The Constitutional Court limits the New Housing Law, annulling some provisions

The Plenary of the Constitutional Court has ratified most of the Housing Law promoted by the government of Pedro Sánchez and approved in May 2023, which establishes limits to rent increases and regulates the figure of the large tenant, defined as the owner of more than five or ten homes. The Court has determined that these provisions do not encroach on regional competences. However, the ruling also declares certain articles of the law unconstitutional, following the proposal of Judge María Luisa Segoviano.

The progressive majority of the Constitutional Court has responded to the appeal filed by the Junta de Andalucía, interpreting the law in accordance with article 149 of the Constitution, which grants the State exclusive competence over ‘the regulation of the basic conditions that guarantee the equality of all Spaniards’. The ruling also considers that the Constitution assigns the central government control over ‘the general planning of economic activity’ and civil legislation.

The Court has declared four articles of the law totally or partially unconstitutional. It annulled Article 16, which regulates subsidised housing; Article 19.3, which obliged large property owners to provide detailed information on their housing; the third paragraph of Article 27.1, which defines public housing parks; and Article 27.3, which established that the revenue from fines and sales of public housing should be used to improve public housing parks. The first transitory provision of the law has also been annulled.

In a statement, the Court explained that the annulment of article 16 and the first transitory provision is due to their ‘excessive level of detail and the creation of a supplementary regime, something that the State cannot do in matters that are the exclusive competence of the autonomous communities’. In addition, the Court considered ‘excessive the regulation of the minimum information’ that article 19.3 required of large landowners, stating that ‘this aspect should be regulated by the autonomous communities’. With regard to sections 1, third paragraph, and 3 of article 27, which regulate the composition and financing of public housing parks, the Court declared them unconstitutional ‘for exceeding the determination of these concepts and for contravening the principle of financial autonomy, by providing for a finalist allocation of income’.

The Ministry of Housing and the Urban Agenda has pointed out that ‘it is good news’ that the Constitutional Court has upheld the Housing Act. ‘The correction of certain aspects does not eliminate the essential: this law, according to the Constitutional Court itself, is necessary and essential. The ruling reaffirms the competence of the State to guarantee decent and affordable housing, vindicating its capacity to act in this area within the constitutional framework”, they stated.

The Court’s ruling opposes the warnings of the General Council of the Judiciary in January 2022, before the law was passed. The Council’s advisory report, promoted by the conservative majority, warned that the Government’s Housing Law interfered with the rental market in stressed areas, causing legal uncertainty by ‘expropriating’ autonomous competences. Justices Ricardo Enríquez, Enrique Arnaldo, Concepción Espejel and César Tolosa, from the conservative bloc, have announced dissenting opinions. Judge Laura Diez did not participate in the deliberation.

The Junta de Andalucía’s appeal challenged 16 articles of the law, as well as several additional and final provisions, arguing that the central government’s regulation ‘invades exclusive competences in the field of housing set out in the Statute of Autonomy of Andalusia’.

According to the Junta’s opinion, ‘the State cannot legislate, not even in a supplementary way, on housing matters’, proposing the challenge before the Constitutional Court of ‘all the regulation on subsidised housing, affordable housing with incentives, large tenure and public parks’.

The Junta criticised that the state regulation left no room for the regional legislator and also appealed the regulation of the rights and duties of homeowners, something that, according to jurisprudence, corresponds to the autonomous community.

Furthermore, they considered that the declaration of a stress zone and the reduction of the definition of a large landlord from ten to five properties encroached on the exclusive competences of the autonomous community in the area of housing and property rights. The regulations on the percentage of the reserve for social housing and the reserve in stressed residential market areas were also contested.

Translated with DeepL.com (free version)