Spanish Congress rejects Balearic rent cap proposal

Congreso de los Diputados Luis García, CC BY-SA 4.0

24 March 2023, 17:35

The Plenary Session of the Spanish Congress has rejected the bill presented by the Parliament of the Balearic Islands, which modifies Spanish Law 29/1994, of 24 November on Urban Leases, and did not go ahead due to 71 votes in favour, 270 against and four abstentions. This bill intended to give autonomous communities regulatory capacity to cap rent in pressured areas.

Specifically, the initiative aimed to modify Articles 10 and 17 of the Spanish law on urban leases concerning contract extension and give autonomous community governments regulatory capacity to limit rent in areas under stress.

By amending Article 10, which regulates contract extension, this bill would establish that rental contracts for housing located in "residential market areas under pressure" could be extraordinarily extended for annual periods of up to three years, during which the terms and conditions established for the current contract would continue to apply. This extraordinary extension request would have to be accepted by the landlord unless the parties had agreed on other terms or conditions.

Regarding Article 17, which establishes that the parties would freely agree upon the rent, the bill aimed to allow autonomous communities to cap or moderate rent in areas where the residential market is under stress.

This bill came from the Parliament of the Balearic Islands, where it was promoted by Més per Menorca, and was passed thanks to votes in favour by the PSOE, Unidas Podemos, Més per Mallorca and the Mixed Group.

According to the bill, this rent-capping system was proposed alongside a penalty scheme and an out-of-court system for settling disputes between landlords and tenants.

This bill was examined in the Spanish Congress of Deputies at a time when the coalition government is still negotiating some points of the Housing Law, such as capping rent.