2023-09-28 04:00:13
The Housing Law that came into force on May 26 contains in its articles a multitude of articles that are creating a lot of controversy and legal uncertainty in the real estate sector because it is understood that these measures are going to reduce and are reducing the supply of rental housing and It will shift investments between the Autonomous Communities that apply it and those that do not. This is what José Ramón Zurdo, general director of the Rental Negotiating Agency (ANA), estimates.
In the expert’s opinion, the negative effects of this law will reach the main “players” of the real estate sector: promoters, builders, investors, landlords, real estate agencies, tenants or lawyers. Zurdo explains how it affects each role.
The 40% land reserves imposed by the Law for protected housing and 20% in interior renovation actions on urbanized land, together with the dedication of 50% of these reserves for protected rentals, is negatively affecting the activity. promoter, and therefore, also to the construction company, given the difficulty of making real estate developments profitable with so many imposed limitations. These important reserves of land for protected housing, without any consideration in exchange for real estate developers, in the opinion of the General Director of the Rental Negotiating Agency, José Ramón Zurdowill cause a significant decrease in development activity or an increase in prices to compensate for the limitations imposed, because since the 30% land reserves contained in the 2007 Land Law, the number of protected homes in Spain has gone collapsing.”
Another consequence of the important impositions and limitations contained in the housing law regarding rentals, in the opinion of ANA, is that it will affect many public-private agreements and collaborations between Public Administrations, and developers and construction companies. of new homes to be used for rent, remain on hold or fail to materialize because they are not profitable.
Therefore, if rental limitations persist and developers and builders are not compensated in another way, phenomena such as ‘build to rent’ are doomed to failure. Lastly, he states Left handed that “we are already noticing the interest of some developers in moving the real estate developments they had planned in CCAA that have expressed their intention to declare “tensioned areas” to other autonomous communities and territories that have also expressed their intention of not applying the Law in their territories.”
Investors
The enormous legal uncertainty that the Law has created for access to housing is producing fear of many investors who previously resorted to renting homes to make their investments profitable, and now look for other forms of investment with less risk in real estate or complete their investments by going to the purchase and sale market. Which has as a consequence, In the opinion of ANA, that the supply of rental housing is increasingly being reduced and rents do not stop rising.
Landlords
According to Zurdo, landlords are the most affected by this regulation because a social function has been transferred to them that does not correspond to them, such as access to housing for the most disadvantaged classes, which is also a group where the risk of non-compliance is much higher. Currently, he assures Left handed“at the end of the leases there is a flight of many landlords towards other markets, such as buying and selling or towards other types of rentals with fewer limits and risks such as seasonal rentals, room rentals or tourist rentals.”
All of this is aggravated by the increase in phenomena such as squatting and illegal squatting, for which the State currently according to ANAdoes not provide an answer in the new Law for the right to housing, limiting itself to legislating with new requirements to initiate eviction procedures, which the only thing that will cause is the lengthening of the eviction procedures, almost sine die.
Real estate agencies
The Law for the right to housing denies them the ability to charge tenants their fees for the management and formalization of rentals, which is causing, according to the general director of the Rental Negotiation Agency, three immediate consequences:
The cost of these fees is being passed on to the landlords, who in turn are passing them on to the tenants, in rent increases and that is why rental prices do not stop rising. They are leaving themselves in a situation of defenselessness to many tenants as they do not have independent professionals to advise them on the legality of the rental operations that their landlords propose to them. Real estate agencies that were dedicated to rentals are being closed.
Lessees
Others of the great losers. It seemed that a large part of the measures contained in the new Law were to favor this group, when in reality it is being proven that this is not the case, because the landlords, faced with so much legal uncertainty and the lengthening of eviction procedures, to compensate for it, are raising the requirements for new tenants to access housing, leaving many of them outside these requirements, in addition to raising their income to compensate for the greater risks.
Finally, given the policy of limitations imposed on landlords – such as limits on rent updates, rent limitations announced for stressed areas, IBI surcharges on empty homes, etc. – landlords According to Zurdo, “expenses that until now were not included in housing leases are beginning to be passed on to tenants, such as community fees, costs for contracting non-payment insurance or Ibis, which are causing prices to continue rising. instead of holding back.”
According to ANA, the rent increases that are occurring are mainly due to four causes:
Due to the impact of new expenses that are being transferred to landlords, such as agency expenses. Due to the greater risks that are being transferred to landlords, such as the lengthening of eviction processes. Due to the shortage of rental housing supply in the face of a high demand.Due to the new limits imposed on home landlords, such as the limitation on rent updates or the freezing or intervention of these.
Lawyers
They are also affected by the new regulations of the Housing Law, especially in terms of the regulation that affects eviction procedures, as the requirements established to initiate eviction procedures in cases of vulnerable tenants are greatly complicated, with very high procedural standards. confusing and ambiguous, and in some cases difficult to apply.
The new changes introduced by the new Law are added to the different regulatory changes that have been produced since the Lease Law of 1964; changes that are still in force, depending on the date of execution of the leases, making it very difficult for the professionals themselves to know the applicable regulations in each case, because each specific case may have different regulations.
Insurance companies
Any company that has to insure the risk of rent collection in a housing lease and assume the cost of eviction procedures for its clients will find that their risk has increased considerably, which will lead to an increase in premiums. of the insurance that they will charge to the landlords, which they will subsequently also pass on to their tenants.
The conclusion of everything stated, Zurdo concludes, “is that with these very restrictive measures that the new Law for the right to housing incorporates towards the only operators who can increase the supply of rental housing, it will never increase, but “On the other hand, its reduction will increase considerably, as is already happening.”
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