It is all over the Spanish News, Spain’s government has clinched enough support in Parliament to pass the new housing Law, in Spanish ¨Ley de Vivienda¨.
Why does Spain need a new housing law?
“All Spaniards have the right to enjoy decent and adequate housing,” Article 47 of the Spanish Constitution writes. The Constitution adds that public authorities must promote the necessary conditions and establish the relevant regulations to make this right effective.
This law aims to establish a standardized regulation of the essential aspects of housing policies and provide autonomous communities and town councils with the instruments to promote affordable housing for the population.
In this line, as explained by the Spanish Prime Minister Pedro Sánchez, ¨the new housing law will make access to a decent home ‘a right and not a problem’ and offer more emancipation opportunities for the youth, Prime Minister Pedro Sánchez said on Saturday 15th April. As outlined in the Spanish Constitution, the new norm makes access to decent housing “a right and not a problem”
On Friday 14 April 2023 it was announced in a press conference that the new law had been finalized and agreed. The agreement on the new law came after weeks of difficult negotiations between PSOE, its junior coalition partner Unidas Podemos (EU Left), Catalan pro-independence Esquerra Republicana de Catalunya (Republican Left of Catalonia, ERC) and Basque separatist Eh Bildu.
It is worth nothing that Spain will hold regional and municipal elections on 28 May so this announcement is seen as a convincing point to gain more votes form the population.
What are the changes?
- End of the CPI: new cap on the renewal of existing rental contracts
On the one hand, the cap on the increase in the renewal of rental contracts in force during 2023 is maintained, which will remain 2% until December 31. It will be 3% throughout 2024, and from 2025 a new Rental Index will be applied, which will be the reference in lease contracts with the intention of this index to be more stable and lower than the evolution of the CPI.
Before December 31, 2024, the National Institute of Statistics (INE) will define a new reference index for the annual update of housing lease contracts
- Declaration of rental stressed zones
Another of the substantial changes of the agreement is the declaration of stressed areas in the rental market. It is only necessary to meet one of these two conditions: that the payment of housing supposes an effort of more than 30% on the income of households in the area (including expenses and supplies) or that prices have risen more than 3% above the CPI, in the last five years.
- Definition of large owner
Within these stressed areas, the number of homes necessary to be considered a large owner is reduced. The change transcends from 10 to 5 properties of the same owner in that stressed area.
- New rental contracts and the cap to be applied according to the owner
The application of caps on rental prices in stressed areas will be different depending on whether you are a small owner or a large owner. For a small owner (less than 5 properties), indexation will be applied to the previous rent in force, so only the increase applied at that time can be applied, that is, 2% in 2023, 3% in 2024, and the new index that applies from 2025. While a price index will be applied to large holders that may not exceed what is indicated by the new rental index.
- New rental housing in a stressed area
In the event that a home is rented for the first time, or if that property has not been rented in the last five years, the limits applied by the price reference index will apply.
- The owner will be the one who pays the real estate agent fees
The agreement also contemplates that the real estate expenses and fees produced by the rental of a property will always be borne by the owner of the property.
- Contracts may not exclude the application of the Housing Law
The clauses that allowed the non-application of the measures contained in the Law if there is an agreement between the parties are now forbidden.
In addition, it is prohibited to increase rental income by way of new expenses, which would force tenants to pay service expenses, garbage fees or any other non-attributable that were not previously agreed.
- Rental contract extension
Tenants may benefit from an extraordinary extension of the contract in force on an annual basis and for a maximum period of three years. This extension is now unilateral and no longer bilaterally agreed by both parties.
- Promotion of social housing for rent at a limited price
The percentages of land reserve for social housing increase from 30 to 40% in developable land (new urbanization actions) and from 10 to 20% in unconsolidated urban land (renovation of the urbanization).
- Date and time required to carry out an eviction
In terms of evictions, those without a predetermined date and time will be prohibited. It also includes further extensions to the launch of procedures, which will postpone proceedings for more than two years, and stipulates mandatory access to out-of-court settlement procedures for vulnerable people. In addition, the autonomous communities may articulate their own mechanisms of mediation and alternative housing that they consider appropriate, forcing large holders who carry out evictions to submit to them.
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