Rent Caps, Squats and Stressed Areas: Keys to Future Housing Law

Rent caps, tax incentives for landlords who lower prices or additional procedures to evict squatters. The right to housing bill, which was approved by Congress this Thursday, introduces important innovations in the relationship between landlords and tenants. These are some of them:

Hat rental

For both large and small owners, rent cap in the annual update, it will rise from the current 2% to 3% in 2024. Starting in 2025, a new index will come into force that will always be lower than the CPI, both for houses already on the market and for new contracts. Restrictions will depend on the owner’s profile in stressed areas. Those of small owners will have to be indexed with the previous valid contract, while the large ones will apply the price retention index.

big owners

The big forks natural and legal persons with more than ten residential units owned or with a built-up area of ​​more than 1,500 square meters (excluding garages and storage). Those with more than five properties for residential use in the same stressed area will also be considered large landowners, if the autonomous community they belong to so deems.

areas under stress

Although the autonomous communities will have the final say, they will be considered highlighted area when the average mortgage or rental fee exceeds 30% of the average household income. Also when the price of housing rose three points above inflation in the five years before the declaration of a stressed area.

tenant protection

The norm determines the possibility of a extraordinary contract extension for one year if the situation of economic or social vulnerability is accredited. In these cases, general costs for the proper maintenance of the property would be agreed upon. Likewise, the costs of managing the property and formalizing the contract are borne by the lessor.

tax incentives

It will be bonuses up to 90% of income tax for small landlords who reduce the price of their contracts in a stressed area by at least 5%. If the house is intended for social rent or for young people under 35, the incentive is 70%. And 60% for those who have been rehabilitated. In all other cases, the incentive will be 50 percent, compared to the current general 60 percent.

empty houses

A surcharge will be applied, which in some cases can reach up to 150% of the real estate tax (IBI) —compared to the current 50%— on those apartments that have been empty for more than two years. Of course, it will only be for those owners who have a minimum of four houses in the mentioned situation, and always under unjustified reasons of temporary unemployment.

Squatting and evictions

The deadlines for suspension of launches in situations of vulnerability are increased, from one to two months when the owner is a natural person, or from three to four when the owner is a legal entity. If it is a large landowner, the conciliation procedure must also be accredited. In short, deadlines are being extended and greater demands are being made for evictions.

subsidized housing

The percentages of land reserves for subsidized housing increase from 30 to 40% in construction land (new development activities) and from 10 to 20% in unconsolidated urban land (reform or renewal of urbanization).

With the future law, it will not be possible to dispose of the public social housing fund again, which will be considered a heritage that is permanently subject to protection and which must serve different administrations in order to facilitate access to housing for the population with the greatest difficulties. For this purpose, strict regulation of public parks is being established, avoiding repetition of sales to investment funds. In this sense, it was established that public housing parks are a special heritage, so the income they generate must be used for their creation, expansion, rehabilitation or improvement.

At the same time, unspecified qualification of subsidized housing, always guaranteeing a period of at least 30 years. At the state level, some basic conditions have been established that define the regime of permanent public protection of encouraged housing that is promoted on qualified reserve land. In all other cases, a minimum disqualification period of 30 years is prescribed.