Council of Ministers

The Government presents the future Law on the Right to Housing

Moncloa Palace, Madrid, Tuesday 26 October 2021

The Minister for Transport, Mobility and the Urban Agenda, Raquel Sánchez, has presented the draft bill on the Right to Housing to the Council of Ministers, which "aims to configure housing as the fifth pillar of the Welfare State" and as a "powerful tool to fight inequality, marginality and exclusion".

This is a "historic" regulation, which reinforces the exercise of the constitutional right to decent and adequate housing, which the minister defined as that which is "habitable, accessible, energy efficient and which guarantees access to basic supplies without its enjoyment entailing an unaffordable financial effort for citizens".

Sánchez explained that the text pays special attention to the people with the greatest difficulties and to those areas where there is the greatest tension in the market, affords legal security and is a guarantee because it protects the renter, the tenant and the landlord and does not encroach on the competences of the regional governments.

The future law, according to the minister, aims to increase public housing stock, which only covers 1.6% of households compared to the 10% provided by other neighbouring countries, as well as to combat abusive price rises. "We took the opposite path to liberalisation and real estate bubbles and connected with the reality of thousands and thousands of families who could not even afford basic supplies," she said.

What's new in the future housing law?

Foto: Pool Moncloa/Borja Puig de la BellacasaThe future law prevents the sale of public social housing stock to investment funds, as it is subject to permanent protection and cannot be sold; it establishes the indefinite classification of social housing, and introduces the concept of incentivised affordable housing, which is privately owned housing that is granted certain tax or other benefits, on the condition that it is intended to be rented at a reduced price.

Raquel Sánchez also stressed that the mobilisation of empty homes is encouraged by introducing the possibility for local councils to apply the Property Tax surcharge to homes that have been empty for more than two years if the owner has four or more homes in the same municipality.

The regulation improves the eviction procedure in situations of vulnerability by streamlining communication between judges and social services, which will have to provide a housing response to families. The minister indicated that the period of suspension of mortgage foreclosures has been extended from one to two months when the owner of the property is an individual and from three to four months when the owner is a legal entity.

Another initiative is to promote subsidised housing for rent at a limited price. Sánchez has advanced that a 30% reserve is established for urbanised land, establishing the compensation that corresponds to the owners when acquired rights are affected. And of this land reserve, the possibility of 50% of this 30% being used for rental housing is envisaged.

Raquel Sánchez added that the future regulation will allow the regional governments to declare areas with a stressed residential market, in which tenants will be able to take advantage of an extraordinary extension of their contracts, on an annual basis, for a maximum period of three years.

The draft bill defines a "large property holder" as a natural or legal person who owns more than ten urban properties for residential use or a built-up area of more than 1,500 square metres. Where the owner is a large legal entity, the rent of new contracts concluded in stressed areas shall be limited by the previous contract or the ceiling of the price applicable under the reference price index system; there shall be a period of 18 months from the adoption of the law for the application of the latter limitation.

With regard to the tax framework, the minister highlighted that the regulation of personal income tax is being improved to stimulate the rental of permanent housing at affordable prices. A 50% reduction percentage is set for new rental contracts, which may be increased depending on criteria such as a drop in rent in a stressed area or first-time renting of housing in these areas to young people aged 18 to 35.

Raquel Sánchez added that the law reinforces collaboration between public administrations in the field of housing, rehabilitation, regeneration and urban renewal, and encourages public-private partnership with the sector's agents.

Draft Bill on the Quality of Architecture

The Government has analysed the draft bill on the Quality of Architecture, which aims to position architecture as an asset of general interest to be preserved and promoted, and is one of the reforms included in the Recovery, Transformation and Resilience Plan.

The Minister for Transport, Mobility and Urban Agenda stressed that the Executive aims to bring architecture closer to society and to recognise the value it contributes to economic and social development through renovation, the improvement of buildings and the protection of cultural and natural heritage.

It is also a legislative instrument that will help consolidate a new model of economic, energy, ecological and social transition driven by the NextGenerationEU Funds.

Greater protection for energy consumers

Foto: Pool Moncloa/Borja Puig de la BellacasaThe Council of Ministers has approved new urgent measures in response to the current situation of high gas and electricity prices.

The Third Vice-President of the Government of Spain and Minister for Ecological Transition and Demographic Challenge, Teresa Ribera, has specified that the measure has a triple purpose: to give an extraordinary boost to the protection of vulnerable consumers; to increase transparency and supervision capacity in the electricity and gas markets, and to promote stability in electricity prices for industrial consumers.

To increase the protection of vulnerable consumers, the discount on electricity bills granted by the social electricity voucher increases from the current 25% to 60% - from 40% to 70% in the case of the severely vulnerable - until 31 March 2022. In addition, the budget for the social thermal voucher has been doubled this year, reaching 202.5 million euros.

Teresa Ribera has announced that, extraordinarily, vulnerable consumers are going to have extra money to face the winter with the social thermal voucher. A cheque for 90 euros per family will be available during December to cover their heating needs, regardless of the heating system.

In order to promote transparency and improve the monitoring capacity of the retail electricity and gas markets, marketers will report any changes to contracts one month in advance, detail the effects of the change on the bill and will have to submit transparent, comparable and up-to-date information on their offers to the National Markets and Competition Commission (CNMC). "Consumers need to understand what the conditions of their contracts are, what tariffs they are paying and their conditions" and have access to all the conditions offered by all companies, said Ribera.

In the wholesale electricity market, companies must provide data on the bilateral agreements and hedges they enter into, both with third parties and within the same business group.

Teresa Ribera also specified the scope of application of the temporary reduction of the extraordinary profits of generation plants that do not bear the gas costs passed on in the wholesale market, a measure included in the Shock Plan approved in September. "Those who have not incorporated extraordinary benefits, either because they have fixed-price forward contracts prior to 16 September 2021, or because they are going to fix an extension of this fixed-price hedge in a contract, are exempt from the reduction".

"At a time when industry has very limited coverage and is having to turn to the wholesale gas market, it is essential that there is an incentive to expand fixed-price hedging for industrial consumers," the minister added.

Ribera concluded by pointing out that these measures could be completed in the coming months, both in terms of the regime for small renewable electricity producers associated with a stable regime and in terms of support for gas consumers and small marketers.

Extension of the social shield

Foto: Pool Moncloa/Borja Puig de la BellacasaThe Executive has approved the extension until 28 February of the so-called "social shield" measures that were due to expire on 31 October.

The Minister for Territorial Policy and Government Spokesperson, Isabel Rodríguez, recalled that one of the Government's hallmarks is the protection of vulnerable people, which is why the extension of the social shield coincides with the extension of the Temporary Redundancy Plans. The Government, she continued, "is furthering its strategy of guaranteeing equality, social justice and progress, while consolidating the social welfare structure".

The Royal Decree approved today includes the extension of the guarantee of gas, water and electricity supply, a social voucher for vulnerable groups, the suspension of evictions in situations of vulnerability and the moratorium for rent arrears.

Contingency fund to help La Palma

The spokesperson of the Executive has informed that the Council of Ministers has authorised the application of 70 million euros from the Contingency Fund to alleviate the economic and social effects of the eruption of the volcano on La Palma.

Of this amount, 63 million euros will be used to finance the Extraordinary Employment and Training Plan to help people who have lost their jobs. The other almost seven million will finance the direct grant to the Regional Government of the Canary Islands to support agriculture and livestock farming on the island.

"We are responding in a forceful and precise manner and we will continue to do so for as long as normality is not restored to the island," said Isabel Rodríguez.

Non official translation