Spain's government approves the Right to Housing Bill

The Spanish Cabinet has approved (1 February 2022) the Right to Housing Bill, which aims to establish a standardised regulation of the essential aspects of housing policies and provide autonomous communities and town councils with the instruments to promote affordable housing for the population.

The Right to Housing Bill sets out a series of measures to provide a legal framework for the social purposes of housing, define the fundamental aspects that should govern public planning and programming policies in this area, public-housing parks, and establish a protection and transparency framework in the purchase and rental of this type of property.

Sheltered housing

The main new feature is that, in general, subsidised housing cannot be disqualified and is, therefore, subject to a permanent qualification regime. However, for housing developed on land whose urban planning classification does not require this purpose and does not receive public aid for its development, or in cases in which it is exceptionally justified under regional regulations, the qualification period will be temporary. However, it may not be under 30 years.

The novel concept of incentivised affordable housing is also introduced. This is privately owned housing whose owner is granted urban tax, planning, or other advantages by the administration in exchange for its use as a usual residence for rent or other forms of temporary tenancy by people whose income level does not allow them to pay market housing prices.

Definition of a large owner

As part of the measures aimed at regulating residential leases, the bill introduces the definition of a "large property owner" in line with terms already included in Royal Decree-Law 11/2020, of 31 March, which adopted urgent complementary measures in the social and economic field to combat Covid-19, but limited in the bill to properties and areas intended for residential use. To this end, the bill sets out that a "large holder" will be that natural or legal person who owns more than 10 urban properties or a built surface of more than 1,500 m2 for residential use, excluding garages and storage rooms.

Areas with a stressed housing market

Similarly, and following the same principles set out in Law 11/2020 on urgent measures to contain the prices of rental housing contracts in Catalonia, the bill provides for the power of the competent administration to declare areas with a stressed housing market in areas where there is a particular risk of insufficient supply of housing for the population, in conditions that make access to the market affordable. This declaration will have a duration of three years, renewable annually if the circumstances that led to it persist. It will also allow the competent authorities to take measures to make access to housing in this market affordable.

In this regard, to increase the information available for the development of the system of reference indices for housing rental prices set out in the Second Additional Provision of Royal Decree-Law 7/2019, of 1 March, on urgent measures in the housing and rental sector, the bill provides for the creation of a public register of housing rental contracts, which will be linked to the current regional records of deposits of the autonomous communities and the Land Registry.

Urban Leases Act modification

In the case of rented dwellings located in declared stressed-housing market areas, at the tenant's request, the contract may be renewed after the end of the mandatory extension tacit renewal period for successive annual periods up to a maximum of three years, maintaining the same conditions of the current contract. 

This means that contracts that have already been extended can be extended for an additional period of up to three years, which means that leases could last up to 11 or 13 years, depending on whether the lessor is a natural person or a legal entity. The bill sets out the possibility of excluding this measure when: the parties agree on different terms and conditions, the parties enter into a new contract with the rent limitations applicable to the corresponding stressed market area, or the landlord needs to occupy the rented residence.

Regarding the rent cap, for new rental contracts located in areas declared to be in a stressed housing market, the applicable rent may only be increased up to 10% of the rent charged for the same dwelling during the last five years (increased by applying the annual updating clause of the previous contract) provided that the residence has undergone renovation, improvement or accessibility works during the two years prior to the signing of the new contract or when the contract has a duration of 10 years or more.

However, if the landlord is a large property owner, then the rent of the new contract must not exceed the ceiling of the reference price index system.

Land and Urban Rehabilitation Act amendment

Concerning the Law on Land and Urban Rehabilitation, the bill sets out that a minimum percentage of land must only be used for housing subject to the public protection regime, which allows setting the maximum price for sale, rent, or other forms of access to housing, such as surface rights or administrative concessions.

The reservation will be established by land and urban planning legislation or, in accordance therewith, by planning instruments, but the minimum percentage of the reservation will be:

• For rural land to be included in urban development plans, 30% of the intended development area must be set aside for public protection.
• The minimum percentage to set aside for urban land undergoing reform or renovation is 10%.

Real estate taxes modification

Local councils may impose a surcharge of up to 50% on residential properties that have been unoccupied without justification and uninterruptedly for over two years, with a further increase of 50% if the property has been unoccupied for over three years, and an additional 50%, that is, up to 150% if the owner has two or more properties in the same municipality.

Osborne Clarke comment

The measures described above may change since the bill is still in the parliamentary process. We will provide information on the final measures once the Housing Act has been approved and enacted.