What do I have to consider as a landlord with regard to the new Housing Act?

This week, an agreement was reached between the government partners on the new housing law. And although the agreement came late, PSOE and Unidas Podemos have managed to implement the promised regulation of rental prices in burdened areas. For many actors in the sector, this news is a cold shower, although there are also many who believe that this legislation will allow citizens to finally have access to housing in more economically favorable conditions.

Be that as it may, landlord associations are more concerned in this regard. For the Agencia Negociadora del Alquiler (ANA), for example, this is “an attack on landlords. “When asked about the legal regulation of prices to reduce rents based on the reference index for all contracts in areas with a tight market and the withdrawal of tax privileges, José Ramón Zurdo, director general of the Agency for Rent Negotiations (ANA), said, “As we have said on several occasions, we think it is a serious mistake to attack the large landlords, who are the ones who immediately create and can create more rental housing supply,” he said.

And he reiterated that it is a measure that goes against free competition and freedom of the market. An increase in taxes and a reduction in prices would go directly against the profitability of their business, and they would eventually stop operating in Spain. This will lead to a reduction in the supply of rental housing, as many of these properties that were already destined for rental will be sold and therefore the supply will be lost,” he concludes.

But do we know yet how the new state housing law will really affect homeowners? Although the final draft of the law has not yet been published, some of the measures that will regulate the rental market are already known, both for tenants and landlords. What should the latter consider?

What will change for landlords with the new state housing law?

The draft law for the future State Housing Act has not yet been published, but we summarize here its purpose and some of the measures already announced. The goal of this law is to reduce rents in the most distressed areas, especially for properties owned by large landlords. For private individuals, the objective is to freeze prices if they are located in cities where access to rental housing is particularly difficult, both because of the existing deficit and because of prices.

This law can be applied as long as the autonomous communities cooperate. It will be up to them to ask the government to identify areas with a tight rental market. Price regulation will take place there, and always for owners who own more than ten properties.

The autonomous communities have the task of creating a map of reference prices for their area in the next 18 months, if they have requested it. However, if this does not happen and the communities do not make this request, no limitation or price regulation can be applied to it. We should not lose sight of the fact that the initial reaction of some chairmen of the main municipalities has been negative to the application of the law: the municipalities governed by the PP are threatening not to apply the Housing Law, and some members of the PSOE say that there are no areas under pressure.

On the other hand, the future law is expected to allow municipalities to impose a surcharge on the property tax (IBI) of up to 150% on vacant apartments. No information is available on the specific conditions that these residential facilities must meet, but it is known that local councils will not be required to apply this measure.

Tax relief for small landlords.

It seems that the government will try to offset this price freeze with tax breaks for homeowners in the most distressed areas. They are required to freeze the price, but if they eventually decide to lower it, they will receive a rebate of up to 90% of the income they generate from renting out the property(ies) they own as compensation.

Who are the large landlords?

The government’s proposed reform calls on large landlords to reduce apartment prices. In order to limit this measure, the government had to define what is meant by large landlords so as not to harm small landlords who have one or two apartments to rent. In fact, this was one of the main stumbling blocks that prevented the coalition partners from reaching an agreement. In any case, it was decided that only those who own ten or more properties will be considered large landowners.

Discount, applies only to legal entities.

We indicated that large landlords are those who own ten or more properties. However, the price control applies only to legal entities, not to individuals, even if they own more than 10 rental properties.

More information you may obtain contacting the professionals of the law firm Despacho Lamas in Palma de Mallorca by +34 971 720 202


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