The Government has reached an agreement with ERC and EH Bildu to approve the first state housing law of democracy. It is an investiture commitment that had been negotiated for more than three years and that, although it was crystallized in the first Budget pact between PSOE and Unidas Podemos, did not receive the final approval until this very Friday, on the eve of the campaign the regional and municipal ones.
The future housing law contains important changes with respect to the bill approved more than a year ago. These are the main ones:
Once the current limitation on rent increases of 2% ends, starting January 1 of next year, and “to avoid uncontrolled rent increases”, a 3% cap will be applied to contract renewals during all 2024.
As of January 1, 2025, a new index will be created to limit rent increases in all parts of Spain. It will be a more stable reference and will always be lower than the evolution of the CPI. It is planned to create a working group to define this measure.
The autonomous communities may, based on their powers and taking into account their respective realities, lower the status of “large holder”, or owner, of the 10 properties established by the Government bill to the 5 properties that will finally be included in the Law. The condition of large holder will be important for the limitation of rents in the so-called stressed market areas.
The rents of the new contracts that are signed in stressed areas will be limited to a reference index that will be established by the Government through the Ministry of Transport. In other words, the autonomous community will have to declare a stressed area and, then, apply the limitation. This aspect does not change with respect to the bill approved by the council of ministers.
The owners of less than five properties in stressed areas (provided that an autonomous community declares it) will have limited rent increases. In this case, they will have to freeze prices or reduce them in exchange for fiscal incentives. Specifically, they will be able to see a reduction in personal income tax between 50 and 90% when the price is lowered by more than 5%. If the home is rented to young people between the ages of 18 and 35, the deduction reaches 70%. And it will be 60% if rehabilitation works have been carried out on the property in the two previous years.
For the new rental contracts that are signed, the housing law leaves the possibility for autonomous communities and town halls to determine price ceilings with the aim of some owners withdrawing their properties from the market to then re-include them without having to limitations. This was one of the conditions in which ERC insisted the most to give its support to the norm.
The declaration of stressed areas will be declared when one of these two conditions is met: that the average cost of the mortgage or rent plus basic expenses and supplies exceeds 30% of the average household income, or that the The purchase or rental price of the home has increased at least 3 points above the CPI in the five years prior to the declaration of a stressed area.
The real estate expenses and fees produced by the rental of a property will always be borne by the owner and not the lessee.
Since the entry into force of the housing law, evictions must be with a predetermined date and time. In addition, there will be new extensions in the uprising processes and negotiation processes for vulnerable families will be enabled. The autonomous communities will be able to articulate this negotiation to avoid an eviction and, in addition, they will have the possibility of allocating resources from the State Housing Plan to offer a housing alternative.
The future housing law will enable the Catalan law, currently appealed by the Government before the Constitutional Court. ERC considers that the norm supposes a “competence armoring” of the autonomic norm.
