Sánchez pushes forward the housing decrees: how do evictions and rents stand now?

Madrid"In this legislature, we have had to work with a Congress with a lot of fighting. Where reaching agreements has been confused with betrayal, and blocking with convincing." This is how the Spanish Prime Minister, Pedro Sánchez, has defined his experience in Parliament, as a display of how he has suffered to approve legislative proposals, since mainly Junts and, to a lesser extent, Podemos have been a thorn in his side. The housing decree laws are the latest example. However, the calling of elections and the dissolution of the Courts grant Pedro Sánchez a second opportunity to approve issues that until now have been impossible for him. He will be able to do so via decree laws (which cannot regulate, for example, fundamental rights and must only be done for urgent matters). For what reason? Because the permanent deputation comes into operation. It is a parliamentary body, a kind of mini-Parliament, that operates when elections are called or during vacation periods. It is currently made up of 69 deputies in a proportional representation of the groups in the chamber. However, unlike the plenary session, in this body, the progressive majority does not depend on Junts to push measures forward: Junts (1), the PP (27), and Vox (6) add up to 34 votes and remain one short of the majority.

That is why Pedro Sánchez, as confirmed by sources from the Spanish government, will bring the housing decree-laws that were rejected by the Congress of Deputies to the Council of Ministers this Tuesday, with the idea that they will be approved by the permanent deputation during the electoral period. In fact, it is a strategy that the executive can use throughout the entire electoral campaign to simulate what it could do if it won the elections and could govern with a progressive majority. It can continue to use the decree-laws, but the rest of the initiatives pending in Congress will lapse. "We need a much broader progressive majority," Sánchez shouted this Monday to ask citizens to support the left to renew the majority that has been governing Spain for eight years. The right has already come out to criticize the mechanism, while sources from Moncloa defend that it is "totally democratic".

The effects

What will be approved this Tuesday? The Council of Ministers is expected to approve the two housing decree-laws that it gave the green light to just a week ago. On one hand, there is one that stops evictions for vulnerable families among other measures, such as the extraordinary extension of rentals for two years; and, on the other, a second decree-law that establishes indefinite rental contracts and compensation for the tenant if the landlord wants to end the contract early. According to the majorities of the permanent deputation, only the first is expected to go ahead, since the PNB has also opposed this second measure, which is a demand of the Tenants' Union. Sources from the Basque nationalists, in any case, will address the direction of their vote in the coming hours. From Sumar, the Minister of Culture, Ernest Urtasun, has already warned that they will not accept "cuts" to the proposal.

What does it mean for the first housing decree-law to enter into force? The main effect is that evictions of vulnerable families will be stopped, a measure that the government approved during the pandemic and had been extended until this year. Junts struck it down with the argument that it did not provide enough guarantees for the collection of rent for small landlords – an autonomous compensation with state funds was established – while the eviction was suspended due to vulnerability. This same week there were 90 evictions scheduled only in the city of Barcelona, which is the city where the most are carried out, some of which would have to be stopped the day after the new housing decree-law is published in the BOE. At the same time, once the decree-law is approved, tenants will also be able to request the extraordinary two-year extension of rental contracts or deduct rent in their personal income tax return (IRPF) if they have a salary of less than 33,000 euros per year and if the contract was set to expire before the end of 2028.

The purchase of homes by investors for a price lower than 70% of the market value will also be prohibited – the way the Spanish government established to veto real estate purchase transactions by vulture funds –; tax incentives for landlords will be activated, such as a 100% IRPF deduction on the net income provided by the property if the rent is lowered by 5% compared to the previous price; and a 10% VAT will be applied to tourist apartments.