What are the keys to the new Housing Law?

The Draft Law for the Right to Housing which will be approved today by the Council of Ministers of the Government of Spain gives the autonomous communities the ability to limit the prices of rents in stressed areas to legal persons (companies and institutions) that own more than ten homes.

The rest of the owners of these areas are allowed to increase prices up to 10% on the last rent of the previous contract. Of course, they must have carried out energy and accessibility rehabilitation and improvement works in the last two years.

As an income containment mechanism, the text also establishes for new contracts a general bonus of 50% in the IRPF of the lessors, adjustable according to various criteria, up to a maximum of 90% for those who lower the price by 5% of your rentals.

With the aim of encouraging the market of empty homes, it gives the city councils the possibility to apply a surcharge of up to 150% of the liquid IBI quota to those that are unoccupied without justification for more than two years.

These are, in seven keys, the main novelties of the text:

1.- Communities declare stressed areas

The autonomous communities may declare a territorial area as a stressed residential market area for a period of three years after verifying that in that area the rental income exceeds 30% of the average income per household and that in the last five years it has risen by five points above the CPI of that community.

2.- 18 months to build benchmarks

The incomes of legal entities that own more than ten homes in stressed areas are limited according to a system of reference price indexes. Although the Ministry of Transport, Mobility and Urban Agenda (Mitma) already has one, there is a period of 18 months from the entry into force of the law for its preparation, which in practice means that the regulation of the rents for large holders would not begin to apply this legislature.

3.- Income tax deductions for lessors (new contracts)

The current 60% deduction in personal income tax for net income from the rental of a habitual residence is now 50%, but it is modulated up to 90% in stressed areas.

For new housing rentals to young people between 18 and 35 years old, the reduction is 70%, while for protected housing and for houses rehabilitated in the last two years it is 60%.

4.- Surcharge in the IBI of empty houses

The town councils may apply a 50% surcharge on the real estate tax (IBI) to real estate for residential use that remains unoccupied without justification for more than two years; 100% if it is empty for more than three years and 150% if the owner has several unoccupied properties in the same municipal area.

Some justified causes for having an empty home are moving for work or training reasons, change of address due to dependency, health or social emergency, properties destined for a second residence with a maximum of four years of continuous unemployment or those under construction. or immersed in some litigation.

Also excepted are properties for sale (a maximum year) or rent (with a maximum of six months), under market conditions.

5.- Suspension of evictions

The great novelty is that the courts will automatically suspend evictions for non-payment of rent of vulnerable families for two months, if the plaintiff is a natural person, and for four months if he is a legal person.

6.- Increase the stock of social housing

Among other measures, and in order to increase the social housing stock, the text establishes that 30% of the urbanized land will be reserved in the new developments for public housing and half of that percentage will go to rent; in the actions of reform or renovation of the urbanization, the reserve percentage will be 10%.

7.- Affordable incentivized housing

It also creates, together with protected housing, the figure of “incentivized affordable housing”, such as privately owned housing with urban and tax benefits for rent at reduced prices.