The Government has approved the first State Housing Law of the democratic period, a regulation that experts say will change the residential market, particularly the rental market. Although it is currently still a preliminary draft, it has already been subjected to public consultation and will soon become a reality.
However, it has not yet passed the General Council of the Judiciary (CGPJ) screening process. Although it is not binding, the plenary of the council has rejected the report, citing doubts about the competence of the State to legislate on the right to housing, a matter that the Constitution attributes to the Autonomous Communities.
The key feature of this legal text is that it establishes a price limit for rents based on benchmark rates to be applied in areas under stress. These are defined as areas where the average rent and mortgage charges, plus basic expenses and utilities, exceed 30% of the average household income.
To qualify as a high-stress area, the purchase or rental price must have risen over the last 5 years by at least 5 percentage points more than the CPI of that autonomous community. Therefore, this area will be considered a stressed area for a period of 3 years, which can be extended. The autonomous communities will have the power to set these rates or rent price controls.
Within these stressed areas, it is the major landlords, mainly investment groups, who will be obliged to bring rents into line with the levels set by the official price indexes. According to the law, a large holder is a landlord with more than 10 dwellings or more than 1,500 m2.
On the other hand, smaller landlords will be able to increase their rental prices by up to 10% if they can prove that they have carried out a renovation or refurbishment of the property or an upgrade of its accessibility in the previous 2 years. They may also be able to do so if they sign a new contract with their tenants for at least 10 years.
The law also requires local councils to apply a surcharge on the Property Tax (IBI) for empty homes. That is, if a property remains unoccupied without a justified cause for more than 2 years and belongs to an owner with 4 or more dwellings, councils will be able to apply a surcharge of up to 50% of the IBI.
However, this surcharge will be increased to 100% when the property is unoccupied for more than 3 years. It will also rise to 150% when the unoccupied dwellings belonging to owners who own 2 or more properties are located in the same municipality.
The legislative text establishes a period of 18 months from the approval of the law until its application, with the aim of regulating a reference price rate, as well as establishing the zones designated as stressed areas on the basis of the statistics of these territories.
On 27 January, the CGPJ approved the report that was critical of the housing law by a large majority.
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