the budding Inflation registered throughout the year 2021, the very high levels recorded in 2022 and the blows that are still expected in the new year threaten to overthrow one of the star measures of the future State Law for the Right to Housing: the regulation of rental prices. The reason is to be found in the fine print of the draft law that the Government began to draft when inflation was testimonial, and that linked future income ceilings to the evolution of the CPI. For this reason, and fearing that the norm will be watered down, the Executive and its usual partners are negotiating to redesign the text taking advantage of its passage through Congress, according to sources familiar with inside and outside the coalition.
To regulate the rents of an area it is necessary that it is first declared as stressed. For this, two requirements must be met simultaneously, according to the draft that is in Parliament awaiting amendments. On the one hand, the average cost of housing plus basic supplies must exceed 30% of the average income in the area. On the other hand, the price of housing in the five years prior to the declaration must have experienced a percentage of accumulated growth at least five percentage points higher than the percentage of accumulated growth of the regional CPI.
This last point is the most problematic with regard to the future price limitation, since the regional CPI of Madrid, Catalonia, the Balearic Islands or Andalusia, all of them regions with potential stressed areas, will close the year 2022 with an average annual increase of more than 8 %. “In a context of strong inflation, which will also last through 2023, we run the risk of losing the opportunity to limit rents,” explain sources from the Government’s usual partners. “Especially if rental prices, which are already skyrocketing, stagnate and stop growing.”
In other words, if incomes fall or remain flat and the new inflation data for 2023 enter the equation (which could close with an average of 4.8% according to various analysts), the five-point differential with the regional CPI could be insufficient. For this reason, the same sources add, the objective is to reformulate these demands to soften them.
One possibility, they point out, would be to reduce from five to two points the percentage of accumulated growth necessary to be able to declare an area as stressed. Another, that in order to exchange the declaration, it is enough to comply with one of the two requirements contemplated. The sources consulted, however, do not rule out other alternative formulas.
From the Government, for its part, they prefer not to advance details and insist that the negotiation phase is open, “so the groups involved must be allowed to work so that the talks advance and the law is approved as soon as possible.”
For now, they point out from the Ministry of Transport, Mobility and Urban Agenda, there are already agreements to transact more than 400 amendments of the more than 800 that have been presented. Meanwhile, the minister of the branch, Raquel Sánchez, is confident that the law will be definitively unblocked over the next few weeks.
The declaration of an area as stressed, something that will last three years and can be extended annually, will allow the competent administration to limit the rental prices of large holders (more than 10 homes) with legal personality, but it will also open the door to other possibilities. One of them is the freezing of rents, which will affect small owners and large holders with physical personality, always according to the bill.
The declaration as a hot zone, in addition, would launch a series of tax rebates for landlords who lower the price of housing, rehabilitate it or rent it to people under 35 years of age.
The Government and its usual partners want to have the housing law approved as soon as possible to warm up the electoral campaign ahead of the regional and national elections to be held in May and at the end of the year, respectively. There are several main points on the table, such as the definition of a large owner, evictions without housing alternatives, and rent limits on houses that enter the market for the first time.
Regarding the large holder, the Executive and its partners are negotiating to lower the threshold of 10 owned homes that today defines this figure. According to government sources, the new range could range between the five owned houses proposed by United We Can and the ten defended by the PSOE.
The purple formation also proposes that the contracts for new homes that were not on the market be subject to the reference index of rental prices in stressed market areas, a tool that will come into operation within a period of up to 18 months from that the law be approved definitively. The partners also press to prohibit evictions without alternative housing.
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