased according to the market situation.

For her part, councillor Rosario Sánchez explained that the decree-law approved today enables the revision of public contracts and concessions to compensate the Administration’s contractors “in the face of rising prices”. As the councillor indicated, this measure can be applied in those cases “in which there has been an extraordinary and unforeseeable alteration of more than 6 per cent in the prices of materials”. This will affect the contracts of the administration of the autonomous community, with the exception of minor contracts, executed or in execution as of 1 January 2021. It will also be applicable to the contracts of island councils, town councils and the autonomous public sector.

Incentivising private housing

In addition to the increase in construction prices, there are other factors that have hindered the viability of building private VPOs, one of them being that the State Housing Plans have not included subsidies for the construction and purchase of VPOs for years. Another is that the module prices have been frozen in the Balearic Islands since 2008, linked to a State Royal Decree, which had caused them to become outdated.

At present, there is land available in private hands for the construction of VPO and it is expected that this will increase, as this is contemplated both in the draft of the State Law for the right to housing and the future General Plan of Palma. On the other hand, it should be remembered that the Government has already established that the VPO regime will be permanent and will not end after thirty years, as was previously the case.

The hearing was attended by the president of the Association of Builders of the Balearic Islands and vice-president of the CAEB, Francisca Alba; the president of the Business Association of Property Developers of the Balearic Islands (PROINBA), Luis Martín; the president of the Commission of Construction and Auxiliary Companies of the CAEB, Óscar Carreras, and the general director of the Association of Builders, Sandra Verger.