A law that affirms the right to affordable housing is working its way through the Spanish legislative process, but economic experts and the military are warning that its interventionist economic basis will do more harm than good while leaving some vulnerable groups unprotected.
The Housing Law, as it is best known, approved in the country’s Congress of Deputies on April 27th, contains about ten measures designed to improve the lack of affordable housing.
Under the draft law, increases in rent, which are allowed annually, will be capped at 3% in 2024. Currently, rental increases are not allowed to exceed growth in the consumer price index (CPI). The following year, 2025, the government will be mandated to debut a new rent-specific index to govern the percentage that a landlord can increase the rent on a yearly basis.
It also stipulates the designation and criteria for “stressed areas,” neighbourhoods seeing fast rises in rental prices drive tenants out. In these areas, which can span from a few blocks to entire regions, rental prices can be capped.
The law would also penalise owners of more than ten properties—or five in stressed areas—for leaving homes empty for more than two years by increasing property taxes by 150%.
Renters who are to be evicted must be informed of the exact day and time of the pending eviction and the law would lengthen the process for evicting non-paying renters or illegal occupants up to two years. This has been one of the most controversial parts of the law.
It also requires that 30% of future new speculative construction be reserved for public housing.
President Pedro Sánchez has also promised 183,000 new public housing units, 20,000 of them to be built on land owned by the Ministry of Defence.
Spain has the largest housing deficit in all of Europe, whether to rent or purchase, and only about 7% of its housing stock is public, compared to 20% to 30% in other European countries. A full third of the housing lacking in Europe is needed in Spain. Not surprisingly, the situation is especially pronounced in the fastest-growing cities, such as Madrid.
In the last four years, coinciding with Sánchez’s presidency, the situation for rental housing has become particularly bad. Overall, rental stock has plummeted 28%, according to data from the real estate website Idealista. The decrease has been especially steep in growing areas such as Valencia and Madrid.
This recent decline in rental stock follows layers of trends that have hit the working classes the hardest. The collapse of the housing and financial markets in 2008 saw many people evicted and jobless and the Spanish economy has never fully recovered. It still suffers from high unemployment and relatively low wages as the cost of living never stops increasing.
In housing, ‘vulture funds’ flew in on the heels of the collapse and were followed by apps such as Airbnb that caused an exponential increase in vacation rentals of residences. In Madrid, areas of the city centre that 15 years ago were ordinary residential neighbourhoods and homes to the working class have been changed by the dual hit of gentrification and ‘touristification.’ The residents who have lived through it, if not pushed out by rising rents or touristification of residential properties, have felt infringed on by speculators, investors, and tourists.
Incidents of renters simply ceasing to pay their rent have spiked sharply, along with cases of squatters occupying homes. As Spanish law stands, evicting a non-paying renter or removing a squatter makes the owner run a legal gauntlet, and the new housing law is designed to continue giving the advantage to the renter or illegal occupant.
Spain’s Exceltur tourism association told France 24 that capping rents in high-demand areas may only further the touristification of residential areas.
“It could end up further aggravating the problem, giving a strong incentive to transfer properties from the residential market to the tourist rentals where there are no [price] ceilings,” it said.
The Spanish Troop and Sailor Association (ATME) has been critical of Sánchez’s housing measures. Military personnel often have to wait months for housing and are easily evicted if they fall behind on their rent, even in military housing. They have a grace period of only three months, compared to the two years in the private sector. In 2023 alone, 40 soldiers were evicted from properties that the Ministry of Defence owned.
The proposal still has to go through the Senate but is almost certain to become law by the end of the legislative term.
