These are the keys to the new Housing Act

This Friday, the government reached an agreement with CKD and EH Bild around the new one Housing Act, as announced this morning at the press conference by the deputies of ERC, Pilar Vallugera, and EH Bilda, Oskar Matute.

The green light comes after more than a year of negotiations in Congress. Some conversations that have become established due to the reluctance of part of the Government to limit prices lease. “Either unlock or there is no law”he came to threaten Valluguero.

Head of government, Pedro Sánchez, is directly involved in negotiations to try to resolve the deadlock in the middle of Holy Week. A task in which the second vice president, Yolanda Díaz, was also involved. Finally, PSOE, Unidas Podemos and their parliamentary partners will arrive in the 28M campaign with a law on the table.

Now, what are the keys to the agreement and what changes does it introduce to the real estate market?

Hat rental

A 3% increase in 2024 and the end of CPI as a reference index. Currently, limitation of rent increase (2%) which Pedro Sánchez’s executive government put in place as part of a social shield to deal with a spike in inflation after the war in Ukraine. As reported this morning by the parties involved in the negotiations, this limit will increase to 3% in 2024. What will happen then? Matute announced that on January 1, 2025, the CPI will be eliminated as the reference index for the annual contract update. “It can generate huge fluctuations in a few months that make rental income more expensive,” he explained. Until then, the central government and autonomous communities must have ready a new index, “more stable and always lower than the CPI”.

areas under stress

Rent space for all owners. Another innovation introduced by the law is the possibility of subpoenas areas under stress for rent, those where either the average cost of housing, with costs and supplies, exceeds 30% of the average household income or those where the price of buying and renting an apartment has increased by three points above the CPI in the 5 years before the declaration of a stressed area.

If either of these two conditions are met, autonomous communities or town halls can request this designation. This will allow the introduction of measures to limit rent in the affected area for large owners (more than five properties) and small owners (less than five properties). Large holders, such as investment funds, will be able to raise prices only according to the index created by the Government. However, tenants will be able to ask small owners for the same price enjoyed by the previous tenant with the corresponding maximum increase for that year.

The drawing will be done by census tractsalthough if more than one in the same city are found to meet the criteria, the entire city can be covered.

tax incentives

Small owners. In order to avoid the massive withdrawal of real estate from the rental market, due to the imposed restrictions, the Government accepted the establishment tax credits in personal income tax so that small owners in stressed areas, where prices will be constrained, still have incentives to continue to rent their homes and to continue to be profitable.

evictions

Mandatory adjustment process for vulnerable households. As the two deputies explained, “they finished the evictions without a predetermined date and time.” The court procession will not be able to appear at the door of the building overnight to evict the family. Also, there will be new ones extensions in startup procedures, by delaying the process and prescribing mandatory access of vulnerable citizens to reconciliation processes, in order to achieve an out-of-court solution to their situation. The autonomous communities will be responsible for articulating tools to reach an agreement or seek housing alternatives if this is not possible.

“Previously, evictions of vulnerable families could be carried out without the authorities knowing that they were happening. This is an attempt to stop it,” they explained.

real estate expenses

They are paid by the home owner. The law also describes in detail what obligations each party must assume after entering into a rental agreement. The costs and fees for real estate will always be borne by the owner, which will put an end to the abuses that the Government has observed in the leasing sector.

In addition, there will be no back door through which to escape the law. Those who, on the other hand, try to inflate rental income, will face reality: as soon as the legislative package is adopted, It will be forbidden to increase prices through new expenses, such as utility or garbage fees., even if they were previously agreed upon. “This avoids a possible avenue for legal fraud,” the disputed claim.

Actually, the provisions that exempted landlords from the application of the measures provided for by law are eliminated, with the prior agreement of both parties. And this is done because they are considered to have the upper hand in negotiations, forcing the tenant to give up his rights.

The housing law is part of the commitments the government made with Brussels to obtain the fourth tranche of European recovery funds.