All the changes on the new rental regulation that the Government is proposing



Last Wednesday, June 16, sources from We can assured that the coalition government has agreed to freeze rental prices in areas defined as'stressed'. Thus, once these areas are declared as such, the rental contracts will be frozen for three years (Both those that are in force at that time and those that are formalized after the implementation of the standard, which will be reflected in the new State Housing Law). This means that landlords will not be able to raise the rental price to their tenants or charge more to their new tenants than they already did to previous tenants.

However, the government partners seem not to agree completely. United we can rejects the proposal of tax incentives for owners put on the table by the PSOE. All in all, what do we know about the future Housing Law?

The negotiation of the PSOE and United We Can

The measure of Ministry of Transport, led by the socialist Jose Luis Ábalos, proposes that the regulation of prices be articulated by means of tax reductions.

As of today, in Spain, a 60% reduction is applied to all lessors. Thus, 60% of what they receive from income is not added to their income in the personal income tax return, which means that they do not pay that amount.

Facing the future State Housing Law, the PSOE proposes lower the general bonus to 50%, giving incentives to owners who meet a series of requirements, such as renting a flat to young people. One of the most relevant incentives proposed by the ministry led by Ábalos is to increase tax benefits for owners who lower the rent by 10% to new tenants, whose bonus could reach 90%.

However, from UP they maintain that "the regulation proposed by the department of Ábalos would not allow lower rental prices, as stated in the budget agreement between both formations, nor would it cover the Catalan housing law. They explain that for this reason the negotiations continue "intensely" to reach an agreement. This rule was appealed last Tuesday, June 15, by the Government to which UP belongs to the Constitutional Court, although the Executive has decided not to request its precautionary suspension.

To this day, the Ministry of Social RightsUnlike the Transport Department, it has not made its proposal public.

What is a 'stressed area'?

Stressed areas are those in which there has been a sustained increase in rents in recent years and in which homes suffer a 'financial overload'to pay them. This is that the cost of housing exceeds 30% of the average income in said area or that the price of housing has increased at least five points above the growth of the CPI of the autonomous community to which the area belongs in the last five years.

Other measures included in the PSOE - United We can coalition agreement

In the Coalition agreement signed in 2019 by PSOE and United We Can, which included the lines agreed by Pedro Sánchez and Pablo Iglesias to form a coalition government, in the section on housing, it could be read that to stop the abusive increases in rents, in addition to preventing the rise in rents in areas stressed, it would facilitate communities and municipalities access to State System of Reference Indices of Housing Rental Prices to build their own price index. It is intended that 'the municipalities and / or autonomous communities that consider it to be able to regulate the abusive increases in the rental price in the areas previously declared stressed and at the same time avoid possible effects of contraction of the supply of rental housing'.

On the other hand, the agreement also reflects that it is also intended to promote measures to ensure the immediate relocation of those tenants who cannot meet the rents due to lack of economic resources; I know promote social rental for people who, after having given or lost their sole and habitual home in foreclosure, do not have a housing alternative and will seek to implement regulatory reforms that allow homeowners' communities to prohibit the exercise of the tourist rental activity or set certain conditions for its exercise, among other things.

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