On Tuesday 26 October 2021, the Draft Bill on the Right to Housing was presented for consideration at the first reading by the Ministry of Transport, Mobility and Urban Agency, together with the Ministry of Social Rights and Agenda 2030.
It should be noted that, through this legal framework, a series of rights and duties are regulated whose raison d’être lies in the fulfilment of the constitutional mandate established in article 47 of our Constitution, which guarantees the right of all Spaniards to decent and adequate housing.
However, it remains to be seen whether these measures improve or worsen the current situation of rental housing, whether they really help to improve situations of inequality or whether they cause the opposite effect, uncertainty in investment and a decrease in the supply of rental housing.
New features of the Housing Law
Below, we will highlight some of the main novelties introduced by this body of legislation:
The mobilisation of empty flats
In dwellings unoccupied for a period of more than 2 years, a surcharge of up to 150% of the IBI can be applied. When the owner has a minimum of four properties in the said municipality and there is no justified cause for temporary unoccupation.
This surcharge will be weighted according to the time of vacancy and the number of unoccupied dwellings of that owner in the same municipality.
Incentives in personal income taxation
Similarly, in stressed areas (where housing costs are greater than 30% of the rent in the area and, together with this, rents have risen 5% above the regional CPI in the last five years), owners who reduce their rent by 5% compared to the previous contract will be entitled to a 90% rebate by reducing the net yield of the rental of their main residence.
Similarly, if the property is rented for the first time by young people between 18 and 35 years of age, the rebate will be 70%.
Finally, if the lessor has carried out refurbishment or improvement work, the rebate will be 60%.
It should be noted that, in relation to this, another measure introduced is the possibility, on the part of the lessee, to extend the lease (annually) for a maximum of three years.
However, in addition to all of the above, in the aforementioned areas, those owners who sign a contract of at least ten years will be exempt from the price freeze and, in addition to this, will be able to increase the rent by 10%.
Reserve for social housing
Under the proposed draft, 30% of the developed land will be set aside for social housing. There will be compensation for those acquired rights affected.
In addition, a minimum percentage of 50% is established for subsidised rental housing within the land set aside for subsidised housing.
“Affordable incentivised housing”
The new legislation introduces a new concept, that of “incentivised affordable housing”.
This concept is reserved for private properties that are rented (at an affordable price) to people on low incomes.
The owners of such properties will receive urban and fiscal incentives as a “reward”.
For example, they receive a 70% reduction in the net rental income of their main residence.
Control over evictions
Evictions will be “frozen” in the case of vulnerable people (which must be stated in a report drawn up by social services).
Social services will have to provide housing solutions for those affected and objective criteria will be established to define situations of economic vulnerability.
This eviction will be resumed as soon as there is evidence of a housing alternative, within two months of the suspension of the eviction, if the claimant is a natural person, and four months if the claimant is a legal entity.
Guarantee for subsidised housing
This measure acts as protection against the maintenance of the social housing stock.
It consists of the impossibility of changing the classification of public housing for at least thirty years.
Limitations on large landlords
“Large landlords” (defined as natural or legal persons owning more than ten properties or with a built-up area of more than 1,500 square metres) must limit their rent to the reference index established in the area.
Likewise, the new regulation aims to include vouchers of 250 euros per month for the next two years (which may be “complemented” with direct rental aid for vulnerable families).
The beneficiaries of this aid will be young people aged between 18 and 35.
They must also have an income of less than 23,725 euros per year.
Cooperation between administrations
In order to carry out all these measures, a duty of information is established on the part of the City Councils and the Autonomous Communities, which will have to report on:
- The number of dwellings and their use.
- Which dwellings are unoccupied or empty and since when.
- Characteristics and number of people requesting housing.
- Available land suitable for the development of social housing.
It also defines the general framework for cooperation and collaboration between Public Administrations.
The Housing Advisory Council is created to ensure the participation of all agents in the elaboration and development of housing policies.
Future of the Housing Act
We will have to see how the market reacts to the entry into force of this law, whether it represents an improvement for those involved or, on the contrary, a detriment for all.
Investment will be affected by the uncertainty in the sector, in particular investment in built to rent and some experts in the sector claim that there will be a decrease in the supply of rental housing.
Only time will show the outcome of these measures, and whether it would be better to alleviate the rise in rental prices by expanding the housing stock, such as the approval of urban developments.