Article 47 of the Spanish Constitution recognizes the right to decent, dignified housing and obliges public authorities to implement the conditions necessary to guarantee equality in the exercise of this right. This right is completed by other constitutional and fundamental rights such as the right to physical and moral integrity, to personal and familial privacy or to health protection. Housing is therefore a central pillar of well-being. In addition to this sociologic aspect, it occupies a central economic place, as housing counts for 80% of built space.
The new law on the right to housing came into force in Spain on May 26 , following its publication the previous day in the Official State Gazette (Boletín Oficial del Estado – BOE). The main aims of this law are to increase the number of social housing, avoid situations of tension in the housing market and support some communities in accessing housing, particularly for the youth and vulnerable people.
Tight housing market zones
This new law creates zones considered as tight residential market zones which correspond to areas in which there is a particular risk of an insufficient supply of housing for the population. The aim of this classification is to direct public policies towards these areas, notably by regulating rental prices and enabling owners to obtain tax benefits.
For a zone to be included in this category, there are two possibilities:
- The average cost of the mortgage or rent exceeds 30% of the average income
- The purchase or rental price has risen of 3 points above the cumulative percentage growth in the consumer price index (Indice de precio de consumo – IPC) for the last five last years prior to the declaration of a tense zone.
Once those criteria have been met, it is up to the Autonomous Communities (CC. AA.) to make the declaration. However, once the area is considered as a tense one, it will be for a renewable period of three years.
Increase of public housing
In keeping with the idea of providing access to housing for as many people as possible, this law aims to improve and above all, increase the number of social housing with one objective: guarantee the access to housing stock. To this end, an inventory will be drawn up to ensure proper development. These homes will be protected and their revenues used exclusively for their creation, extension or renovation.
A category of subsidized housing will be set up, this housing correspond to houses under a specified regime in order to make them the habitual residence of people in difficulty. Access criteria will be tightened and the number of units will be increased. Homes in this category will remain there for at least 30 years.
To this can be added the concept of incentivized affordable housing to increase the offer on short term, and corresponding to private housing that will be rented at a reduced price in exchange for tax benefits.
Changes in owner-tenant relationship
The law will offer a greater protection in case of eviction, particularly when it is about a vulnerable community by allowing an access to extrajudicial procedures. Then, unlike in the past, an eviction can only take place at a specific date and time. Finally, it will be possible to use public funds to offer a housing solution to people threatened with eviction.
As far as owners are concerned, a number of changes will apply. They will be required to pay property management and contract formalization fees.
The definition of “large owner” has changed: any individual or legal entity owning more than 10 residential properties in a traditional zone, or more than 5 properties in a zone declared to be under pressure, will now be considered a large owner. This qualification will have a significant impact, particularly in under-pressure zones, since it will enable rent to be determined using a price limitation index.
For owners of empty properties, it will now be possible for town councils to increase the rate of tax on movable property (Impuesto sobre Bienes Muebles) up to 150% if the property has been empty for more than 2 years, and if the owner has more than 4 properties in the same municipality.
Finally, in order to encourage owners to rent at more attractive prices, the government will be introducing a series of tax incentives, notably concerning personal income tax (Impuesto sobre la Renta de las Personas Físicas). Depending on the situation, such as a high-pressure area, rental to young people or work carried out in the previous two years, the reduction will be more or less significant.