Evictions of vulnerable people suspended until 2030 and extension of rents: the keys to the decrees
Despite the approval in the council of ministers, the final version of the texts was not yet finished
MadridWaiting to know the final texts of the two decrees on housing that the Spanish government has approved –this Tuesday afternoon they were not finished–, these are the general keys to some of the main measures.
Evictions
Some evictions of vulnerable people (this must be proven) without a housing alternative are prohibited until 2030. Regarding the suspension of the execution, the latest draft distinguishes between a large investment fund (it is suspended automatically) and an individual. In this second case, the judge first asks the competent administration what alternatives it has. If it does not offer any, the eviction is suspended until an adequate solution is provided. Furthermore, it is contemplated that the administration compensates the owner, although the scope of the measure is not concrete.
There are some nuances: the judge can change their mind when reviewing the tenant's situation after one year (whether they continue to be vulnerable or if they have an alternative). Furthermore, if the eviction affects an owner who has one or two properties, their "economic vulnerability" prevails over that of the tenant. Therefore, the eviction can proceed.
If the tenant has a debt, it does not disappear. Nor does the eviction execution disappear beyond 2030 (it is only temporarily suspended).
Limit on annual update
A freeze on the annual rent update in cases where the contract is above the price index maximum. For the rest of the contracts, the annual update is limited to 2% until December 31, 2027, to avoid increases with inflation rates like the current one (4.9% this September).
Extension of contracts
The extraordinary two-year extension for contracts ending before December 31, 2028, is being reinstated. A contract extension of up to two years may be requested (to be reviewed annually) provided that rent payments are up to date or the rent has been paid for the 8 months prior to the extension request. The landlord is obligated to accept the extension if no alternative agreement is reached, a new contract is signed, or they communicate the need to recover the apartment (for example, in case it is for a family member).
In practice, this means a freeze on rental conditions (the price) to avoid a rent increase when it is due for renewal.
The second decree incorporates the "automatic renewal of rentals." This responds to the demand from the Tenants' Union, as well as left-wing parties, to approve indefinite rental contracts. The Ministry of Housing has appealed for stability and recalled that Casa47 already offers contracts of up to 75 years.
Definition of 'vulture fund'
According to the executive, an end is being put to "speculative" purchases of residential buildings by large investors until 2028. Here the definition of vulture fund will come into play. Also of this practice. Sources from the Ministry of Economy explain that a “balance” has been found. The key will be to see if it is defined based on the operation (how the sale is carried out) or based on its legal form.
Seasonal, tourist, and room rentals
It is defined what is understood by a seasonal contract: its use must be justified and accredited. The ordinary duration may not exceed 11 months. If it is detected that consecutive temporary contracts are signed, it will be considered a habitual residence.
A 10% VAT on tourist apartments is proposed, their duration is limited to 31 days, municipalities are enabled to approve surcharges on the IBI (property tax) in stressed areas, and the control of digital platforms (Booking or Airbnb) is reinforced with a sanctioning regime.
The regulation of room rentals will be similar to the rule currently being processed in Congress, as explained by the Ministry of Housing. The aim is to prevent a landlord from dividing a property into rooms (renting them individually) to avoid a habitual residential contract and therefore its protections for the tenant.
Tax relief
Tax incentives are offered to tenants and landlords, but also to people who want to buy. For young tenants, for example, a deduction on personal income tax (IRPF) for their primary residence is being considered if it is declared a stressed area. The deduction is 10% of the rent paid, with a limit on the rental amount. The deduction decreases based on income (it applies if you earn less than 33,007 euros)
A 0% public loan is being created to help finance the purchase of a first primary residence. It will have maximum limits: 20% of the price or value of the property or 50,000 euros. But it is a first step: it will now have to be developed in a regulation (stating what requirements must be met).
Tax incentives for landlords are offered to mobilize properties: in case of rent price containment or even reduction.
SOCIMIs
The taxation of SOCIMIs on a portion of undistributed profits through dividends is increased to 25%. SOCIMIs that manage offices, warehouses, or shopping centers are excluded. The increase provides for significant deductions if the assets (real estate) are intended for affordable rent or if the profit is reinvested in affordable rental housing.