The coalition government has closed an agreement with ERC and Bildu to unravel the Housing Law with substantial changes compared to the regulations that came out of the Council of Ministers. The new law reduces the conditions to be met for a CCAA or city council to declare stressed rental market areas, the CPI will no longer be the reference index in rental contracts and the definition of great owner in stressed areas. This year the ceiling of 2% in the renewal of contracts will continue, it will rise to 3% in 2024, and a new rental index will be created that will never be higher than the CPI from 2025.
The agreement has been presented by the spokespersons for EH Bildu, Oskar Matute, ERC, and Pilar Vallugera, respectively, who have emphasized the changes that they have managed to agree with the PSOE government and Podemos.
What has changed in the Housing Law?
End of the CPI: new ceiling on the renewal of current rental contracts
On the one hand, the cap on the increase in the renewal of current rental contracts is maintained during 2023, which will continue to be 2% until December 31. It will rise to 3% throughout 2024, and from 2025 a new Rental Index will be applied, which will have to be prepared by the Mitma, which will be the reference in leasing contracts “with the aim of making it more stable and less than the evolution of the CPI and that caps the increases in income for the annual renewal”, as the spokespersons have highlighted.
In addition, it is maintained that the tenants may benefit from an extraordinary extension of the contract in force on an annual basis and for a maximum period of three years.
Before December 31, 2024, the National Institute of Statistics (INE) will define a new reference index for the annual updating of housing lease contracts, in order to avoid disproportionate increases in rent.
How to declare a stressed area for rent
Another of the substantial changes to the agreement is the declaration of stressed areas in the rental market. In fact, the conditions that an area had to meet to be able to declare it as such are reduced for three years, extendable annually if the circumstances persist.
Now it is only necessary to meet one of these two conditions: that the payment of the house involves an effort of more than 30% of the income of households in the area (plus expenses and supplies) or that prices have risen more than 3 points percentages above the CPI, in the last five years.
Expanded definition of big fork
On the other hand, and within these areas of tension the number of homes needed to be considered a large holder is reduced, whether natural or legal person. The change transcends from 10 floors to 5 floors of the same owner in that stressed area, as long as it is motivated and justified by the corresponding CCAA.
New rental contracts and the cap to be applied according to the owner
The application of caps on rental prices in a stressed area will be different depending on whether it is a small owner or a large holder. For a private landlord, the indexation to the previous rent in force will be applied, so only the increase that is applied at that time can be applied, that is, 2% in 2023, 3% in 2024, and the new index that it will be applied as of 2025. While a price index will be applied to large holders that may not exceed what is indicated by the new rental index created by each CCAA.
New rental home in a stressed area
Another assumption that has been included in the agreement that changes the Housing Law is that it occurs in the event that a home is rented for the first time. If that apartment has not been rented in the last five years, the limits applied by the price reference index will be applied.
The owner will be the one who pays the real estate
The agreement also contemplates that the real estate expenses and fees produced by the rental of a property will always be borne by the owner of the property.
Contracts may not exclude the application of the Housing Law
In the same way, the clauses that allowed the non-application of the measures contained in the Law if there was an agreement between the parties are eliminated.
In addition, it is prohibited to increase rental income through new expenses, which would force tenants to pay community expenses, garbage fees or any other non-attributable that were not previously agreed.
Promotion of protected housing for rent at a limited price
The land reserve percentages for subsidized housing increase from 30 to 40% in developable land (new development actions) and from 10 to 20% in non-consolidated urban land (reform or renewal actions of the urbanization).
Mandatory date and time to carry out an eviction
In terms of evictions, those without a predetermined date and time will be prohibited. It also includes new extensions in the launch procedures, which will postpone the processes for more than two years, and stipulates mandatory access to out-of-court settlement procedures for vulnerable people.
In addition, the autonomous communities will be able to articulate their own mediation and housing alternative mechanisms that they deem appropriate, forcing the large holders that carry out evictions to submit to them.
For the first time, the ability to use funds from state housing plans to offer housing alternatives for people at risk of eviction through subsidized social rents, rehousing people in vulnerable situations or any other similar policy will be recognized.
These agreements will be reflected in amendments to incorporate them into the bill that the coalition government sent to the Congress of Deputies before its referral to the Senate, foreseeably at the end of the month or already in the month of May. The spokespersons for ERC and Bildu have pointed out that both the Ministry of Transport and the Ministry of Social Rights “have the will” to see it move forward and not run aground before the end of the legislature.
What is maintained in the Housing Law?
Many other measures of the regulations that came out of the coalition government agreement remain as:
Tax incentives for small owners
The rental of habitual residence at affordable prices will be stimulated fiscally, through the modulation of the reduction of the net yield of the rent of habitual residence.
In the new contracts, a general deduction of 50% that may be increased up to 90% if it is signed in a stressed market area.
- Drop in rent in an area declared stressed (90%). When a new contract is signed in a stressed residential market area, with a drop of at least 5% on the rent of the previous contract.
- Rental of homes to young people between 18 and 35 years old (70%). Rental of homes for the first time in areas stressed to young people. In case of new leases to young people between the ages of 18 and 35 in said areas.
- Rehabilitation or improvement (60%). In the event that rehabilitation works had been carried out in the previous two years. But now it is necessary to demonstrate that a reform has been carried out for 10% of the purchase value of the property. In addition, the maximum limit of rent increase will be 10%
Mobilization of the empty house
To promote its release on the market, the City Councils are offered the possibility of establishing a surcharge up to 150% (it is now at 50%) in the Liquid fee of the Real Estate Tax (IBI)which would affect the dwellings that have been vacant for more than two yearswithout just cause, for owners with a minimum of four homes.
If the property has been empty for three years, the surcharge may reach 100%. Finally, there is the option of raising it by an additional 50% in the case of properties whose owners have two or more floors in the same municipality.
public housing stock
The public park of social housing will be subject to permanent protection and may not be alienated. At the moment barely reaches 290,000 unitswhich means that only 1.6% of households can opt for some type of housing from the Public Administrations, compared to 10% registered in other neighboring countries.
The indefinite qualification of subsidized housing. Some basic conditions are established at the state level, defining a regime of permanent public protection of subsidized housing that is promoted on qualified reserve land. In all other cases, a minimum term of disqualification of 30 years is set.
Reactions to the changes in the Housing Law
The Government, although it has not come out to present the changes introduced in the Housing Law, welcomes the arrival of an agreement for this regulation that has remained stranded in the Congress of Deputies for more than a year due to the lack of agreement to reach a majority enough between the parties of the investiture bloc.
He President of the Government, Pedro Sánchezhas spoken on Twitter and celebrates it as a “historic agreement”.
“Decent housing by law. We reached a historic agreement to pass the first Housing Rights Act of our democracy. We are responding to one of the main concerns of citizens and we are reinforcing our welfare state”, stressed the president.
The leader of Podemos and Minister of Social Rights, Ione Belarrahas described the agreement as “a team effort with which the citizenry wins and the banks, speculators and real estate bosses lose.
In a press conference at the headquarters of his Ministry, he affirmed that it has been the “most difficult” negotiation of the entire mandate, also taking into account “how the legislature has been.”
The sector most in favor of expanding the housing supply in the rental market
Following the announcement by EH Bildu and ERC on the Housing Law agreement, Francisco Iñareta, spokesman for idealistaexplain what “Today the Government has once again shown its blindness by continuing its coercive policies against homeowners, ignoring that the real elephant in the rental market room is the lack of supply.
“All the measures approved so far have only managed to drain more and more of the available offer and increase the problems of access to rent, with special incidence in the most disadvantaged groups”, highlighted the expert, and gives the 2% limit as an example. to the rent updates, which just turned one year old, “which has had a devastating effect on the market. It is true that it has helped people who were already renting, but it has been a huge complication for all those people who currently need to find a home”.
And he adds that “with the measures announced, such as the ceiling on rents, the situation is only bound to get worse. Recent experiences in Berlin and Paris, and the closest one in Barcelona, show that the results of these policies, far from improving the rental market, have made it worse: they dramatically reduce the available offer and increase tensions over prices. If we look back, the measures approved today represent the start of a new old income which made it impossible to update rents and resulted in the annihilation of the rental market and the serious deterioration of rented homes, due to a lack of incentives to maintain them”.
The Rental Negotiating Agency (ANA), For his part, he has described the announcement by ERC and Bildu as an “electoral act”. They have stressed that the announced agreement does not contain “not a single serious and rigorous measure” to increase the supply of rental housing in Spain, which, in their opinion, is the “fundamental problem” for tenants.
They are CEO, José Ramón Zurdo, He added that if the agreement becomes a Law “it will definitely put an end to the little supply of rental housing”, since, as he considers, the measures are aimed “at attacking the owners, both individuals and companies”. Finally, he has reiterated that the rule is an “unnecessary and unjustified” law, because “it was not necessary”, since it has been shown that “in the countries where rental prices have been intervened, they have not gone down , and in some cases they have even gone up.