Starting this month, real estate developers in Spain will find it easier to secure bank financing for new housing projects, thanks to significant changes in regulatory requirements brought about by the conclusion of Basel III and the implementation of CRR 3 (Capital Requirements Regulation 3). This shift could accelerate much-needed housing production across the country.
Key Change: Pre-Sales No Longer a Prerequisite
For years, Spanish developers had to rely heavily on pre-sales — selling homes before construction even began — to convince banks to finance new projects. This approach, though widely used, wasn’t officially regulated but was prevalent due to the real estate sector’s high-risk classification after the 2007-2009 financial crisis.
From November, this longstanding practice changes. Banks will now require developers to provide collateral equivalent to 25% of the final value of a project — a Loan-to-Value (LTV) requirement — rather than demonstrating a certain volume of pre-sales. This “25% rule” is now clearly regulated, standardizing the process across the industry for the first time.
Why the Change Matters
Relying on pre-sales meant that projects could get delayed or canceled if market demand faltered or economic conditions changed. The new system is designed to provide greater stability and predictability:
- Less Volatility: Access to financing will no longer swing as sharply with the economic cycle, making it more accessible even in slow markets.
- Regulatory Clarity: With a clear 25% equity requirement, both developers and banks can consistently evaluate projects.
- Streamlined Project Timelines: Since developers don’t have to wait until they hit pre-sale targets, construction can begin sooner, helping tackle Spain’s housing shortage more quickly.
This is not a relaxation of standards — the capital requirements remain strict — but rather a technical adjustment designed to make the system more stable and less sensitive to short-term market shifts.
Impact on Housing Supply and Development
The change comes at a critical time. Spain is facing soaring housing prices fueled by a persistent gap between supply and demand. By eliminating the pre-sales bottleneck, projects — especially rentals or those in high-demand but slower-moving areas — can get off the ground faster.
However, experts caution that while the new rule will help speed up financing, other challenges such as land availability, construction costs, and regulatory processes also impact project timelines.
According to data from the Bank of Spain, outstanding loans for development activities are currently between 52 and 55 billion euros, with residential development accounting for about 35 to 40 billion. While lending has recovered somewhat in recent years, it remains below pre-crisis levels, reflecting a more disciplined and cautious approach among both banks and developers.
Alternative Financing on the Rise
If bank financing isn’t viable, developers have increasing access to alternative finance — such as private lenders and crowdfunding. The “I Observatory of Financing in the Developer Sector” by Urbanitae and KPMG predicts that by 2030, alternative finance could account for 37-40% of real estate development funding in Spain, compared to the current 32-35%.
This trend mirrors what’s happening in the UK and US, where alternative lenders already provide up to 40-50% of development financing.
The Bottom Line
With these new, clearer, and more predictable rules, Spain’s developers are set to benefit from faster, more reliable access to funding. This change could help bridge the housing supply gap — provided other structural challenges are also addressed — and aligns Spain with international trends in real estate project financing.
Looking to the future, Spain’s real estate sector appears on firmer financial footing, with a broader range of funding options and less sensitivity to market cycles — giving hope to both developers and homebuyers craving more supply and less red tape.
