The minister of the branch, Raquel Sánchez, defends that the norm offers “security both to tenants and to property rights”
The Council of Ministers has given the green light this Tuesday to the new Housing Law that, for the first time in the history of Spain, will regulate the control of rent prices, limiting their rise in those considered as stressed areas. And the Executive warns: the communities that do not adhere to the new state regulation, which are within their right to do so, will deprive their citizens of the tax incentives agreed to encourage price containment.
“The autonomous communities and city councils are not obliged to implement the norm. They can even declare a stressed area with their own criteria and apply those policies that they consider, but not those of the State’s competence ”, indicated sources consulted. That is to say, if you want to access the incentives programmed in the law, and that raise rebates on personal income tax of up to 90% for certain cases, you must take full advantage of it.
The message comes at a time of maximum tension, with the communities governed by the PP even threatening to bring the new regulation to the Constitution. Even so, there would still be two incentives that ‘wayward’ communities could apply throughout the territory: when a home is rehabilitated and put on the rental market and when a home is transferred to Public Administrations for affordable rents.
Faced with criticism for a rule that many communities have labeled “interventionist”, the minister of the branch, Raquel Sánchez, has defended the legal security that the law will offer. “It is a law that protects the tenant, but also the owner and the right to property and in no case does it imply an invasion of the powers of the autonomous communities,” Sánchez assured during his speech after the Council of Ministers.
“It was urgent to combat abusive price increases,” explained Sánchez, recalling that the objective of the new Law is not only to control prices, but to reverse the trend that has been observed in recent years in the public housing stock , which is currently around 290,000. “This implies that they only cover 1.6% of households, compared to the 10% coverage offered by neighboring countries.”
As the minister has detailed, they hope that the approval of the rule will be carried out by urgent procedure, with the intention that it be sent to the Courts before the end of the year. The approval scenario would be the second half of 2022, which coincides with the completion date of the milestone contemplated in the Recovery Plan that gives access to European funds.
1. What are stressed zones
The norm establishes that they will be those in which the average expenses of the households (rent and supplies) exceed 30% of their net income and where, in addition, the rental prices rise five points above the regional CPI. The tenants will be able to benefit from the extension of their contract for a period of three years, renewable annually if the administrations demonstrate that measures to ‘loosen’ prices have been carried out without success.
2. Large owners
The Government has divided those affected by the price control established by the new Law depending on the type of landlord. If it is a large holder -those with more than ten dwellings- a legal entity, the evolution of the price of its flats will depend on the price indices that the Government has given itself within 18 months from the entry into force of the law (therefore, to the new contracts that are signed thereafter) to be developed, which will make it difficult for it to be put into effect before the end of the legislature.
3. Natural persons
For the rest of the owners of the stressed market (individuals and companies with less than 10 dwellings), the formula of freezing contracts is chosen, with the possibility of increasing it according to the annual CPI. Landlords may also raise prices by up to 10% if they carry out rehabilitation works that allow energy savings of 30% or when they agree to contracts of more than 10 years with their tenants.
4. Incentives for those who lower prices
There will be bonuses for small owners who lower the prices of their contracts, of up to 90% on personal income tax if the reduction is 5% in stressed areas. If the house is intended for social rental or for young people up to 35 years of age, the incentive is 70%. For the rest of cases of price reductions, the percentage will be 50%, compared to the general 60% that was in force until now.
5. Empty houses
The norm establishes a surcharge that can reach up to 150% in the IBI of the empty houses (unoccupied without justification for more than two years for owners of four or more properties). The surcharge may reach 50%, a figure that rises to 100% if unemployment exceeds 3 years, plus an extra surcharge of another 50 percentage points for those owners who have two or more homes in the same municipality.
6. Public and affordable incentivized housing
The rule prohibits the sale of public housing to private hands for a minimum period of 30 years, with some exceptions. In addition, 30% of all new promotions will be reserved for protected housing, of which half must be allocated to social rental.
The concept of incentivized affordable housing is also introduced, with urban and tax benefits -including personal income tax credits established in the law, aid for rehabilitation, aid from the State Housing Plan, etc.- in exchange for being used for rent with prices low. Government sources indicate that municipalities and autonomous communities can also give this type of aid to encourage affordable rent.
7. Protection against evictions
Following the formula established during the state of alarm, a rapid communication between social services and judges is intended to be able to offer a housing alternative in launching situations, the term of which is extended from one to two months when the landlord is a natural person and up to four months when it is a legal entity.
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