La Ley de Vivienda  – The Law With the Shortest Lifespan in History

The Popular Party (PP) , which opposes La Ley de Vivienda, came out as a winner of the local elections, rendering the Housing Law ineffective in many regions. The outcome could have significant implications for rental prices, market conditions, and access to housing, leaving landlords and tenants in a state of uncertainty.

With no agreements reached with Vox, the Popular Party would govern in 10 Autonomous Communities and would be key in the Canary Islands to allow the Coalition Canaria (CC) to govern.

The areas described in the new Ley de Vivienda as a residential markets under the strain,  and the limitation on rents practically died before they are born. 

The most controversial measure of the new Ley de Vivienda may bid farewell to its effects after the electoral results of the recent regional and municipal elections on May 28th. The Popular Party had already stated that it would not apply this law in the Autonomous Communities and municipalities where it governed, and after the votes, the map of Spain could turn blue in up to 11 Autonomous Communities, with the support of Vox. The announcement of the early general elections scheduled for July 23rd could even lead to the complete repeal of the Ley de Vivienda if the Popular Party were to win.

The new Ley de Vivienda came into effect on Friday, May 26th, just two days before the recent regional and municipal elections. The unblocking of this bill, which had been stalled in the Congress of Deputies for over a year, just before these elections, has been used by right-wing and left-wing parties during the campaign to announce who would implement or not the most controversial measures, especially the creation of areas with tight market conditions and, therefore, the control of rental prices.

The Popular Party, the main opposition party to the central government, had already announced that it would not apply the declaration of areas with tight residential markets in the regions where it governed. If before May 28th, the “popular” communities of Madrid, Andalusia, Galicia, or Castilla y León confirmed their opposition to rent caps, after the elections, the regions of Valencia, Cantabria, Balearic Islands, Extremadura, and Aragon will also join, although they depend on agreements with Vox. 

In La Rioja, the Popular Party has won an absolute majority, as in Madrid, while in the Canary Islands, the contribution of the Popular Party will be crucial to allow the Coalition Canaria to govern, to the detriment of the Spanish Socialist Workers’ Party (PSOE) and its allies, who have not obtained the necessary majority to remain in power. However, there is still another party that can at least abstain from the legislative vote, which could come from Vox or the Socialist Grouping of La Gomera (ASG).

The Canarian nationalist party did not support the Ley de Vivienda in Congress, citing an invasion of regional competences, just like the Basque Nationalist Party (PNV), which governs in the Basque Country, a region where regional elections have not been held. At the moment, the Socialists only hold on to Castilla-La Mancha and Asturias.

The Catalan region, governed by the ERC with the support of PSC-PSOE, along with Asturias and Castilla-La Mancha, would be the only autonomous communities willing to apply the Ley de Vivienda, along with Navarra, which, despite the triumph of the Union of Navarrese People (UPN), would maintain the government of PSN-PSOE with the support of EH Bildu and Geroa Bai.

But even a stronghold like Barcelona will depend on the election results to form a new municipal government that supports or opposes rent caps. Mayor Ada Colau (with 9 councilors) has lost local power and now becomes the third political force behind Xavier Trías’ JuntsxCat (11) and PSC/PSOE (10) led by Jaume Collboni. Ernest Maragall’s ERC (5) has lost half of its councilors. It will be up to Trías, as the winner, to seek sufficient support, although he faces difficulties unless he can achieve a minority government with occasional agreements with ERC. 

“The electoral upheaval that has just taken place in Spain, where many municipalities and autonomous communities are going to be ruled by the Popular Party, a party that has positioned itself against the new Ley de Vivienda, will render the territorial application of the Law ineffective,” says José Ramón Zurdo, CEO of the Rent Negotiation Agency.

“The entire development of the Law, including the application of tight market conditions, which was intended to intervene and limit rental incomes, will not have a real effect in the vast majority of autonomous communities and municipalities in Spain. In those communities where it could be applied, it will lead to a displacement of investment by developers and investors towards those communities that do not impose limits on rental investment, creating a Spain with two speeds,” emphasizes Zurdo.


The early elections could render La Ley de Vivienda ineffective

The announcement by President Pedro Sánchez of the early general elections, originally scheduled for late 2023, on July 23rd could even lead to the complete repeal of the Ley de Vivienda if the Popular Party were to win the upcoming elections and form a government.

Indeed, the Popular Party has already called for the repeal of the Ley de Vivienda. This week, it will present a non-binding motion requesting the repeal of the recently approved Housing Law and the implementation of an “anti-squatting” plan that allows evictions within 24 hours.

The Popular Party defends its repeal because it considers it includes “interventionist measures that are contrary to individual freedom” and that it will reduce the housing market supply.

Likewise, it proposes to promote a State Pact for Housing with the main objective of facilitating access to housing for young people, providing assistance for both rental and purchase, in order to close the gap in emancipation compared to the European Union.

But one thing is the non-application of the measures that depended on regional initiative, and another is the repeal of the Law. What will happen to the management of evictions if the law changes? And what about the updating of lease agreements? Let’s remember that until December 31st, 2023, the annual increase is capped at 2%, it will be 3% in 2024, and a new index will be introduced from 2025. The answer can probably be found in the electoral programs of political parties in the next two months.

“What is unheard of,” warns José Ramón Zurdo, “is that the rental market in our country has to wait for the election results to know if a landlord can safely and confidently rent out their property. This uncertainty affects all of us, tenants and landlords, and ultimately severely disrupts the rental market, destroying supply, and thus greatly hindering access to housing.”

This article is brought to you by Expat Hub Valencia, a property buying agent  in Valencia. Using the Expat Hub’s services, you will be able to successfully navigate Valencia’s complicated property market in no time.

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