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The Paradoxes of the New Housing Law



The Housing Law approved in May of last year has unleashed a great deal of controversy and uncertainty among landlords and tenants. At first glance, it seems that the new provisions seek to balance the scales between rights and duties. However, a deeper analysis reveals that the increase in tenant protection instruments generates an imbalance against the landlord that can trigger more turbulence in a rental market where small landlords are the main providers of housing.

Payment of the real estate professional's fee by the landlord.

One of the first consequences that has been visualized is that the processing and management costs of renting a home for the habitual residence of its future tenants become an economic burden that must be borne exclusively by the landlord, annulling any negotiation capacity in this section, thus altering the principle of the autonomy of the will, a nuclear factor of freedom of enterprise.

Evidently, this measure designed to alleviate tenants seems to have had the opposite effect to date, since part of the increase in rents in recent quarters must be attributed to the need to compensate for these new additional costs for landlords. A populist measure with an inflationary outcome.

Difficulties in Recovering Possession: A Procedural Labyrinth

An element that generates effects that are not yet quantified and that is not sufficiently visualized from the media perspective is the modifications to the judicial process in the event that the landlord has to resort to it to recover possession of their rented or occupied homes. The new procedural and civil regulations, which seek to protect vulnerable occupants, turn the recovery of a home into a bureaucratic labyrinth. At a recent Real Estate Congress, it was determined that, in addition to the increase in the duration of judicial processes due to the overload of the Administration of Justice, the changes that affect the effectiveness of the summary process approved in 2018 must be added, and the delays, especially hostile, in cases where the landlord is a large holder, being able to extend said recovery up to 30 months depending on the development of the process and the characteristics of the owner.

Rent Limitation: A Moderate Containment

The star measure that the law introduces is a moderate containment of rents in areas of tense market. This measure, of potestative application by the CCAA, aims to curb the uncontrolled rise in rental prices, although without closing the door to increases adjusted to certain conditions. The proposal made by the housing law is not as radical as the Catalan law contained, however, the absence of the two indexes that the State must make known maintains uncertainties that do not benefit the rental market at all.

In addition, with the possibility of adopting the new concept of large holder, the law puts the spotlight on the owners of a few homes. The definition adopted, unique in the western panorama, raises more questions than answers in certain cases, and closes the doors to an advance in the professionalization of the rental market.

Adverse Results: The Irony of Legislative Consequences

The law has generated collateral effects, contrary to those intended and that deserve our attention. The avalanche of questions that are received about other alternatives to renting for habitual residence, such as seasonal rentals or room rentals, reveal the concern that the regulation has generated. In addition, the temporal context in which this law has been approved has aggravated the decrease in the supply of housing for rent and the exit of small investors from the market, especially the Catalan one, where more than a semester ago the approval of the tensioned area and the decrease to only five homes of the conceptualization of the large holder.

Furthermore, we have observed how the request for the presence of guarantors in rental contracts has increased exponentially, or how the selection of the tenant in areas of high demand is increasingly strict, certifying with this, that probably a good part of the measures can be beneficial exclusively for those households that currently live on rent, but that the law can make it difficult for those people who do not have the necessary recurrent economic resources to prove that they will not cause difficulties in the course of the rental relationship.

The ideological polarization surrounding housing legislation in the last decade has only generated legal uncertainty. Citizens and investors seek stability and predictability, not a constant struggle that jeopardizes the durability of any housing policy.

The housing law has set in motion a series of complex and, at times, contradictory mechanisms. Housing, a fundamental right and a basic need, has become the epicenter of a debate that goes beyond the walls of a home. Landlords and tenants deserve a law that offers clear and stable solutions, that guarantees security and promotes an equitable market. In the meantime, we are navigating in a sea of uncertainties, which does not seem to be going to cease, with the announcement of more coercive measures that will not help at all if the Administration is not willing to put the economic resources to generate a sufficient public housing stock and thus become the main player in the rental real estate market.

 

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