Updates on Financing for Social Housing Developers
Publicly subsidized housing (VPO) has acquired great political and institutional relevance in the context of the current tensions in the housing market. This situation has led to the consolidation of a much more robust and integrated public financing framework. In Catalonia, the lines of aid, guarantees, and subsidized loans have been articulated within the 50,000 Homes Plan promoted by the Catalan government.
I. Conditions for access to aid/loans: requirement that the land be registered in the public land reserve
There has been a complete about-face in the system and requirements for obtaining public aid for the promotion of protected housing. It is now a prerequisite to have land registered in the Public Land Reserve, the basic conditions of which were approved by the Government Agreement of February 18, 2025.
In the case of private land, housing must remain under the VPO (public housing) system for a minimum of 75 years and, after this period, may be converted to a free system. In the case of public land, among other tenure regimes, the right of surface (the right to operate the property without owning it) is permitted for the same duration, although the VPO status will be indefinite.
Currently, registration of new plots is closed, but there are still plots already registered in the reserve (mainly by city councils) that have not yet been selected by a developer.
II. Content of the aid
a) Subsidized loans: main financing instrument for promotions under rental or transfer of use regime
One of the main sources of public support for the housing development sector is the subsidy on loan interest rates offered by the Catalan Housing Agency (AHC), which offers reductions of 1.5%.
As we mentioned, 2025 has seen many changes compared to previous calls for proposals. A non-competitive model has been adopted, which involves awarding grants based on the application submission date and until the budget allocation is exhausted, instead of a competitive system in which, beyond the submission date, bids could be evaluated based on various objective criteria.
It's worth noting that subsidized loans offer very advantageous terms compared to those offered by traditional financial markets. These terms include:
Reduced interest rate : For loans from the Catalan Institute of Finance (ICF) for the development of public housing under rental or leasehold agreements, the initial rate is 3.4% with a public guarantee, but can be reduced to 1.9% thanks to AHC discounts. If a public guarantee is not available, the rate is 3.6% and can also be reduced to 1.5%.
However, if the VPOs are promoted for the purpose of transferring them as surface rights, the interest rate will be 4% and cannot be discounted.
Long repayment period : up to 30 years, making it easier to pay the installments (although the discount will only apply during the first 20 years).
Full investment financing : up to 100% of the project cost can be covered, with a maximum of €50,000,000.
b) Monthly subsidies for the income differential: guarantee of long-term profitability
A second avenue for development, included in the new legal framework, is the granting of monthly subsidies to the developer for a period of 28 years.
These subsidies compensate for the difference between the rent due to the tenant according to applicable regulations and the rent resulting from applying €10.65/m².
These reference amounts are updated annually according to the CPI, ensuring long-term economic viability.
For more information, advice, or the development of legal feasibility plans, please contact the Administrative Law Department at Manubens Abogados.
