Why are there small landlords who are worried about the housing decree?

BarcelonaMany small landlords, who make up the largest proportion of the housing market, are skeptical about the decree approved by the Spanish government, which faces a vote in Congress this Friday. Of the two housing decrees, the one including measures for the protection of vulnerable people was, in principle, the one that seemed most likely to move forward, especially after the 'yes' announced by Podemos and the PNV. But the rejection by Junts —which is asking the Spanish government to withdraw it or they will vote against it— has disrupted the possibility of it passing. The second one, which incorporates automatic lease extensions and compensation for tenants, had no chance, because the PNV will also vote against it.

One of the issues that causes the most fear among small landlords (ten properties or fewer, according to the state housing law) is the suspension of evictions for vulnerable individuals and families until December 31, 2030. Junts has made a banner of defending small landlords, their concerns, and opposing illegal occupations. The aspect that worries them most is the compensation for landlords when a tenant who does not pay is considered vulnerable and has no residential alternative, nor does the administration provide one. "It is not clear how or when the property owners" who are not large holders will receive compensation, sources consulted state. In any case, the decree establishes a protection mechanism aimed at evictions for non-payment that is different from the one affecting large holders.

The decree specifies that "if the competent autonomous community does not offer a residential alternative, it will be obliged to stay the action, that is, to assume the payment of the necessary amounts to avoid eviction within a period of two months." Furthermore, it says that during these two months, the judicial procedure is suspended; if the action is stayed, the process ends and the contract remains in force. And if the autonomous community does not act within this period, the suspension of the procedure remains in effect until it fulfills its obligation. But there are those who do not see enough guarantees.

Loaded with social policy

The property chambers, which usually have many members with few homes, share many of the criticisms of large property owners conveyed by the president of the CEOE, Antonio Garamendi. The measures, far from fixing the problem, run the risk of aggravating it, warned the day before the president of Pimec, Antoni Cañete. For his part, the president of Foment del Treball, Josep Sánchez Llibre, went further and, at a conference on Wednesday in Barcelona, stated that the Spanish government seeks to "covertly" socialize private property. And builders claim that they are already converting rental developments into flats for sale, according to the president of the Association of Developers and Builders of Spain (APCE) and also president of APCE Catalonia, Xavier Vilajona.

The chambers denounce that the Moncloa "is once again loading onto private owners a growing part of the social housing policy" and warn that the regulatory framework is "increasingly complex, restrictive and unstable", with growing "legal uncertainty". The result, they claim, will be to reduce the supply of rental housing, as also stated by the organization Som Habitatge (Union of Property Owners of Catalonia). Despite admitting that the difficulties of access to housing must be addressed "urgently", the chambers, like other organizations, also criticize that the intention is to "transfer to owners responsibilities that essentially correspond to public administrations".

Tax bonuses

The Spanish government highlights that the regulation submitted for approval includes many measures in favor of small property owners. Such as the tax bonuses provided for in the Personal Income Tax (IRPF), which the central executive quantifies at about 330 million. The net yield reductions that could be applied if they lower the rent of a new contract by 5% range from 70% to 100%. If they maintain the price, the reduction is 50%, and if they increase it, the discounts range from 15% to 40%. If it is the first contract, the reductions range from 50% to 100%.

Another 100% tax exemption on capital gains would apply to owners who sell a home to the public sector with a transfer value of up to 200,000 euros. The advantage will be decreasing from 200,001 to 800,000 euros.