Valuing a VPO: why it cannot exceed the maximum price

When a protected home (vivienda protegida, or VPO) is valued for a mortgage, Orden ECO/805/2003, the ministerial order that governs property valuation for financial purposes, requires the valuer to state two figures: the home's market value and its maximum legal value. The valuation (tasación) that counts for the mortgage is the lower of the two.

For protected housing, the maximum legal value is almost always the lower one. That is the reason, and the only one, why your VPO "won't value any higher": the valuer is not being cautious, the rules stop them from going above the cap.

Banks lend on the lower of the purchase price and the valuation. With an ordinary home, a high valuation can reduce the down payment. With a protected home that does not happen, because the ceiling on the valuation is the maximum legal price, which is usually almost exactly what you pay.

• Do not count on a high valuation to finance more than 80%. The lever for a VPO is the ICO guarantee (aval ICO), not the valuation.
• The buyer normally pays for the valuation, and it is valid for a limited time (six months from when it is issued, according to the order itself). If the process drags on, it can expire and need doing again.
• The valuation company must be approved and registered with the Banco de España (the Bank of Spain). The bank may suggest one, but you can bring your own if it meets that requirement.

This is where the rule becomes practical and saves deals. If a seller asks you for more than the maximum legal price for a protected home still within its protection period, the valuation will show it: the bank will lend on the maximum legal value, and you would have to pay the difference off the title deed (fuera de escritura), which is not only a tax problem but also a breach of the protected housing rules.

Before you sign a deposit contract (arras), work out the maximum price. You can estimate it with the resale calculator for the regions whose model we have verified, and always check it with the authority in charge.

If the protection period has expired, or the home has been de-qualified, there is no maximum legal value to apply any more: it is valued like any ordinary home, at market value. That is why, when buying second-hand, the first thing to check is whether the protection is still alive, in the qualification certificate (calificación) and at the Land Registry (Registro de la Propiedad).

How that process works is in the guide to de-qualifying a protected home.