The Sustainable Growth and Housing Rights Bill was submitted by the Honorable Head of Government to the General Council on August 1st. This bill, as repeatedly announced, aims to bring vacant housing into the rental market through the formula of mandatory transfer. Articles 66 to 74 regulate the concept of vacant housing as well as the procedure for mandatory transfer of housing.
Rightly, the social function of property is invoked (art. 27.1 of the Constitution). However, it is surprising that this provision has not been incorporated into the Expropriation Law of September 3, 1993, where these articles should rightfully be, with sound legislative technique. Indeed, the property owner is deprived of their right of use, even if only temporarily. In this regard, and as an illustration in comparative law, the temporary expropriation of the use of housing in the Balearic Islands uses the mechanisms provided in the expropriation law.
Indeed, the fact that the transfer is temporary does not imply that the holder of this right of use (owner or usufructuary) does not have the right to receive compensation, as indirectly recognized by the expropriation law, which applies to tenants (who have a temporary right of use) according to articles 3.2 and 23.4 of that law.
It seems evident that the legislator simply wanted to avoid using this term due to the rejection it provokes in Andorra. However, in law, “the name does not make the thing,” and the mere fact that the law is not incorporated into the Expropriation Law does not make it contrary to the Constitution or the legal order.
However, one must proceed in accordance with article 27.2 of the Constitution, and the limitation imposed on property by the mandatory transfer must be compensated with fair indemnity and following the procedure established by law, a procedure that must, of course, guarantee the rights of the person deprived of their right of use.
In the case at hand, it is necessary to analyze whether the procedure meets the necessary guarantees for the owner or the holder of the right of use. At first glance, it does not seem that notification to the administrator of the community of owners meets this requirement. The administrator does not represent the owner, and nothing guarantees that they know the owner’s identity or address. Therefore, the law should require that the administrator and the Commune (local authority) be obligated to communicate the information they have on the owner, usufructuary, or holder of the right of use (with the consequent modification of the data protection law), and then necessarily notify the administrative act to the interested party, and finally, decree its publication by edict, always indicating the existing administrative and judicial remedies. Otherwise, the rights of the interested party are infringed.
The expropriation law always provides for the intervention of an expropriation judge and the public prosecutor in several cases, but the bill only provides for the intervention of the administration.
Furthermore, the amount of economic compensation to be received by the owner depends on the affordable rent approved by the Government for the specific housing. It does not seem coherent that this price is not announced at the beginning of the administrative procedure, even if only for informational purposes. The same applies to the cost of housing adaptation, which can only be determined after accessing the property. We believe that failing to communicate these details to the interested party infringes upon their right to make an informed decision.
Here we encounter another point of the bill that has not been thoroughly analyzed from a constitutional perspective: the amount to be received as compensation. It is certainly not the rent paid by the allocated occupant, as the expropriated owner has no legal relationship with them.
First, it is surprising that in the case of temporary expropriation of property rights, the compensation is paid in installments and not at the initial moment when the administration takes possession, as provided by the expropriation law and the Constitution itself, since the deprivation of the right is accompanied by fair compensation.
All these differences between an expropriation carried out with all guarantees, following the expropriation law, and that provided in the bill, could raise doubts about the constitutionality of the mentioned bill.
Moreover, it turns out that the amount of rent at an affordable price depends on the economic situation of the beneficiary (tenant) and can never exceed 75% of the market price (article 3.1 of Law 30/2021 and 12.7 of Regulation 115/2024) and probably, according to article 2.3 of Law 24/2023, it was 6 euros per square meter of housing in 2023.
Can these prices (notably lower than market prices) for housing that may undergo renovations be considered fair compensation? We believe that in no case. In Andorra, compensation related to expropriation must cover all damages. From the moment the amount to be received by the owner is lower than the market price, this requirement is not met, and this aspect of the law becomes unconstitutional.
But another problem is the equality among property owners. Instead of setting common criteria by which each expropriated owner receives compensation based on the characteristics of the property, it will depend on the financial capacity of the transferee of the transfer, because, let us remember, the 75% of the market price is a maximum limit. Therefore, depending on the economic capacity of the transferee, the owner will receive different rent.
The law also overlooks other aspects, such as the case where the transferee deteriorates the transferred property or refuses to leave at the end of the term. It is evident that the Government must once again compensate the owner, even if the transferee is required to take out insurance, whose non-payment is not expressly stated as grounds for termination of the contract and may not cover all damages.
Another controversial aspect is that the owner must reimburse the Government for the expenses incurred in conditioning the housing (art. 72.1 b) of the draft law). With such low affordable prices, it is likely that if the property is not in good condition, the cost of the works will not have been covered during the term of the contract. Thus, the owner will have incurred a debt with the Government of Andorra. The amount of the works is unknown at the time the mechanism of transfer of use is activated, and the duration of the works will only harm the owner. It is evident that the owner is in a situation of absolute helplessness regarding the decisions of the administration.
Furthermore, the provision does not align with what is provided in the Constitution, as it is the owner who must be compensated in case of expropriation, and not the administration by the owner, even if the administration makes improvements to the property. Therefore, we believe that the procedure cannot, in any case, end up obliging the owner to pay any amount.
In conclusion, we believe in this initial reflection that the bill contains enough elements contrary to the Constitution to thoroughly review the text submitted to the General Council and make the necessary references to the expropriation law. Indeed, the mandatory transfer of the use of housing is possible and constitutional in Andorra, but assuming that we are dealing with a temporary expropriation of property rights.
Finally, we will add that, although it may be constitutional, it is also necessary to consider whether it is desirable. There are other much more beneficial policies for making affordable housing available on the market. These include public-private partnerships, where public landholders make it available free of charge, and private capital invests in construction, obtaining in return a temporary surface right or similar, and setting maximum prices for rent or sale of the right to a third party. Surely moderate but long-term returns will attract the necessary capital.
Finally, considering the investment amounts needed to solve the housing issue, all capital, national or foreign, should be welcomed.
