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Housing crisis

These are the government’s ten proposals to tackle the housing crisis

The legislation, the details of which have not yet been finalised, covers everything from construction to the regulation of holiday rentals, tourist accommodation and taxation on speculative transactions

Elma Sáiz, government spokesperson
Javier Arias Lomo

The Spanish government is working round the clock to negotiate the new royal decree-law on housing, with the aim of submitting it to the ... Cabinet as early as tomorrow, Tuesday, driven by the social impact of recent cases of eviction, such as that of Maricarmen . Among the key issues on the negotiating table, the coalition partners are addressing the strengthening of anti-eviction mechanisms and curbing speculative buying by large property owners or investment funds, although more drastic measures, such as the expropriation of property, have been ruled out.

  1. Protection against eviction

The inclusion of a clause to protect vulnerable people from eviction is being proposed, with the aim of preventing further cases such as that of Maricarmen. The initiative seeks to halt mortgage foreclosures or evictions of families at social risk. The parties on the far left of the parliamentary spectrum demanded that the text include an emergency safeguard to prevent the judicial system from carrying out evictions of people in situations of extreme vulnerability without first offering alternative accommodation or suspending the court order for eviction.

  1. Ban on speculative purchases by vulture funds

The decree currently being finalised by Moncloa is set to ban the large-scale acquisition of residential property by speculative investment funds. The argument put forward is that homes should be used for residential purposes and not for financial speculation. It is one of the most forceful demands set out by left-wing parties such as Sumar, Podemos, ERC and Bildu. The aim of this ban is to prevent the mass hoarding of new-build flats by investment firms, reserving land and properties for the family housing market and preventing manoeuvres designed to artificially inflate prices.

  1. Stabilisation of tenancy agreements

A mechanism is established to protect tenants against excessive rent increases when renewing their rental contracts. This measure aims to effectively apply stability criteria in those regions where the Ley de Vivienda is not currently in force. In response to demands from groups such as the Sindicato de Inquilinas (Tenants’ Union), which called for "open-ended tenancy agreements" to be made compulsory by law, the government has opted for a middle ground known as "stabilisation".

  1. Regulation of holiday lettings

The aim is to regulate this market in order to stamp out fraud in short-term tenancies. The objective is to prevent these temporary tenancies from being misused to circumvent the price caps laid down by the housing legislation.

  1. Application of IVA to holiday lettings

The government’s proposal sets out to introduce a tax increase (with a proposal to bring it into line with the standard 21 per cent IVA, value added tax, rate) on properties used for tourist accommodation. This is justified on the grounds that such properties operate as a commercial business activity and with the aim of curbing their proliferation in areas under pressure. In recent months, the ministry has detected a massive shift of properties from standard tenancies to seasonal tenancies, a tactic used by some landlords to circumvent the price and term restrictions imposed by the Ley de Vivienda. The new regulation will impose stricter limits and requirements to justify the validity of temporary tenancy agreements.

  1. Tax relief for tenants

The government’s roadmap sets out direct tax incentives for tenants with the aim of providing immediate relief from the financial strain and burden that rent payments place on their household budgets. This favourable tax treatment for landlords is the main measure agreed with the conservative bloc of the parliamentary majority (PNV and Junts) to stimulate the market without resorting solely to mandatory rent caps or punitive measures.

  1. Tax relief for those who reduce their rent

This is a tax scheme aimed at property owners or landlords who agree to reduce the amount of rent they charge. The aim of this incentive is to encourage, on a voluntary basis, the containment or reduction of prices in the rental market.

  1. Financial assistance for first-time homebuyers

A scheme providing financial support and guarantees aimed primarily at young buyers or groups who lack the necessary savings to cover the deposit or initial payment for a property. The Ministry of the Economy emphasises the need to address the ‘market failure’ faced by young people, who often have a regular income sufficient to repay a mortgage but are unable to buy a property because they lack the 20 per cent or 30 per cent initial savings required by the financial system.

  1. Protection of the state housing stock

Permanent protection is envisaged for publicly owned housing. The aim is to prevent, by law, its future downgrading, sale or privatisation, thereby ensuring that assets financed with public funds do not end up in the hands of investors or speculators.

  1. Reduction in IVA on the construction of social housing

It is proposed to reduce the tax rate applicable to the construction of social housing that has been granted permanent status. This reduction aims to boost supply and speed up the construction of affordable housing. Furthermore, it acts as an economic counterbalance to offset the planned tax increase on the holiday let sector.

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These are the government’s ten proposals to tackle the housing crisis

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These are the government’s ten proposals to tackle the housing crisis