Spain: Interim Parliament Approves Housing Decree Amid Election

• Spain's interim parliament approved a housing decree aimed at curbing speculation and protecting tenants, following nationwide protests.
• The decree extends eviction protections until 2030, freezes certain rent increases, and imposes a 10% tax on tourist apartments.
• Measures also include anti-speculation rules preventing companies from buying properties below 70% of their value.
• The future of these new housing policies is uncertain, as the opposition Popular Party vows to repeal them if they win the upcoming national election.
• A more contentious second decree, which would have made leases automatically renewable, was rejected.

The future of these new housing policies is uncertain, as the opposition Popular Party vows to repeal them if they win the upcoming national election.

Spain's interim lower house of parliament recently ratified a significant package of housing measures, a move that followed widespread public discontent and a general strike across the nation. These new regulations are designed to address the country's escalating housing costs by curbing real estate speculation and enhancing tenant protections. The approval, which occurred on Thursday, comes amidst a highly charged political atmosphere, with the future of these measures hanging precariously on the outcome of a national election scheduled for later this month.

The legislative push was not without its challenges. The government had initially attempted to introduce similar provisions in October, spurred by public outrage after the eviction and subsequent death of an 87-year-old woman in Madrid, which brought the issue of soaring rents into sharp focus. However, those initial efforts were blocked by the conservative Popular Party (PP) and its allies in parliament. Prime Minister Pedro Sánchez responded by calling an early election, and the government subsequently waited for a more opportune moment, leveraging a smaller interim parliament where progressive parties held a more favorable distribution of seats. To secure passage of at least some reforms, the government strategically divided its proposals into two separate decrees. The first, comprehensive decree successfully passed with a narrow 35-34 vote, while the second, more contentious decree was rejected.

The recently approved Spain housing decree introduces several critical changes aimed at stabilizing the housing market and protecting vulnerable tenants. A cornerstone of the new legislation is the extension of Spain eviction protection until 2030 for individuals deemed to be in a precarious financial or social situation by social services, provided regional authorities cannot offer them alternative accommodation. This measure seeks to provide a safety net for those most at risk of homelessness.

Furthermore, the decree includes robust Spain real estate speculation measures. It explicitly prohibits companies involved in the real estate market from purchasing properties at less than 70% of their market value. This provision is intended to deter the practice of wholesale property acquisition at low prices, followed by resale at significantly inflated rates, thereby cooling down speculative activities. The new Spanish rent control law also mandates a freeze on rent increases for properties where current rents already surpass the government's established reference price index for that specific neighborhood, aiming to make housing more affordable. Additionally, the legislation introduces a 10% Spain tourist apartment tax on properties rented out to visitors, particularly those listed on online platforms, alongside tax incentives designed to encourage long-term leasing and government-backed loans to assist with down payments for residential homes.

Despite the successful passage of the primary housing decree, its long-term viability remains highly uncertain due to the impending national election on November 29. The conservative Popular Party, currently the leading opposition force, has explicitly stated its intention to implement a Popular Party housing repeal of the left-wing government's housing measures should it come to power. This stance introduces significant regulatory instability, especially given that current polls indicate a real possibility of a PP victory. Minister of Housing and Urban Agenda Isabel Rodríguez acknowledged this political tension, remarking that the "right to housing won on the street and in workplaces" and expressing hope it would "win again at the ballot box."

The rejected second decree highlights the deep divisions within the Spanish parliament regarding housing policy. This decree, which would have made residential leases automatically renewable for tenants and required owners to compensate tenants with a year's rent if contracts were broken, was ultimately defeated by a 34-35 vote. Many lawmakers, including a center-right Basque party that otherwise supported the first decree, feared this measure would prompt homeowners to withdraw properties from the rental market, exacerbating supply shortages and driving up prices. The PP, through lawmaker Sergio Sayas, sharply criticized the government, accusing it of "demagoguery" instead of delivering more housing. In contrast, the PP's own Spanish housing policy election platform includes a pledge to oversee the construction of one million new homes while simultaneously reducing taxes and bureaucratic hurdles for real estate development.

Lawyers advising clients on real estate investments, rental agreements, or property development in Spain must immediately assess the impact of these newly approved housing measures, particularly concerning eviction protections, rent controls, and anti-speculation taxes. However, they must also closely monitor the upcoming national election, as the potential repeal of these measures by a new government introduces significant regulatory uncertainty and necessitates contingency planning for clients.

Source: Original reporting via Associated Press