The first democratic state housing law was closed yesterday after more than two years of intense negotiations, first within the coalition government and then with two of the usual parliamentary partners, ERC and EH Bildu. Until this Easter Monday, the negotiation that will serve to modify the urban lease law was not unblocked. The most difficult point to agree on was the limitation of the increases in all rents from January 1 of next year, when the 2% ceiling in force falls. The door will also be opened to price intervention in stressed market areas, Barcelona being one of the areas where they could be applied.
The agreement reached between the Government and its partners contemplates that rental contract renewals may not exceed 3% of the price during 2024. That is, if a tenant pays 1,000 euros for their lease and has to renew the maximum fee next year to pay will be 1,030 euros. As of January 1, 2025, this ceiling will be linked to the evolution of the CPI (by then the Government hopes to have inflation under control). Before December 31, 2024, the National Statistics Institute (INE) will prepare a reference index for the annual updating of contracts linked to the evolution of prices.
Another noteworthy novelty of the agreement concluded yesterday affects the consideration of "large homeowner". The housing law will empower the autonomous communities that so wish to consider a "great owner" to be someone who has five or more properties in the same stressed market area. The stressed areas can cover a census district, a neighborhood of a large city, a municipality, or an entire province.
For an area to be declared stressed, it must meet one of these two conditions: that the average cost of the mortgage or rent, plus basic expenses and supplies, exceeds 30% of the average household income, or that the purchase or rental price of the home has increased at least 3 points above the CPI in the five years prior to the cataloging. The declaration of stressed areas will be the responsibility of the autonomous communities and will have a duration of three reviewable years. The Government has also agreed to introduce an amendment to consider both physical and legal persons "large holder".
Once a community declares an area as stressed, the rents of large owners will be limited to a reference rate that will be set by the Government through the Ministry of Transport. This aspect does not change with respect to the bill approved by the Council of Ministers more than a year ago.
One of the areas that could be declared stressed is Barcelona, where a notable number of owners would be affected by the new regulations.
To find out the composition of Barcelona's rental housing stock, it is pertinent to refer to the report prepared by the Metropolitan Housing Observatory, dependent on the city council. It offers an x-ray of how many lease contracts with home use (permanent and habitual) based on the owners who have deposited a deposit as of January 1, 2021, which are approximately 76.5% of the total. In this sense, in the province of Barcelona there were at that time just over 272,000 owners with more than 500,000 rental homes.
Based on the official data from the consistory, the owners of more than five properties in the province of Barcelona would be 8,710, who would have 162,744 homes for rent. In other words, 3.2% of large owners accumulated in 2021 one in three homes for rent.
In the case of small owners, with less than five homes, in stressed areas, their rents will also be intervened. Specifically, whenever the autonomy declares it, they will have the obligation to freeze the prices at the time of renewing the leases. They will also have the possibility of lowering their rents in exchange for tax incentives. Specifically, they will be able to see their income tax reduced between 50 and 90% when the price is reduced by more than 5%. For its part, if the home is rented to young people between the ages of 18 and 35, the deduction will reach 70%. And it will be 60% if rehabilitation works have been carried out on the property in the previous two years. In Barcelona in 2021 there were a total of 263,380 owners with between one and five homes for rent. In total they accumulated just over 335,000 properties.
The negotiators included a clause at the last minute to prevent homeowners from removing their properties from the market and then reintroducing it without the price cap affecting them. In this case, and always for stressed areas, the new lease contracts will have to be applied under the same terms and conditions as the previous agreements. In other words, if a tenant is going to sign a new lease in a stressed area, the owner will have the obligation to set the same price as the previous tenant.
While the 3% limitation on rent increases in 2024 and the CPI from 2025 is mandatory throughout Spain, the measures that will affect stressed market areas will only be effective in the autonomies where their governments decide to apply them. In this sense, the negotiators already advanced yesterday that the regional governments of the PP will not apply this point of the law.
The agreement reached yesterday will enable the Catalan housing law, currently appealed by the Government before the Constitutional Court. ERC considered that the norm supposes a "competence shield" of the autonomic one.
The housing law also establishes that the expenses and fees of real estate agents produced by the rental of a property are always borne by the owner and not the tenant, and establishes a reinforced control of evictions, which must be with a predetermined date and time, and in which the autonomous communities must intervene in a mandatory manner to be able to establish intermediation processes. Regional governments will have the possibility of allocating resources from the State Housing Plan to offer a housing alternative.
The land reserve percentages for subsidized housing increase from 30 to 40% in developable land, for new constructions, and from 10 to 20% in unconsolidated urban land, for reforms or urban renovations. And, finally, the town halls will be able to set a surcharge of the IBI of up to 150% for the empty houses of large owners.
Out of the negotiation has been the possibility of allocating the empty homes of Sareb, the former bad bank, as a solution for the vulnerable, or that investment funds can offer their empty homes for social rentals.
The negotiators trusted yesterday that the norm would be dealt with urgently so that it would enter into force before May 28. They also had unconstitutionality appeals from the opposition, although the Bildu negotiator assured: "I have the feeling that we have made it quite difficult for them to prosper."
Neither the owners nor the landlords liked the result of the negotiations. From different portals, such as Idealista, they criticized the intervention and focused on the lack of supply. The Rental Negotiating Agency considers that the law attacks the owners and the president of the CEOE, Antonio Garamendi, said that he is concerned that "the right to private property" could be invaded. The tenants' union and the PAH, for their part, dismissed the rule as a "farce"
