Friction in Spanish government over lack of rent control in draft housing bill

Podemos unhappy about proposed Socialist bill for “flagrant breach of government agreement”

Council of Ministers of the Spanish government meet in January 2021 (by Pool Moncloa / Fernando Calvo)
Council of Ministers of the Spanish government meet in January 2021 (by Pool Moncloa / Fernando Calvo) / ACN

ACN | Barcelona

March 19, 2021 11:38 AM

A new draft bill on housing proposed by Socialist transport minister José Luis Ábalos is causing friction within the Spanish government between the two coalition partners. 

Minority partner Unidas Podemos are dissatisfied that the bill leaves out any condition which would limit or control rent prices.

The anti-austerity left-wing party criticizes that the proposal consists of "dedicating public resources” to give to landlords who reduce rent prices. “The rental bubble should not be sustained with public funds,” sources from the group argue.

In addition, they see not including the regulation of rent prices in the draft bill as a "flagrant breach of the government agreement."

Additionally, the party criticizes that the “antisocial” proposed bill would benefit “those who have the most and who have contributed most to inflating the bubble” with public money.

Podemos laments that the Socialists have succumbed to the “pressures of the real estate employer" and calls for taxpayers’ money “not to end up in the pockets of housing speculators."

Housing law proposal

Ábalos’s proposal to Podemos includes a system of tax credits to "stimulate the rental of regular housing at affordable prices." 

The text proposes lowering personal income tax on rental income from 60% to 50%. For landlords who rent at an “affordable” price, an additional 10% deduction would be added. 

There would also be reductions for renting to young people between 18 and 35 years old, and for reducing the rent prices of tenants by at least 10%.

The Socialists believe the text stresses the need to "stimulate supply" instead of applying "restrictive measures."

In a housing market comprised mostly of “small homeowners, mostly individuals," they consider that they will be "more conducive to incentive measures, especially in the field of personal income tax."

Socialist vice-president of the Spanish government, Nadia Calviño, remarked that "there is no miraculous solution" to reduce rental prices, and defended that the proposal from Ábalos is "very reasonable” and complies with the government agreement. According to Calviño, tax breaks "work."

Catalonia's rent cap law

On September 9, 2020, the Catalan parliament passed a law regulating rent prices – a historic win for housing rights activists. Coming into effect on September 22, 2020, the rent cap affects 60 cities and towns with over 20,000 inhabitants and with "tense housing markets," including the major cities of Barcelona, Girona, Lleida, and Tarragona. All 60 of these municipalities have seen average rent prices increase by at least 20% between 2014 and 2019. 

In these areas where affordable housing is scarce, rents will be determined by the Catalan Housing Agency's Average Price Index – you can look up relevant information on the size and the year your building was built online at the Spanish land registry website to see how your rent compares to others in the area.

The approval of the law was much celebrated by tenants' rights associations, including the Sindicat de Llogateres who helped draft the regulation, as rent prices have increased by a staggering 36% in Catalonia from 2013 to 2019. In Barcelona, this rise is even more drastic: 43%, or an average of €297.25 per apartment, over the same period.

However, opposition parties were against the law, and the People's Party brought the case to the Constitutional Court who accepted it for consideration. However, the court chose not to provisionally suspend the law while it deliberates.