August 4, 2021

PSOE and United We can agree to freeze rental contracts in stressed areas

The PSOE and United We Can have reached an agreement to include a freeze on rental prices in stressed areas in the future Housing Law, as proposed by the PSOE several weeks ago. Sources from United Podemos emphasize, however, that “the regulation proposed by the Ábalos department would not allow lowering of rental prices, as stated in the agreement between both formations” and that they continue to negotiate to try to reach something more ambitious. But freezing is a first step.

The price of urban land plummets throughout Spain and falls to the lowest level since 2004

The price of urban land plummets throughout Spain and falls to the lowest level since 2004

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The fine print of the measure is not yet public, but according to sources from both parties it would work as follows. On the one hand, if an area is declared stressed, tenants with a contract in that area would have the right to extensions by paying the same monthly payment. The owner could only raise the CPI for the duration of the stress zone declaration (three years).

On the other hand, and this is the main novelty with respect to the last socialist proposal, the new contracts in that area must use the price of the previous contract as a reference. How someone will know how much the previous tenant paid is a detail not yet available. In some communities, it is common to deposit the bond (and therefore, the contract is registered) but in others it is not.

What is a stress zone? According to the definition of the socialist part, it is one in which there has been a sustained increase in rents in recent years and in which households suffer a greater “financial overload” to pay them (than, on average, spending on housing exceed 30% of income in the area). The declaration of a stressed area, as explained by MITMA to a few weeks ago, would be made by a bilateral commission of the State and the Autonomous Community with an audience of the town hall involved.

“Once the decision is made, it must be approved in the State Budget Law. And if there is no budget law, another law is used,” department sources explained to this medium. The Autonomous Communities can also declare stressed areas, but only to apply measures within their competence. Rent freezing and tax policy would be the responsibility of the State. The PSOE has always defended your proposal to increase tax benefits for owners who lower their rent by 10%.

The Housing law accumulates a delay of four months already, because it was scheduled to go to the Council of Ministers in February. It should be remembered that this week the Government Catalan housing law has appealed to the Constitutional Court for “violating state powers”, although it has not requested its precautionary suspension because “in parallel” it intends to process state law. Catalan law imposes limits on rent in 61 Catalan municipalities and the government agreement revealed that state law would follow the same line. Negotiations to close it are advancing and both formations hope to have the text ready before the summer break.


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