The Community of Madrid has approved a guarantee scheme to facilitate the purchase of off-plan new-build properties. The scheme will enable buyers to avoid paying up to 10 per cent of the property’s price in advance during construction – a sum that is usually paid to the developer or co-operative before the keys are handed over. The total limit of the scheme will be 50 million euros.
On 4 November, the Governing Council gave the green light to the scheme’s terms and conditions. Mutual guarantee societies (SGRs) will be able to provide guarantees to developers and co-operatives to cover these advance payments, so that future owners do not have to have that money available whilst the work is being carried out. The initiative will apply to both the private and social housing sectors.
Isabel Díaz Ayuso’s government will cover, at no cost, up to 70 per cent of each guarantee, whilst the SGRs granting the guarantees must cover at least the remaining 30 per cent. To participate, these societies must have their headquarters in the Community of Madrid, meet the established financial requirements and sign an agreement with the Regional Ministry of Economy, Finance and Employment.
The measure does not constitute a direct subsidy to the buyer nor does it reduce that part of the price: the guarantee covers the amounts that are normally paid in advance during construction. The scheme will come into force following its publication in the Official Gazette of the Community of Madrid (BOCM), and buyers will be able to benefit from it once the SGRs join the scheme.
Once the building work is complete, those who take over the developer’s mortgage may apply to join the ‘Mi Primera Vivienda’ scheme, provided they meet the programme’s requirements and take out the loan with a participating financial institution. This initiative allows people under the age of 40 to finance up to 100 per cent of the property’s value; the maximum percentage is 95 per cent for those aged 40 to 45 and 90 per cent for those aged between 45 and 50.
