Three laws, that of urban locationsthat of earth and the most recent, that of 2023the only one expressly titled with the name “residence”but whose implementation is today questioned due to the reluctance of the majority of the autonomous communities, which are responsible for putting it into practice. This is the balance of 46 years of Spanish legislation on one of the rights enshrined in the 1978 Constitution, in article 47, and which in this period of time, which lasted almost half a century, has been eminently regulated through decreeswhich changed depending on the political color of the Government of the moment. Unlike education, which has already accumulated eight different laws in the democratic period, the truth is that the state has intervened little in housing. Maybe because until now it had not been seen as a problem.
“Almost all the regulations passed have focused on this regulate the conditions of rental contractsexamining the durations of rental contracts and,in the last of them,intervening in the price containment“,describes the lawyer Cristina Vallejo,specialist in real estate law and member of the Col·legi de l’Advocacia de Barcelona (ICAB). In a market “that is reinventing itself, especially in recent years”, says Vallejo, the sector is being discovered that the laws are clear behind reality.
“The only part of the 2023 Housing Act that is really enforced is the procedural part, but even then it is complicated,” the lawyer explains. The key point of this rule, approved by the government of Pedro Sánchez shortly before the last regional elections fully changed the color of the regional governments, is the definition of stressed rental areas and the next cap on rental prices. But at the moment only Catalonia applies it, waiting for the Basque Country and Navarra to also do so, without a date yet.
Before the passage of the current controversial law, the law that undoubtedly had the greatest impact (and continues to have) was called boyer Decree, 1985, which introduced important changes in urban locations and whose main objective was liberalize the rental marketwhich at that time was highly regulated and controlled. “That decree marked a before and an afteramong other things because it was he who put an end to the so-called old rental contractstherefore rental contracts signed after the day of their entry into force, May 9, 1985, already have an expiration date”, specifies Vallejo.
A country of apartment owners
For the researcher and co-director of the Barcelona Urban Research Institute (IDRA), Jaime Palomera, this is the origin of the problem that suffocates tenants in spain. “It was a regulation that started from the assumption that Permanent rentals had discouraged the marketbecause thay reduced the supply, but the truth is that it continued to decrease over the following two decades, at the same rate it had recorded until then”, explains Palomera.
The housing plans adopted in Spain since 1957, explains the expert, “have always promoted buying and selling housing versus renting“. “It is exactly the opposite of what happens in countries like Germany, Denmark, France or the Netherlands, where rental contracts are by default open-ended and can only be fired for a justified reason, for example because the owner or a family member has to move into the house,” he adds.
Nine years after the decree of Miguel Boyer, who was Minister of Economy with felipe González, the PP promoted the reform of the law on urban rents (LAU), which established the periods of five years for contracts“with the possibility of extending them to another three years,” Vallejo says. But with him everything changed burst of the real estate bubble in 2007which led financial institutions to stop granting mortgage loans with the ease with which they had granted them up to that point. “On the one hand, the population that until then had taken out mortgages stopped doing so and switched to renting. On the other hand, the owners of the surplus apartments decided to rent them out because they saw that they would not sell them,” Palomera continues.
Dance Regulations
and there the normative dance has begun. While in 2013 the PP once again opted for modify the conditions of the LAU and review the duration of rental contracts downwards, leaving them at three years plus one extendable, in 2019, again with the PSOE government, they returned to five years plus three extendable, with the possibility that the first contract outside the seven years if the the tenant was a legal person.
“We are at a time when demand for rental housing has increased as an inevitable result demographic changes and increased migration towards large cities such as Madrid and barcelona, where market pressure has caused prices to rise. However, supply has not grown at the same rateaffected by the lack of tax incentives,an unfavorable regulatory framework and the proliferation of tourist rentals in some areas”,says Helena Beunza,president of the Association of Rental Home Owners (Asval),which brings together more than 6,000 members. of which 95% are small owners.
And now?
The approval of First ley specifically housing last year is not having the desired effect. Not even its strongest defenders, the tenant sector, looked upon it with satisfaction. “It is true that it is the first law in decades that intervenes on prices, but the problem is that it is sometimes contradictory, distinguishing between small and large owners, which we do not believe should be a criterion”, reflects Palomera, who regrets the fact that “while setting price limits, does not provide for any sanctioning regime, which makes its effectiveness questionable.” “At Asval we believe that the current regulatory framework has not been able to adapt to the needs of the market and we support an approach which promotes investment in rental housingboth public and private,to achieve a sustainable balance that responds to the current needs of society”,adds Helena Beunza.
What are the key provisions of the 2023 Housing Act in Spain?
Interview between Time.news Editor (TNE) and Cristina vallejo, Real Estate Law Expert (CV)
TNE: Welcome, Cristina! We’re excited to have you here to discuss the evolving landscape of housing legislation in Spain. It’s evident that the topic has gained significant attention, especially with the introduction of the 2023 Housing act. Could you give us a brief overview of the key developments in Spanish housing law over the past nearly five decades?
CV: Thank you for the possibility! Indeed, the legal framework around housing in Spain has seen notable changes, especially as the 1978 Constitution enshrined the right to housing. Over the past 46 years, there have been three major laws addressing urban rentals, along with innumerable decrees that varied with the political climate. Compared to othre sectors like education,where we’ve had multiple legislative revisions,housing has been largely static until recent pressures prompted this shift.
TNE: The 2023 Housing Act has generated quite a bit of discussion. What are its primary objectives, and how does it differ from previous laws?
CV: The 2023 Housing Act is indeed a pivotal piece of legislation as it primarily seeks to address rental prices and the conditions of rental contracts. Its defining features include the establishment of “stressed rental areas” and the implementation of rental price caps. however, it’s crucial to note that its enforcement has been inconsistent, with Catalonia being the only autonomous community currently applying it effectively. Other regions, like the Basque Country and Navarra, have yet to adopt it, which raises questions about overall implementation.
TNE: Why do you think there is such reluctance among autonomous communities to implement the 2023 Housing Act?
CV: There are multiple factors at play.Some communities may perceive it as an infringement on their autonomy, while others might fear how it could impact the rental market negatively. Additionally, the political landscape has shifted significantly, leading to a divergence in views on housing policy. Many communities are hesitant to adopt measures perceived to limit profits for landlords, which complicates the political will to implement these regulations.
TNE: you mentioned the Boyer decree of 1985 as a significant turning point. Can you elaborate on its effects on the rental market?
CV: Certainly! The Boyer Decree aimed to liberalize a highly regulated rental market by ending the era of old rental contracts, which were often lifetime leases. This decree changed the dynamics dramatically, leading to the introduction of expiration dates for new contracts.While it was intended to increase the supply of rental properties by encouraging landlords to enter the market, it didn’t fully achieve this goal. Rather, rental availability continued to decline over the next two decades, exacerbating the housing crisis we’re seeing today.
TNE: Jaime Palomera from the Barcelona Urban Research Institute has pointed out that permanent rentals were seen as a discouragement to market supply. What is your take on this viewpoint?
CV: Jaime’s assessment brings an important dimension to the conversation. The belief that permanent rentals disincentivize market activity has been a prevalent narrative but doesn’t reflect the complex realities of the housing market. Even after the liberalization measures of the Boyer Decree,the supply of housing remained tight. This indicates that merely adjusting legislation does not address underlying economic and social factors—like income disparities, urban migration trends, and investment strategies—that hinder the availability of affordable rentals.
TNE: Moving forward, what do you think needs to happen to create a more balanced housing market in Spain?
CV: A multifaceted approach is essential. We need legislation that not only regulates rent but also incentivizes the construction of affordable housing. It’s crucial to engage both public and private sectors in dialog to develop complete housing policies that reflect local needs. Additionally, there should be a concerted effort to empower vulnerable populations and ensure that their voices are part of the policy-making process.
TNE: Thank you, Cristina, for these insights. It’s clear that the road ahead is complex but vital for the future of housing in Spain. We appreciate your time and expertise today!
CV: Thank you for having me! It’s always a pleasure to discuss these critical issues.
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This interview aims to highlight current housing legislation challenges in Spain while providing expert perspectives on the implications and future directions for the housing market.