Draft law redefines the exploitation of municipal real estate

The objective is the creation of a “clear, functional and coherent institutional framework” that will enable municipalities and regions to manage their assets more effectively.

The draft bill stipulates that local authorities are not only obliged to protect their property but also to manage and utilise it in a “diligent and efficient manner.” It also introduces, for the first time, a requirement to prepare an asset management and utilisation programme from the first year of each municipal or regional term. This programme will be approved by the relevant councils and may be revised, while opposition groups will be allowed to submit alternative proposals.

Under the new provisions, the sale of municipal and regional properties will be permitted only through public auction and only where it is demonstrated that it serves the interest of the respective local authority. The relevant decision will require an enhanced majority of the municipal or regional council. Proceeds from asset disposals may be used exclusively for public works, compensation for expropriations, or other needs of local authorities.

The draft law also provides for the possibility of direct sale without auction to the State, other municipalities, public law entities, public utility organisations, and specific categories of cooperatives. Special provisions are also included for properties located abroad.

Particular emphasis is placed on the valuation process for assets. Under Article 564, asset evaluation committees will be established, comprising elected officials, engineers, and financial officers. These committees will assess the suitability and fair value of properties prior to any lease, sale, or acquisition, while high-value assets will require certified appraisal by professional valuers.

The new framework also introduces the possibility of utilising public property through “social counter-concession.” Under Article 551, municipalities and regions may enter into agreements with private developers for the creation of social housing through the development or redevelopment of public real estate. Under this model, private partners may undertake construction or renovation works and, in return, receive part of the property’s commercial exploitation rights, while a portion of the housing stock will be allocated to social housing.

The bill links social counter-concession to the need to expand the housing stock and address the housing crisis, particularly for vulnerable social groups. The conclusion of such agreements requires the approval of the Minister of Social Cohesion and Family Affairs, following a substantiated proposal by the relevant municipality or region.

In addition, special social provisions are introduced for housing support to residents. Article 574 allows municipalities to directly sell plots to low-income residents without first residence ownership. Beneficiaries will be selected based on social and income criteria, such as number of children, health conditions, or damages caused by natural disasters. The price may be set at up to one quarter of the market value, payable in eight annual instalments.

Long-term leases of up to 99 years for tourism investments

A central component of the framework concerns the leasing of public assets. Article 554 provides that leases of municipal and regional property will generally be conducted through public auction, with a repeat procedure in case of an unsuccessful first round. If the second auction also fails, direct negotiation will be permitted, with terms set by the relevant council.

However, the bill also introduces significant exemptions. Direct leasing without auction will be allowed for low-value cases where annual rent does not exceed €2,000, as well as for transfers to the State, local authorities, public law entities, public utility organisations, cooperatives, and energy communities. Temporary concessions of theatres, cinemas, and similar venues for cultural, scientific, or social purposes are also foreseen.

Special emphasis is placed on long-term leases for investment purposes. Municipalities and regions will be able to grant leases of up to 99 years for tourism investments, while leases of up to 50 years are foreseen for sports facilities, primary production, industrial activities, and renewable energy projects. The framework also allows reduced rent for up to 25 years where the lessee undertakes renovation or reconstruction of the property.