The Government proposes including in the housing package that it is negotiating against the clock a new protection until 2028 against evictions and an extraordinary extension of rental contracts that would allow tenants to remain in their homes for up to two more years. They are two of the levers found in the latest draft that the Executive has sent to the partners with whom it negotiates the new decree, to which this newspaper has had access, and which will be approved in the Council of Ministers this Tuesday. To do this, of course, the Government will have to convince the parties on the right and left, which maintain antagonistic positions that could still modify some of the points.
The parties involved exchanged several drafts over the weekend. The last document up for discussion was distributed by the ministry among the parliamentary groups at 3:30 p.m. on Monday and, during the afternoon, two of Sumar's ministers, Pablo Bustinduy and Ernest Urtasun, went to the Ministry of Housing to debate some of the details of the proposal. Since the morning, one of the concessions to reach the agreement had been to eliminate from the July text the reform of the Land Law that served to make housing construction more flexible and that Podemos had marked as a red line. Crossed vetoes between conservative nationalists and left-wing groups have had the decree blocked since March.
The department led by Isabel Rodríguez, who is leading the conversations with the aim of the majority of the investiture giving the green light to the text within a month, proposes that habitual residence contracts that expire can be extended for a maximum of two additional years, maintaining the conditions and price of the contract during that period. The formula that is being proposed does not involve establishing indefinite contracts or automatic renewal without a time limit, as demanded by the Tenants' Union from the Puerta del Sol camp in Madrid, but rather an extraordinary extension that the tenant may request.
The proposal affects habitual residence contracts in force when the decree comes into force and that end before December 31, 2028. As established in the draft, if the tenant is up to date with the payment, and has been for the previous eight months, they may request an extension for annual periods and up to a maximum of two years. The owner must accept it in general, with certain exceptions.
Among them are that the parties agree to other conditions, that they sign a new contract or that the landlord has communicated the need to recover the home for himself or his family members, as long as there is a real and proven cause. The mandatory extension can also be avoided when the owner and tenant agree on a new rental with a rent at least 5% lower than the current one. The Government approved a similar measure in the royal decree last March, which fell a month later in the Cortes.
The package also incorporates an extraordinary limitation on rent updates, given the level of prices and the growing rise in inflation. For contracts whose annuity is fulfilled between the entry into force of the decree and December 31, 2027, the tenant may negotiate with the landlord the increase in rent and, if there is no new agreement, the increase may not exceed 2%.
The issue of evictions and vulture funds was what lit the flame of protests after the expulsion of Maricarmen from her home last week. Early in the morning, government sources assured that they were working to prohibit “speculative purchases from vulture funds.” That is the starting point of the draft that has circulated among parliamentary groups without specifying how this prohibition would be carried out. What it does leave defined in the case of the suspension of evictions until December 2028 is that landlords should be legal entities or not (that is, also individuals), "dedicated to acquiring properties or portfolios of unpaid mortgage loans for a price clearly lower than their market appraisal value, with the aim of evading the mechanisms of social function of housing or maximizing its profitability through the disproportion in rental income, in housing prices. resale or for its use for non-residential purposes.”
A very broad concept that covers a wide diversity of investors. This on the part of the owner. For the tenant, anyone who falls under this definition would have to have a report proving their vulnerability. Furthermore, if the tenant is vulnerable, the eviction may also be suspended if an alternative housing option is not found. Of course, in that case the public administrations must bear the expenses, such as unpaid monthly payments "from the moment the process is suspended and until the measure is lifted."
tax discounts
The plan also includes a series of tax credits designed for both landlords and tenants, and which increases the pressure on the Government for the autonomies and city councils, with powers in housing, to declare the stressed areas. For tenants, the package contemplates a new state deduction in personal income tax of 10% of the rent of the habitual residence for young people under 35 years of age with a tax base of less than 33,007.20 euros per year. These discounts are limited to hot market areas.
For landlords, the scheme is broader and is not restricted to stressed areas, although the greatest tax advantages are concentrated in them. The reduction in the net rental yield can reach 95% when renting to young people between 18 and 35 years old with a rent reduction of more than 5%, and 90% when this reduction is applied to any tenant, always in stressed areas. Outside of them, reductions are also contemplated. Among others, a 100% rate is proposed in certain new contracts with the same tenant or when the rent falls below the reference index. In addition, lower reduction sections are maintained, from 50% to 15%, depending on how the price evolves with respect to the previous contract, with the aim of penalizing landlords who increase the rent.
In addition, the Official Credit Institute (ICO) is ordered to create a line of loans to support young people to access their first home. Public credits will be used to finance at least 20% of the value of the mortgaged home, or up to 50,000 euros. They will be granted for up to 10 years, at an interest rate of zero% and without commissions, with a grace period equal to the term of the mortgage, and for a maximum of 30 years. The details are left for later elaboration.
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