After many months of blockade in the negotiations on a rule discussed within the Government throughout the legislature and approved in the Council of Ministers a year and a half ago, the coalition Executive has finally managed to unblock the talks with the partners of Congress to guarantee parliamentary support for the housing law. In the last few hours, both ERC and EH Bildu have given their final approval to a text that will include structural rental price limitations. After the negotiations between the Ministry of Transport and the parliamentary groups of EH Bildu and ERC, whose dialogue intensified in recent hours with the spokesman Gabriel Rufián by the Republicans, this Friday the two main partners of the Executive in the legislature have appeared to announce the deal.
Sánchez ordered to close pension and housing agreements with the legislature partners after the crisis of ‘only yes is yes’
“We have reached an agreement for a housing law that finally recognizes the right to housing, that intervenes and regulates the market, that puts a stop to speculation and stops the increase in rents”, the spokespersons held at a press conference parliamentarians from the republicans, Pilar Vallugera, and from EH Bildu, Oskar Matute. Shortly after, the spokesman for the Socialists in Congress, Patxi López, celebrated a “historic” measure, and the Minister of Social Rights, co-proponent of the law that left the Government, considered that this Friday “citizenship wins” with the “most important step in democracy to guarantee the constitutional right to housing”.
The consensus text reached by the Government with its allies includes some important innovations with respect to the text that has already come out of the Council of Ministers. The main one, a structural limitation of rental contract reviews. As part of the social shield deployed by the Government on account of the economic consequences of the pandemic and the war, this limitation is today 2% and will remain so until the end of the year. With the new law, this ceiling will go to 3% in 2024 and, from now on, it will be set by a new alternative index and lower than the CPI, which will protect tenants from the inflationary spiral that the economy is experiencing today. The condition of large holder is lowered from 10 to 5 properties, which can be owned by both natural and legal persons and not only companies, as the initial text stated. But to apply the concept of a large fork, stressed areas will have to be declared, with skyrocketing rental prices, and that is the responsibility of the autonomous communities.
After the frontal clash between the PSOE and Unidas Podemos on account of the reform of the only yes is yes, the political order of President Pedro Sánchez to his Executive was to unblock the housing negotiations as soon as possible in order to give a definitive impetus to the law and send a message that the coalition government continues to be in good legislative shape in the run-up to the electoral campaign in May. This guideline even materialized in a meeting before Easter between Sánchez himself and the second vice president, Yolanda Díaz. Since then, the negotiations between the Ministry of Transport (with responsibility for housing) and parliamentary partners such as ERC and EH Bildu have intensified to the point of leaving the definitive agreement practically closed during the last week.
This Friday, Yolanda Díaz herself has celebrated the pact, considering it part of the “useful policy” that she defends in the Government. “Finally today our country has a housing law, it is a very important day, this law was essential”, assured the Minister of Labor. “It is vital to be able to say that we have a law that allows regulating rental prices,” she pointed out.
On the table, there have been fundamentally two obstacles to overcome: converting the limitation of rental prices that is applied temporarily as part of the social shield deployed due to the consequences of the war and the pandemic into a structural one (fixed in these cases by decree in maximum increases of 2%) and also include the regulation of new properties that come onto the market for the first time.
According to all the sources consulted, this Thursday the last fringes of the agreement were definitively closed in both sections and both ERC and EH Bildu will end up guaranteeing their definitive support in Congress for a regulation that will now pass the paper process immediately. The Government has given these groups the opportunity to announce the news at a large press conference in Congress, in which the two groups have claimed their role in the negotiation.
“Once again it is the leftist sovereignist forces who made such an important advance possible and achieved (…). It will be the 18 votes that ERC and EH Bildu add up that will make this law a reality”, have defended Matute and Vallugera. The announcement has relegated the PSOE to the background but also United We Can and the Ministry of Social Rights, which participated in the drafting of the text that came out of the Council of Ministers and which was aligned with the negotiating positions of the parliamentary partners.
In public, the spokesman for Esquerra Republicana, Gabriel Rufián, and the leaders of Podemos have exchanged compliments. “I know this is quite unusual in politics but I don’t care. I want to thank the negotiating effort to @eh Bildu already @WE CAN and especially the partner @OskarMatute and the partner @ionebellarra. Everything good is achieved is always collective. There is already a Housing Law”, Rufián wrote on Twitter. “Thank you Gabriel. The work of ERC and EH Bildu has been essential so that today we have a better law”, Belarra replied in the same way, in a message similar to the one dedicated to Matute: “Thank you very much for all your work @OskarMatute. Today, thanks to joint work, we have a better law”.
Agreement before the campaign
Although the law that came out of the Council of Ministers establishes a regulatory framework at the state level, housing powers belong to the autonomous communities and town halls and it is these institutions that must decide, once the norm is approved, if they decide to apply the ceilings to the rent that would cover the text. It is for this circumstance that the progressive parties are especially interested in having the norm approved before the campaign, in order to be able to exhibit in the electoral acts between now and May what would be one of the main milestones of the Government and of the so-called investiture bloc in The congress.
The inflationary spiral of the last year led to the implementation of the rent cap, which many landlords are skipping with the threat of wanting to recover the flat for direct family members. Also, that linking the review of rents and rents to the CPI –as stated in the current legislation– harms tenants. “Obviously, how we regulate the updates in the face of increases in CPI rental prices is one of the issues that are being worked on,” acknowledged Raquel Sánchez last week.
After ruling out by the Ministry of Economy fixed limitations in the revisions of rental contracts (Unidas Podemos proposed a limit of 3%), the proposal worked on in recent days consists of outlining an alternative index to the CPI that can be protected from fluctuations inflationists of the economy and sentence tenants to abusive revisions of their contracts.
According to the text released by ERC and EH Bildu, in charge of announcing the law this Friday, the current 2% cap will remain until the end of the year, then 3% will apply for another year and will be from 1 January 2025 when the new index, which will be drafted by working groups from the Ministries of Transport and Social Rights, enters into force. This index, in any case, according to the parliamentary groups, must be lower than the CPI. This part of the law, contract reviews, affects all rentals and not stressed areas, which have a specific additional regulation.
Expansion of stressed areas and reduction of forks
As explained by the spokespersons for ERC, Pilar Vallugera, and EH Bildu, Oskar Matute, this Friday in Congress, the new law will regulate rents that are in stressed areas, “both for real estate contracts that are on the rent as for new contracts”. The latter was a requirement that the groups had enforced to prevent homeowners from circumventing the cap, taking their home off the market and reintroducing it like new.
“These ceilings will be established, depending on the type of contract and property, through the indexation to the previous income in force for small owners and through the application of the price containment index for large holders,” they have specified.
The second leg of this part is what requirements are necessary for the autonomous communities and town halls to be able to declare stressed areas in their territories. They may do so if at least one of the following two conditions is met: “that the average cost of the mortgage or rent plus basic expenses and supplies exceeds 30% of the average household income; or that the purchase or rental price of the home has increased at least 3 points above the CPI in the five years prior to the declaration of a stressed area”.
The spokespersons have explained that the minimum unit to declare a stressed area is the census district, but that from there, the competent administrations have the ability to establish areas with a greater perimeter until they consider it necessary.
The law provides differentiated measures for owners depending on whether they are large or small holders. Regarding the project that came out of the Council of Ministers, there are several novelties. The first is that the number of flats to be made by a large owner decreases, which goes from 10 to 5. In this case, the price of the new contract will have to be linked to a price containment index that will have to be carried out from of the approval of the law; in the case of small holders, through the indexation to the previous income in force for small holders.
The text negotiated between the Government and the groups will prohibit “evictions without a predetermined date and time”, a “historic demand of the housing movements to end the uncertainty and defenselessness of the tenants”, according to the groups’ spokespersons. independentistas
On the other hand, “new extensions are included in the launch procedures, which will postpone the processes for more than 2 years, and mandatory access to out-of-court settlement procedures is stipulated for vulnerable people” and for the first time “the ability to to be able to use the funds from the state housing plans to offer housing alternatives for people at risk of eviction through subsidized social rents, rehousing people in vulnerable situations or any other policy that aims to offer housing alternatives to these people and families”.