The coalition government has reached an agreement with ERC and Bildu to defuse the housing law with substantial changes to the regulations that came out of the Council of Ministers.
The new law reduces the conditions to be met for a CVAA or municipality to declare market areas subject to rental constraint, theCPI will cease to be the reference index in rental contracts and lowers to five dwellings either natural or legal person the definition of large landlord in areas subject to constraint.
This year will follow the 2% cap on contract renewals, rising to 3% in 2024, and a new rental rate will be created that will never be higher than the CPI from 2025 onwards.
The agreement was presented by spokespersons for EH Bildu, Oskar Matute, ERC, Pilar Vallugera, respectively, who highlighted the changes they had managed to pact with the PSOE government and Podemos.
What has changed in the Housing Act?
End of CPI: new cap on lease renewals in force On the one hand, the upward cap on lease renewals in force during 2023 is maintained and will remain at 2% until December 31.
It will increase to 3% throughout 2024, and from 2025 a new rental rate will be applied, which should prepare the Mitma, which will be the reference in lease contracts “with the aim of making it more stable and lower than the evolution of the CPI and capping income increases through annual renewal”, the spokesmen stressed.
In addition, it is stated that tenants can benefit from an extraordinary extension of the current contract on an annual basis and for a maximum of three years.
By December 31, 2024, the National Statistics Institute (INE) will define a new reference index for the annual updating of housing rental contracts, in order to avoid disproportionate income increases.
How to declare a stressed rental area? Another substantial change to the agreement is the declaration of zones subject to rental market tensions.
Indeed, the conditions that an area had to meet in order to be declared as such for three years, extendable annually if circumstances persist, have been reduced.
Only one of these conditions now needs to be met: that paying for housing represents an effort of more than 30% on the income of households in the area (plus expenses and supplies), or that prices have risen by more than 3 percentage points over the last five years. Broadening the definition of a large porter: In addition, in these areas of tension, the number of dwellings required to be considered as having a large porterage, whether for individuals or corporate bodies, is reduced.
The change goes from 10 floors to 5 floors of the same owner in this constrained zone, provided that it is motivated and justified by the CVAA concerned. New rental contracts and ceilings to be applied depending on the landlord: The application of ceilings on rental prices in the constrained zone will differ depending on whether you are a small or large landlord.
For an individual landlord, the indexation on previous income in force will be applied, so that only the increase applicable at that time, i.e. 2% in 2023, 3% in 2024, can be applied, and the new index applicable from 2025.
As long as large holders are subject to a price index that cannot exceed that indicated by the new rental index that each CVAA will create. New rental accommodation in an under-pressure area: Another assumption that has been included in the agreement amending the Housing Act is that this occurs when an apartment is rented out for the first time.
If this apartment has not been rented out in the last five years, it is subject to the limits set by the price reference index.
The owner is the one who pays the real estate agent: The agreement also stipulates that real estate costs and fees incurred in renting out a property are always payable by the property owner.
Contracts may not exclude the application of the Housing Act: Similarly, clauses authorizing the non-application of measures provided for by the law in the event of agreement between the parties have been removed.
Promotion of low-cost housing: The percentage of land set aside for protected housing is increased from 30% to 40% for buildable land (new urbanization) and from 10% to 20% for unconsolidated urban land (renovation or renewal of urbanization).In addition, it is forbidden to increase rents by means of new expenses, which would oblige tenants to pay community fees, garbage taxes or any other non-attributable that had not been previously agreed.
Eviction date and time: With regard to evictions, evictions without a predetermined date and time will be prohibited.
New extensions are also planned for start-up procedures, which will postpone proceedings by more than two years, and compulsory access for vulnerable people to out-of-court settlement procedures is provided for. In addition, autonomous communities will be able to set up their own mediation and alternative housing mechanisms as they see fit, forcing large landlords who carry out evictions to submit to them.
For the first time, the ability to use state housing plan funds to provide alternative housing for people threatened with eviction through subsidized social rents will be recognized, rehousing people in vulnerable situations or any other similar policy.
These agreements will result in amendments to the bill that the coalition government has submitted to the Congress of Deputies before it is sent to the Senate, probably at the end of the month or as early as May.
Spokespersons for ERC and Bildu stressed that both the Ministry of Transport and the Ministry of Social Rights “have the will” to push it forward and not to fail before the end of the legislature. What does the Housing Act provide for? Many other measures of the regulations resulting from the coalition government agreement are maintained, such as: Tax incentives for small landlords Normal rent at affordable prices will be fiscally stimulated by modulating the reduction in the net yield of normal rent.
The new contracts provide for a general deduction of 50%, which can be increased to 90% if they are concluded in a constrained market area. Decrease in income in a zone declared tense (90%). When signing a new contract in a restricted residential area, with a reduction of at least 5% on the rent of the previous contract. Rental accommodation for young people aged 18 to 35 (70%). First-time rentals in areas where there is tension among young people.
In the case of new rental contracts for young people aged 18 to 35 in these areas. Rehabilitation or improvement (60%). If rehabilitation work has been carried out in the previous two years.
However, it is now necessary to prove that 10% of the purchase value of the property has been renovated.
In addition, the income increase ceiling will be 10%. Mobilization of empty dwellings: to promote their release onto the market, municipalities are offered the possibility of establishing a surcharge of up to 150% (now 50%) on the liquid portion of the property tax (IBI) that would affect dwellings that have remained unoccupied for more than two years, without valid reason, for owners with at least four dwellings.
If the property has been empty for three years, the surcharge can reach 100%.
Finally, there is the possibility of a further 50% increase in the case of buildings whose owners have two or more apartments in the same municipality. Public housing stock: Public housing stock is subject to permanent protection and cannot be alienated.
At present, it stands at just 290,000 units, which means that only 1.6% of households are eligible for any type of public housing, compared with 10% in other neighboring countries.
Sheltered housing status is defined for an indefinite period.
Basic conditions are set at state level, defining a regime of permanent public protection for protected housing promoted on land qualified as reserve.
In other cases, a minimum disqualification period of 30 years is set. Reactions to amendments to the Housing Act : Although the Government has not presented the amendments to the Housing Act, welcomes the fact that an agreement has been reached on this regulation, which was blocked for over a year in the Congress of Deputies due to the lack of agreement to achieve a sufficient majority between the parties in the investiture bloc.
Government president Pedro Sánchez took to Twitter to hail it as a “historic agreement”.
“Decent housing by law. We have reached a historic agreement to pass the first housing rights law in our democracy. We are responding to one of the main concerns of citizens and strengthening our welfare state,” he stressed.
Podemos leader and Minister of Social Rights, Ione Belarra, described the agreement as “teamwork with which citizens win and lose the bank, speculators and real estate bosses: At a press conference at his ministry’s headquarters, he said it was the “most difficult” negotiation of the entire mandate, also taking into account “how the legislature has been”.
Ciudadanos national spokeswoman Patricia Guasp described the new Housing Law agreed by the Executive with ERC and Bildu, whom she described as Pedro Sánchez’s “populist partners”, as an “interventionist patch”.
As Guasp pointed out through her account on the social network Twitter, these “interventionist patches don’t solve” the “big problem of access to affordable housing”, which attributes to “years of failed PP and PSOE policies” in this and other areas, such as youth employment and emancipation. The most favorable sector for expanding the supply of housing on the rental market: Following the announcement by EH Bildu and ERC on the agreement of the housing law, Francisco Iñareta, spokesman for the idealist, explains that “The government has today once again shown its blindness by continuing its coercive policies towards landlords, ignoring the fact that the real elephant in the room of the rental market is the lack of supply. “All the measures adopted to date have only succeeded in draining more and more of the available supply and increasing problems of access to rent, with a particular impact on the most disadvantaged groups”, stressed the expert, and points to the example of the 2% limit on rental updates, which has just celebrated its one-year anniversary, “which has had a devastating effect on the market.
It’s true that it has helped people who were already renting, but it has been a huge complication for all the people who need to find housing right now”. And he adds that “with the measures announced, such as rent caps, the situation is only getting worse.
Recent experiences in Berlin and Paris, and closer to home in Barcelona, show that the results of these policies, far from improving the rental market, have actually made it worse: they considerably reduce the available supply and increase price pressures.
If we look back, the measures adopted today mark the beginning of a new old income which made it impossible to discount rents and resulted in the annihilation of the rental market and the serious deterioration of rented accommodation, for want of incentives to maintain it”. The Rent Negotiation Agency (ANA), for its part, described the announcement by ERC and Bildu as an “electoral act”. They pointed out that the announced agreement does not contain “a single serious and rigorous measure” to increase the supply of rental housing in Spain, which they say is the “fundamental problem” for tenants. Its managing director, José Ramón Zurdo, added that if the agreement becomes law “it will put a definitive end to the low supply of rental housing”, because, in his view, the measures are “aimed at attacking landlords, individuals and companies”. Finally, he reiterated that the rule was a “useless and unjustified” law because it was “unnecessary”, as it had been shown that “in countries where rental prices have been intervened, they have not fallen, or even risen”. If you are looking for a property in Estepona and the surrounding area, we invite you to consult our catalog on the pages :
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