Energy crisis

2% cap on rents to affect big landlords

Spanish government bans redundancies for reasons linked to rising energy prices

3 min
The First Vice President, Nadia Calviño, the Second Vice President, Yolanda Díaz and the Third Vice President, Teresa Ribera, at the Congress of Deputies.

MADRIDThe economic emergency plan to counter the consequences of the war in Ukraine will also include measures to labour laws, housing and protection of the most vulnerable population. The package totals €16bn, €6bn in direct aid and tax rebates and €10bn in state-secured loans. "It is an unprecedented challenge", said the Minister of Economy, Nadia Calviño, in a press conference after the Council of Ministers. These are the details of the new measures.

Protection of the vulnerable

In social matters, the Spanish government will extend the welfare electricity voucher. The executive estimates that the bonus can be extended to 600,000 vulnerable families to reach a total of 2 million people. From now on, the measure will be applied to the cohabitation unit of recipients of minimum living income. In addition, the regulation will provide for an automatic renewal of this bonus, which will maintain its discounts (60% for vulnerable consumers and 70% for the most vulnerable) until June 30.

Sources in the Ministry of Energy explain that in order to adapt to the latest Supreme Court ruling – which determined that retailers could be asked to pay the whole cost of the measure – "all players in the sector" will pay for the welfare electricity voucher: distributors and transporters too, among others.

The Spanish government will also increase the Minimum Living Income (MLI) subsidy by 15% every month. This increase will affect applications that are in the process of being approved, but also to those that are submitted as soon as the regulations come into force but are not resolved in time, i.e. before June 30, when the measure is to end.

Limit on rent increases

The regulation will limit rent increases, which are usually capped in accordance with to the consumer price index (CPI). As CPI currently stands at 10%, a different cap is set: until June 30, rent increases will be limited to 2% in the case of big landlords, i.e., those who have over 10 dwellings or 1,500 square metres for rent. The aim is to bring rents closer to the median inflation estimated for this 2022, of 2%, according to estimates the Spanish government's estimates. For small landlords, the cap will apply in the absence of an agreement on rent increases between the parties.

Economic fabric

To protect companies, the government has created a new line of state-secured loans worth €10bn with the aim of covering liquidity needs caused by the temporary increase in the cost of energy and fuels. They will have a grace period of up to 12 months and can be requested until December 31, 2022. The extension of the deadline for repaying the guarantees currently held by companies and self-employed workers is also made more flexible, and the grace period is extended by six months for the most affected sectors.

As regards direct aid, most of it will be channelled through the Tax Agency, except for the primary sector, which will be managed by the Ministry of Agriculture. A total of €193m will be allocated to this sector. The plan also includes €500m for energy-intensive industry, as well as the measures already negotiated with hauliers, which add up to just over €1bn.

Restriction on layoffs

"During crises it is not possible to lay off", said the Minister of Labour, Yolanda Díaz, in a press conference after the Council of Ministers. The dismissal will be unjustified when it is due to causes linked to "the increase in energy prices", said Díaz. Companies that receive public aid will not be able to lay workers off either. "It does not make sense that we allocate resources to pay salaries and that companies then lay off workers", said Díaz. Failure to comply with this rule will mean that the company will have to return any public aid it received.

This measure was already approved during the worst months of the pandemic; in that case, however, it was dismissals for causes derived from covid which were banned. In addition, the government wants to make temporary lay-offs (ERTE) once again the preferred option for companies rather than permanent layoffs.