PSOE and United Podemos have reached an agreement to approve the draft General State Budget (PGE) for 2022, thanks to the fact that the PSOE has accepted a pact on the Housing Law, which aims to include tax incentives for small landlords to maintain rents, limits on the rents of large landlords, a surcharge on IBI for homes that are empty for a long time or that 30% of new housing developments are destined for VPO (subsidised housing).
This Housing Law is expected to reach the Council of Ministers in the coming weeks, while the PGE will arrive on Thursday 7 October.
Incentives for small landlords, limits on rents for large landlords and a surcharge on vacant homes
Podemos has set some conditions to give its approval to the accounts presented by the majority party in the government. The negotiation of the Housing Law, which includes a regulation of the rental housing market in those areas that are declared “stressed”, and after the failure of the agreement reached a year ago to bring this law forward, and which was also included in the agreement to form the coalition government signed by Pedro Sánchez and Pablo Iglesias in December 2019.
The agreement now seems to have an intermediate solution with some initiatives dedicated to small landlords, the vast majority of the rental housing stock in Spain is made up of private landlords, while there will be other measures on the large holders of rental housing, those owners who have more than 10 flats for rent.
This information has not yet been confirmed by the housing minister, but it seems that the future law will include a regulation of rental prices for flats owned by large landlords. The rent limit in these cases will be based on the reference index for all contracts in stressed market areas, where it is also intended to withdraw tax privileges.
What the minister has confirmed is that small landlords will be encouraged to lower the rent to their tenants through reductions in the amount of personal income tax they must pay for that rent.
In addition, a tax is envisaged to tax housing that is empty for a prolonged period of time, through a surcharge on the Property Tax (IBI). Without specifying, the minister has not clarified how much the local councils will be able to tax these dwellings, but there is talk of up to 150% surcharge on IBI.
A third part of the agreement on housing will be to promote a public rental park, with a reserve of 30% of new housing developments for subsidised housing, half of which would be earmarked for social renting.
The PSOE proposes a deduction of up to 90% in personal income tax if the landlord makes rent cheaper
The new tax advantages for renting that the PSOE proposes for the Housing Law are a regulation of the IRPF to stimulate the renting of permanent housing at affordable prices, through the modulation of the current 60% reduction in the net income from renting permanent housing. Specifically, the general reduction percentage will become 50%, but it can be increased according to the following criteria, which would go up to 90% in the IRPF for rental income if the owner lowers the rent in an area declared to be under stress.