The Government wants to accelerate the approval of measures related to the housing rental market. Once it was confirmed that the royal decree-law extending contracts did not have support to be ratified, the Ministry of Housing will bring back to the table a package focused, on one hand, on fiscal incentives and penalties for homeowners and, on the other, on precise regulation of temporary rentals, where part of the traditional leases are being diverted.
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To approve these measures, the Executive needs a cross-party sum and wants to offer a pact to Junts and PNV, the two parties with which negotiation in the housing field is more complicated, given a situation that is already critical for tenants who see prices continuously rising across the country. Junts spokesperson in Congress, Miriam Nogueras, urged on Thursday to sit down to negotiate the new decree and they are open to endorsing it if the measures they propose are included.
The measures are aimed at the approximately 3.4 million households that rent in Spain. And growing. Currently, tenants represent 19% of the population, whereas in 2012 they were only 11.9%, according to estimates from the Tax Agency’s Household Panel.
The first block of measures the Government wants to propose to Junts and PNV seeks to curb price increases in rental contract renewals through tax incentives for landlords. The Treasury is willing to activate a deduction of up to 100% in the IRPF for owners who renew lease contracts without raising the price for their tenants. With this tax aid, landlords would compensate for what they would earn if they increased the rent price. The measure was announced by President Pedro Sánchez in January but did not materialize into a concrete negotiation. Sumar has always considered tax deductions as aid to landlords, but in the negotiation of the decree that has lapsed, it has opened to applying them.
At the same time, the Government proposes to discourage some behaviors of homeowners it considers “harmful.” To this end, it proposes to its investiture partners to modulate the general 50% deduction of income in the IRPF for individuals who raise the rent price. This reduction of the deduction would never reach 0%, as the Treasury wants to maintain differentiated treatment for long-term residential rentals (contracts of five years) versus tourist and seasonal leases.
The 100% tax on foreigners and the 21% VAT on tourist apartments have been stalled in the Cortes for a year
In Congress, there is also a proposal from the socialist group on housing taxation that contemplates applying a 21% VAT to tourist apartments, as well as a tax on empty homes and a 100% tax on non-EU buyers. This initiative has been stalled for almost a year.
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In search of that cross-party agreement, the Government also considers it imperative to strengthen the regulation of seasonal rentals at the state level, that is, those lasting less than a year and, therefore, not subject to price increase containment. In Catalonia, there has been specific regulation since January 1.
Housing has identified a shift towards this modality by property owners who, faced with the limitations of traditional renting, opt for this figure. The Government proposes in this package to set strict conditions for temporary rentals, such as a specific stay date in the country or city associated with the contract, and proposes a harsh sanctioning regime for landlords who fail to comply with the regulation.
To regulate seasonal rentals, the Government proposes an amendment to the Urban Leases Law (LAU) that precisely defines what a temporary rental is and what a room lease is. The temporary rental must exceed 31 days, to differentiate it from tourist rentals, but not exceed one year. Thus, if a seasonal rental lasts more than 12 months, it will be presumed to be a habitual residence. Likewise, if the contract does not adequately prove the cause of that temporality, it will be considered a habitual residence contract, indicating that the burden of proving the cause falls on the landlord.
The ministry proposes reforming the LAU to include that a seasonal rental sets very precise causes
Regarding room rentals, the Government proposes establishing by law that the total rent of all rooms cannot exceed the rent of the entire housing contract.
The Ministry of Housing stated, after the repeal of the decree that extended rental contracts, that it will “intensify contacts” with parliamentary groups to advance measures that benefit tenants who rent. In parallel, the Executive is trying to advance with other measures that do not require going through Parliament. It has just approved the State Housing Plan and launched Casa 47, the public company.
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