VPO: This is how scams are in the sale of subsidized housing in Spain: separate furniture or 50,000 euros in black | Business | The USA Print

Protected housing continues to be the subject of illegalities, fraud and shenanigans in Spain. It is the bargaining chip with which some owners are earning extra money. “My partner and I are looking at a flat to buy… The ones we are interested in are subsidized housing… The real estate agents are asking for a minimum of 50,000 euros in b, they tell you as if it were normal.” It is just one of the comments that can be found by diving into different real estate portals and housing forums. It must be taken into account that subsidized housing can only be sold at the maximum price set by each autonomous community and not at a free price, unless it is disqualified, something that requires a series of administrative procedures and requirements (not exceeding the limit of established income or not having another home).

They are not isolated cases. A user asks in these forums: “We are going to buy a protected house. In the deposit contract, only the purchase of the apartment is included for the appraisal amount established by the Basque Government. But they have made us sign a separate agreement for the sale of kitchen furniture for 6,500 euros in cash, money b. Is it legit?”

Yet another: “A question arose after signing the contract for the sale of a subsidized home in the Community of Madrid… The value of the apartment is 123,000 euros and another 14,000 euros for furniture requested by the seller. Can it pose any problem when going before a notary to notarize?”, the buyer questions. There are even those who sell, without hot cloths and without the excuse of furniture, a house in Valdemoro (Madrid) with protection at a free price (ask for 212,000 euros). The details, in person.

This type of consultation, and what is worse, behavior, is the order of the day, although the truth is that not with the intensity of the years of the real estate bubble, when protected homes were bought and sold with money in b with total joy and in view of all. Protected housing is candy at the door of a school. There are few and their price is much lower than that of free housing. The latter has an average sale price of 1,740 euros per square meter in the third quarter of 2022, while the protected one stands at 1,136 euros, according to the Ministry of Transport, Mobility and Urban Agenda.

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Sometimes it is the owners who are in charge of selling (with cheating) these apartments, but in most cases real estate agencies mediate. One of those well-known firms is behind this ad in Idealista. “Housing plus garage of VPP (public protection housing) is sold at 100,000 euros, module value. The rest up to the sale price for furniture and household appliances subject to paying 4% of the property transfer tax (ITP)”. It is in the Almendrales neighborhood of Madrid and its sale price is 135,000 euros – it has dropped 4%, it cost 140,000 euros. This journalist contacts the agency without identifying herself as such. The agent insists that she is better off chatting in person. She says that the 35,000 euros are because the house, from 2001, is furnished and with electrical appliances.

—How would those 35,000 euros be paid?

“Have you got money?” —he asks, because in a veiled way he gives the option of paying it in b.

The question that arises here is whether these actions are legal. The sale of furniture in a separate private contract is legal. However, the inventory, its payment and liquidation of the property transfer tax (ITP) must be perfectly justified. If it actually involves a payment in b to sell above the module, as it happens in the ads described, fraud is being committed. “Unless the real value of the furniture is that, this practice clearly supposes a fraud whose objective is to sell the house for a price higher than what the law allows,” they say in the CECU legal area.

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Euskadi is one of the autonomous communities with the largest public housing stock in Spain. The Etikalia agency operates there, to which owners have arrived with the intention of selling a flat and “putting in 30,000 euros for four pieces of Ikea furniture,” says Roberto Cacho, manager of this agency present in Bilbao and Vitoria. He has rejected operations because the owner tried to disguise as a sale of furniture what was actually an overprice. “We have managed sales with an extra price of 10,000 or 12,000 euros in furniture, but always justified and with the invoices at hand. What cannot be sold is kitchen furniture from 20 years ago at 12,000 euros, nor can it include works and improvements because it is not a tangible asset”, says Cacho.

Trading above the module without disqualifying is illegal, but you may also be committing tax fraud. The sale of personal property is taxed in the ITP at a lower rate than the home, so if the Treasury considers that all this amount is the value of the house, it is very possible that the buyer will receive a complementary declaration from the Treasury. “It supposes a violation of the protected housing regulations and, at least, a tax fraud by hiding that difference in value from the Treasury,” they warn the Ministry of Environment, Housing and Agriculture of Madrid.

CECU encourages the reporting of these practices “that speculate with a basic necessity such as housing.” The problem is that “in practice there are very few controls,” they complain at the OCU. “If the buyer refuses to pay that amount, they will not sell the apartment. I could report the case to the Housing Council of the autonomous community, but with that I would not be able to acquire that home either ”, they add in this consumer organization, which calls for “greater control in the transmission so that possible legal fraud can be detected”.

The Community of Madrid processed 99 sanctioning files in 2022. In the General Directorate of Housing and Rehabilitation, inspection work is carried out periodically in real estate portals to analyze possible sales of subsidized homes. In addition, it relies on the collaboration of individuals and the portals themselves that send it suspicious advertisements so that the Administration can verify it and carry out the necessary actions to clarify the facts and, if true, start the sanctioning file.

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Serious offense

The surcharge requirement is a serious offence, with fines of between 1,501 and 6,000 euros. The perception is classified as a very serious infraction, from 6,001 to 60,000 euros and the obligation to repay the amounts improperly received. The most common frauds in the Madrid region are advertising the home without mentioning its protected status and offering it at market price. Also avoid the price limit and charge the difference in b so that it does not appear in the deed.

The Basque Government inspects each year around 10,000 flats out of a total stock of around 70,000. It also receives notices from individuals. To sell a protected home, the owner needs an administrative visa from the Department of Housing, without which the houses could not be notarized and registered in the Land Registry. Around 1,000 visas are produced each year for second and subsequent transfers of subsidized housing. “It is important to remember that in the Basque Country subsidized housing has a permanent rating, so it is a stock of affordable housing that does not enter the free market”.

The Basque Government understands that this practice is a fraud of the law and resorts to trial and error in all cases that are identified. “The main way of non-compliance, always in very small numbers, is the collection, regardless of the price of the property itself, of movable property for high amounts.”

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