Spain’s New Housing Bill – Agreement reached between ruling parties

by Deborah Cater
Housing Bill approved in draft by Cabinet in Spain

On Tuesday, Government ministers approved draft new housing legislation during a weekly Cabinet meeting. Items considered were rent caps, increase in IBI for empty homes and tax credits for home owners.

The left-wing coalition in Spain wants to rein in soaring housing costs. Their proposal is to impose rent increase caps on landlords who own 10 or more residential properties.

Opposition parties and leaders of business organisations criticised the proposal as an improper intervention in the free market.

Draft rent control legislation approved

Government ministers approved draft rent control legislation during a weekly Cabinet meeting yesterday. Vulnerable families and young adults in Spain’s biggest cities would be the main beneficiaries of the proposed law, the government said.

Currently, Spain has the highest youth unemployment rate among the 19 nations using the euro currency. This, coupled with low salaries, means many Spaniards cannot afford to live on their own. The average age for leaving home is 30, compared to an EU average of 26.4 years old.

A controversial provision in the bill would set price hike caps for landlords with multiple residential properties. The idea is to target large real estate companies and investment funds. The government has not yet published the draft, so details are not yet available.

However, for landlords with fewer than nine properties, the bill includes tax discounts of up to 90% if they lower their rents.

Rental assistance for 18-24 year olds

The prime minister announced that as part of a separate initiative, the government plans to help adults 18-34 with their rent. Those earning less than €1,977 per month will receive a €250 monthly bonus for up to two years.

Regulating the housing market was the main obstacle that prevented Sánchez’s Socialists from agreeing on a national budget for 2022 with the coalition government’s junior partner, the anti-austerity Unidos Podemos.

ASSSA - health insurance in Spain

The proposed law would also set aside 30% of all public housing as rental units. Currently, they are available for people to buy at a reduced price. In addition, they would significantly increase local taxes on vacant residential properties.

IBI on empty properties to rise

The housing law also contemplates a tax on empty housing through an IBI surcharge of up to 150%. This could be applied by municipalities.

However, the Annual Budget, to which the new Housing Law contributes, needs to pass through the Congress of Deputies. The lower house of the Spanish parliament is expected to pass, but the vote is a test of the government’s strength. Sánchez’s minority government needs the votes of lawmakers outside the coalition, including separatist parties from Catalonia and the Basque Country.

“Housing is a grave problem in our country,” Sánchez said.

Labour minister and Unidos Podemos leader Yolanda Díaz said the bill opened the path “to a new country. The moment has arrived for great multinationals to pay what they must,” she said.

Opposition parties say it’s an attack on private property

But the conservative opposition Popular Party accused the government of mounting “an unprecedented attack against private property.”

“We have a government with communists that intervene with markets on a daily basis,” party spokeswoman Cuca Gamarra said.

Antonio Garamendi, leader of the country’s main business group, CEOE, also opposed the move. “People have the right to save money, and for the state to come now and say how you should manage what you have already paid for and you are already paying taxes for is a brutal distortion of what is the freedom and right to property,” Garamendi said.

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