Left-wing populists want to drastically regulate the rental market
Not for a long time has there been such a heated debate in Spain's parliament as at the beginning of October 2021, when Spanish Prime Minister Sánchez presented the draft of a new housing law that his coalition partner, the communist Unidas Podemos, had pushed through under the leadership of Labor Minister Yolanda Díaz. Podemos had argued that the new law was primarily aimed at „vulture funds“, which dominated the Spanish rental housing market. However, a recent survey by the Spanish statistics institute INE shows that large funds own less than 4% of the residential real estate market. Around 85% of all rental properties are owned by individuals who use the rental income to supplement their income, pay mortgages and maintain the rental property. The new law provides for regulation of the rental market. Large property owners who own more than 10 apartments must adjust rents in 'particularly affected' areas to a price index. Both the designation as a particularly affected area (these are areas in which the average rent has risen by more than five points above the CPI value in the last 5 years) and the preparation of the price index are the responsibility of the Autonomous Regions. Small owners, i.e. private individuals with fewer than 10 apartments, are to be encouraged to reduce rents through tax incentives. For new construction projects, it is planned that the owner will reserve 30% of the newly created living space for social housing. For vacant housing, the annual property tax (IBI) is to be increased by 150% as a penalty.
It has not yet been clarified whether second homes are also subsumed under vacant apartments. And finally: young people between the ages of 18 and 35 with an annual income of less than 23,725 euros can receive a rent subsidy of 250 euros per month for a period of two years. 200 million euros will be made available for this in the Spanish budget from 2022.
Opposition parties and business associations have protested loudly against this bill and have announced that they will take it to the Constitutional Court, as the law represents an unlawful encroachment on the constitutionally guaranteed right to property. It serves to conceal the failures of politics in social and publicly funded housing construction. It is also not suitable for creating more living space. Investors would be deterred by this law from investing in housing construction in Spain, which would lead to a significant increase in the cost of existing supply. A rent freeze would also prevent necessary investment in existing properties, which would also have a negative impact on the quality of the rental supply. The Association of Property Owners (ASIPA) described „the interference in the rights of large property owners as discriminatory and unfair in relation to small property owners, as a large number of large property owners were using the collective savings of small savers who otherwise have no access to the real estate market“.The regions governed by conservatives - including Madrid - have already declared that they will not apply the law. The Balearic government, on the other hand, yes.
Lutz Minkner looks back on 45 years of activity as a lawyer, lecturer,
specialist book author and entrepreneur.
He has been a board member of the real estate company Minkner & Partner since 1984,
