The few details that have emerged about the agreement for the future housing law that has unlocked the Budgets point to solutions discussed in the negotiations during the last nine months and that have been the subject of vigorous discussions between the Government partners. To overcome these differences, the main route has been to differentiate what will be done when the landlord is a large owner and what will be done when it is a small owner. And that definition was precisely one of the disagreements that were made public in his day. According to what sources from United Podemos have indicated, a large owner is considered to be one who has more than 10 homes. That was the bet of the PSOE, while in the formation commanded by Ione Belarra on some occasion they opted to lower that figure. As far as the pact is known, it is not specified whether this definition will apply only to legal persons (that is, companies) or also to individuals, which seems more likely.
But that definition was never a great stumbling block in the negotiation, nor was the mechanism to punish empty housing. Months ago the members of the Executive agreed to use the Real Estate Tax (IBI) to discourage vacant flats, the novelty is that now it is known that this tax may grow up to 150% for those homeowners to those that are not used. The idea is that the municipalities can recharge the tax, a possibility that the legislation has contemplated for a long time but which was inapplicable because nowhere was it specified what an empty home is. The future law, therefore, will have to define it and will allow more than double that tax (the PSOE in its day proposed a 50% surcharge and United We can bet on raising it).
Again, the few details that have emerged leave some doubt. Can any empty house or only those of large owners be taxed? In general, they are large companies (such as funds or banks), which have extensive parks of unused housing. On many occasions they are surplus from the real estate bubble of the beginning of the century that they have not put on the market and that, in general, is not found in the areas where the rental problem is most pressing. The other condition for the tax surcharge to occur is that the Town Hall where the homes are located wants to apply it. In other words, the law will set the framework to allow it, but the final decision will be made by the mayors. What is clear is that the definition adopted will exclude second homes or houses that are empty for justified reasons (for example, because their owner has moved to another city for work reasons).
Rent caps for large owners
Apart from these issues, comes the big mess about prices. How to regulate rental income has always been the main stumbling block between both parties. The agreement, always according to what United Podemos has indicated, will allow “by law to lower rents based on the reference index for all contracts in stressed market areas” when the home is owned by a large owner. The reference index to which reference is made is a public statistic that the then Ministry of Development (current Ministry of Transport, Mobility and Urban Agenda) launched in 2020. The main problem is that it uses income statements as a source, So right now it offers data from 2018. The intention of the Government is to update it, but even if data from 2019 are used, the impact of the pandemic, which forced a reduction in rents in the main cities, would still not be recorded.
The idea of putting a cap on income based on a price index was always defended tooth and nail by the purple formation, and it was less liked by the PSOE. The agreement will make it possible to do so, but only with a part of the rental pool and always in stressed market areas. The definition of these is another of the details that is still unknown, but according to the last spoken in the negotiations, it would be based on a combination of price increases and financial effort for families. According to the last known socialist proposal, a stressed area would be one where prices escalate in five years more than five points above the CPI and where the average rental price represents more than 30% of the average income in the area. For large owners, in addition, the tax credits for landlords will disappear (currently there is a reduction of 60% in general, so that for 6 out of every 10 euros that a landlord receives, it is not taxed).
New for promoters
Tax incentives were precisely the way favored by the PSOE to regulate leases. It will be maintained, but only for small owners, who nevertheless are the vast majority in the Spanish rental park. The idea for these is that in stressed areas prices are frozen. Again it is unknown how that idea will be implemented, but what had been put on the table so far pointed to a forced extension of the contract (that is, the tenant can stretch the rent by law more than the five years that are currently contemplated as minimum duration) and, in the case of a new tenant, by taking as a reference the rent established in the last contract. In the fiscal route, the socialist proposal contemplated various incentives depending on the circumstances. The most powerful was to grant a 90% bonus to landlords who voluntarily agreed to lower the price substantially below the official price index.
Finally, the pact that will allow the Budgets to be carried out also includes a novelty that will affect housing developers. A reserve of 30% of all promotions for protected housing will be required, a measure that is reminiscent of the one approved in its day by the Barcelona City Council. And, among the houses that are built with public support, at least half will have to go to social rent. This was a measure that was considered for a long time because a shared diagnosis between the two Government partners is that the great problem in Spain is the shortage of public parks for rent compared to other countries in Europe. For decades, all the money invested in protected housing was focused on properties for sale that, after a certain time, lost their status as protected and entered the free market. The obligation that at least half of VPO be dedicated to leasing aims to curb this deficit.