Limiting the price of rents was the last trick left to the second vice president of the Government, Pablo Iglesias, to extract political gain from the budget negotiation before his electorate and he has not hesitated to use it until the last moment. Literally. The leader of Unidas Podemos got a four-month commitment at the stroke of midnight to materialize the measure and, incidentally, eliminated all the resistance that had been encountered so far to move it forward, including that of the vice president. third, Nadia Calvià ± o.
Landlords, rental agencies and analysts have long warned of the consequences that a rent cap could have on the market itself. They insist above all on two points: on the one hand, capping prices can reduce the profitability obtained by owners and, consequently, discourage supply, so that instead of easing pressure on prices, the opposite effect would occur.
We detected 7 consequences: increase in the black market, high prices and inequalities, deterioration of housing, end of purchase to rent, ghettos with waiting lists, legal insecurity and withdrawal of Socimis
Rental Negotiating Agency
On the other hand, it is exposed to generate a kind of rent black market, since the owners could demand the payment of a part of the fee outside of what is legally established.
Both effects have already been detected and verified in other cities and countries where limitations of this type have been implemented, and that is what Calvio herself referred to a few months ago when she frontally showed her opposition to this mechanism. “There are different cities that are experimenting along this line, setting limits, not with much success,” he said last January.
However, the agreement reached on Monday by Pablo Iglesias and the president of the Executive, Pedro Sánchez, allows the leader of the training address jump over the resistance of Calvio, closes the way to a possible intervention of the minister in this matter and knock out any attempt at internal opposition. To this end, the Iglesias department is incorporated as an active part in the processing of the Housing Law prepared by the Ministry of Transport, Mobility and Urban Agenda, which will be the legal vehicle that articulates the limitation in leases.
This is expressed in the agreement signed by Unidos Podemos and PSOE: “The Ministry of Transport, Mobility and Urban Agenda and the Second Vice-Presidency of Social Rights and Agenda 2030 will be co-proponents of the law.” Until now, the ministry led by Josà Luis balos he was solely responsible for this rule.
The agreement also contains a double wink. First, the Podemos electorate and the social agents closest to the formation, such as the tenants union, which is even expressly mentioned in the pact document. “This law will be drawn up on the basis of the necessary consultation and cooperation with the Autonomous Communities and municipalities and with the consensus and dialogue with the social agents, unions and the agents of the sector, including among them the tenant unions”, secure the text.
And second, to CataluÃa, where the regional Parliament approved a mechanism to limit rents a little over a month ago. Said mechanism has generated doubts regarding its legal framework, which is why United We can want the Housing Law to grant the necessary protection for its viability. It says it like this: The new law should “validate the progress of those Autonomous Communities that have a defined Rental Price Reference system, streamlining the mechanisms that make its implementation possible.”
Mechanisms to limit
Once the mystery of time has been cleared – the law will be taken to the Council of Ministers within a maximum period of three months and will be presented in the Congress of Deputies in a maximum of four months– All that remains is to know how the aforementioned price limitation will be articulated, although the agreement between UP and PSOE also includes the purple requirements.
In this sense, the pact indicates that declare stressed market areas, “objectively and based on technical criteria, temporarily and exceptionally, when there has been an abusive and sustained increase in rental income”.
In these areas “mechanisms to contain or eventually lower prices will be established, both for new contracts and for existing contracts” based on the reference index systems and, “in any case and in relation to the information obtained by the rental price index systems, unjustified increases in new leases will be contained, taking as a reference the price of the previous lease and limiting the increases allowed to the situations contained in the housing law ” .
Industry reviews
The reactions in the sector have not been long in coming. From the real estate portal Idealista they reiterate their commitment to “measures that encourage the appearance of more product on the market, leaving aside any coercive or punitive policy.
Faced with an increase in available product, the upward trend reverses and prices fall, without any public intervention
Idealista
The situation experienced by the rental market in our country has highlighted the clear relationship between supply and demand. Faced with an increase in the available product (rental housing in cities such as Madrid or Barcelona has doubled since March) the upward trend reverses and prices fall, without any public intervention “.
Rejection also by the owners. Beatriz Toribio, general director of the Association of Rental Home Owners (ASVAL), warns that “this type of regulation will achieve the opposite effect to that desired: it will reduce the supply of rental housing and make it difficult for residents to access housing. social groups with fewer resources, even more so in the current context of economic crisis. Price drops are already being observed in the market, so it makes no sense to regulate now “.
Josà Ram Zurdo, General Director of the Rent Negotiating Agency (ANA), criticizes that it is not a regulation, but “a full-blown market intervention, a purely ideological measure, as we have already been warning, contrary to the free rental market, where small private owners, who make up more than 90% of the sector, are going to be harmed and many of them will prefer to close their homes to rent “, he assures
The company lists up to seven effects that a limitation of this type could have in the sector: “increase in the black market, high prices and inequalities, deterioration of housing, end of purchase to rent, ghettos with waiting lists, legal insecurity with eight different regimes and withdrawal of the Socimis “.
In this line, Antonio Carroza, CEO of Alquiler Seguro, also regrets the approval of the measure and warns that “the intervention of rental prices at the national level will bring irreparable damage to the market, as we have verified with the The experience in Catalonia will be closely linked to a strong contraction in supply and therefore will lead to higher prices and a serious increase in the underground economy “.
Facua-Consumers in Action it stands out from the criticism and “values positively” the agreement of the Government partners. The association considers that the measure “is a step that, with the political will of city councils and autonomous communities, can open the door to curb speculation in rents and thus facilitate compliance with the constitutional mandate to guarantee access to housing”
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
