Draft housing law. New key measures affecting the constitutional right to housing and, in particular, residential lease contracts

The future law on the right to housing claims to adopt housing measures in order to strengthen the constitutional right to decent and suitable housing set out in article 47 of the Spanish Constitution, with the aim of granting equality between all citizens. in order to fight against discrimination against those who are in a particularly vulnerable situation.

The Ministry of Transport, Mobility and the Urban Agenda, together with the Ministry of Social Rights and the 2030 Agenda, submitted on October 26, 2021 to the Council of Ministers the draft housing law (the “Draft bill“) for its first reading, which was then submitted for public consultation until 18 November 2021, and then resubmitted to the Council of Ministers for approval and referral to the Spanish Parliament.

Among other measures, the preliminary draft law introduces some relevant modifications to Spanish Law 24/1994, of 24 November 1994, on urban leases (the “LUL“).

In particular, the following conditions apply to residential leases the main object of which is located in an area declared as a troubled residential market area (as described below):

  • The tenant has the right to renew rental contracts for which the mandatory or tacit extension has expired according to the terms provided for by the LUL for additional annual periods up to a maximum of 3 additional years. During this period, the same conditions of the lease in force apply, unless otherwise agreed or signature of a new lease with limitation of rents or in the case where the lessor has indicated the need to occupy the rented accommodation for the ” use as a permanent home for himself or members of his family.
  • The lessor will have the right to increase the rent of a new lease up to a maximum of 10% compared to the last rent of the previous lease in force during the last 5 years, when:
  1. Rehabilitation works were carried out in the accommodation and these were completed 2 years before the date of conclusion of the new lease agreement;
  2. 2 years before signing the lease, the lessor carried out rehabilitation or improvement work on the housing and achieved a saving of 30% of non-renewable primary energy provided that this condition has been accredited by means of a certificate energy efficiency;
  3. 2 years before the signing of the lease, accessibility improvement work had been carried out in the accommodation; and
  4. The lease is signed for a period of 10 years or more, or in the event of renewal allowing the tenant to extend the lease under the same conditions for a period of 10 years or more.
  • The rent agreed at the start of the new contract cannot exceed the maximum price limit applicable under the CPI regime in the event that the lessor is a large legal person (great tenedor), that is to say has more than 10 properties or a built surface of more than 1,500 m².

With regard to the areas of the residential market in tension, the competent public administrations will be able to declare them only if there is a particular risk of insufficient supply of housing for the population, establishing conditions which would make its affordable access to the market. The following circumstances apply to declare a residential market area under stress:

  • the average burden of the cost of the mortgage or rent plus basic expenses and supplies exceeds 30% of the average or average household income; and
  • The purchase or rental price of the property has seen a cumulative percentage growth of 5% greater than the growth of the Consumer Price Index over the previous 5 years.

These are the main measures that affect the housing lease contract; however, it will be necessary to keep an eye on the modifications which could be made to the bill by the Council of Ministers and the Spanish Parliament until the text is definitively approved.

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