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New housing initiative insures landlords in Spain against non-paying tenants
The long-awaited measure will offer homeowners in Spain more protection against rent defaults
For years, landlords in Spain have watched their rights being eroded, caught between tenants who stop paying rent and squatters who move into empty properties with impunity. Now, finally, the government is taking steps to redress the balance with a package of measures that could transform the rental landscape.
This week, the Council of Ministers will approve a public insurance scheme designed to protect landlords against rent defaults, a measure that was first outlined back in January but has taken months to finalise. The scheme will offer a safety net for property owners who rent below the state reference price index, provided their tenant is either under 35 years old or in a vulnerable situation.
Basically, if a tenant stops paying, the state insurance will guarantee payment of all unpaid monthly rent until the landlord gets their property back. It also covers any damages caused by the tenant and the cost of utilities that the landlord has had to pay. There's a catch, though: landlords will need to wait until the property is vacant before they can claim these amounts.
Just last month, the government began processing a bill that will make it legal to cut off utilities like electricity, gas and water in squatted homes. This really is a major shift in how squatting is handled in Spain, where property owners have previously been powerless to take such action without risking criminal charges themselves.
These measures come against the backdrop of a much larger housing initiative being rolled out by the government. Minister Isabel Rodríguez has announced the transformation of the Public Business Entity for Land (Sepes) into Casa 47, a new public company designed to reconfigure the management of Spain's public housing stock and address soaring property prices.
Casa 47 is scheduled to begin offering affordable public rental housing in 2026 through an online portal. Prices will be capped at 30% of the average income in the area where the property is located, with contracts having an initial duration of 14 years, extendable to a maximum of 75 years. Contracts will be renewable every seven years, provided tenants continue to meet the eligibility requirements.
According to Ms Rodríguez, 60% of the Spanish population will be eligible for Casa 47 apartments, as there will be different types of units designed for families with incomes between two and 7.5 times the IPREM, which currently translates to between €16,800 and €63,000 annually.
The government plans to invest €13 billion over ten years in the initiative, at a rate of €1.3 billion per year starting in 2026.
Whether these measures will be enough to encourage more property owners to put their homes on the rental market remains to be seen. Spain's housing crisis shows no signs of abating, and with prices continuing to climb and stock diminishing, the country needs every available property it can get.
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