Spain housing law conflict explained - Quick guide to understanding conflict with housing law: what communities regulate and how far government can go.

Has the government gone over the top with the housing law? In the eyes of the Judiciary, yes.

The General Council of the Judiciary (CGPJ) has warned that the new law "expropriates" competences to the communities. In other words, that the rule deals in depth with a number of issues where the Government is not supposed to go into.

The CGPJ has produced a new report evaluating the housing act. The Executive wanted the approval of this body before approving the regulation in the Council of Ministers.

Two weeks ago, the CGPJ prepared a first report by former socialist deputy Álvaro Cuesta, but the majority of the members of the body itself voted against the proposal.

The new report, prepared by Enrique Lucas and José Antonio Ballestero, was released on Monday and will be voted on Thursday.

Spain housing law conflict explained

That although the State has competence in housing, this does not allow it to "completely order this matter or duplicate or empty the autonomous attributions of content"”

Moreover, the body is tough and, according to El País, considers that the Executive "expropriates" the competences of the communities.

The new report also harshly criticizes the rent control included in the law.

The Judiciary considers this to be a "constitutionally sensitive" issue, since it contrasts two fundamental rights: private property and the social function of housing.

In addition, it labels the content of the price control as "cumbersome" and asks for empirical evidence that the measure is effective.

Finally, he questions the need for rent control once the worst of the pandemic has been overcome.

Arguments on Spain housing law conflict explained

The authority argues that the measure was born to combat the negative impact of COVID-19 on households, so maintaining this measure once that impact disappears "may not be appropriate".

CGPJ says the Government could be getting more bogged down than it would be on housing. Why? Because when it comes to housing, communities are in charge.

By virtue of Article 18.1.3 of the Spanish Constitution, "the Autonomous Communities may assume as exclusive competence the planning of the territory, urban planning and housing, competence that has been effectively included in all the Statutes of Autonomy".

"The border is complicated, let's say that the general basis has to be given by the State, but who develops the rules and criteria have to be the communities," explains Arantxa Goenaga, lawyer and partner of the firm Círculo Legal Barcelona.

"The state can establish general lines, but it is the communities that land it," says Beatriz Toribio, an expert in the real estate sector.

The application of the most controversial measures of the Law, such as the declaration of stressed areas, the ceilings on the price of rents, or the surcharge on empty flats would therefore be in the hands of the communities and municipalities.

However, there are times when the State rules. Proof of this is the land law, the urban leases law or the different state housing plans, which are state regulations that regulate housing aspects.

Comments on Spain housing law conflict explained

"Together with the autonomous regulations, it will be necessary to consider the existence of a State law on the matter, as well as municipal regulations", says the Constitution in the Synopsis of Article 47.

The State, in fact, has entered to regulate many housing issues, with fiscal measures, with rules that affect the mortgage market, urban leases, the over-indebtedness of families, the protection of mortgage debtors, evictions, horizontal property, or energy efficiency.

But where does one end and the other begin?

"The State has competence titles that can affect to a greater or lesser extent in the matter of housing, without in any case that allows it to order this matter completely or duplicate or empty the autonomous attributions of content," warns the report of the Judiciary.

Goenaga gives an example with the administration of Justice: "The body of the administration is state, but the auxiliary body is autonomous, it corresponds to each community. What the CGPJ is saying to the Government is: beware, do not overreact with policies."

In most issues, the State must have a role only "supplementary", as established by the Constitution itself in its synopsis of art. 47.

For example, in urban planning matters, it is up to the communities to design and develop their own policies, while the State can exercise certain competences that affect the matter, "but must avoid conditioning it".

State provisions on Spain housing law conflict explained

The same is true in the case of public housing: "in this area a large part of the state provisions apply exclusively on a supplementary basis".

The CGPJ report gives some examples of the legal text in which the State is imposing conditions on communities in policies in which the autonomies decide.

For example, the law empowers administrations to encourage affordable housing or to declare a stressed area, "but conditioning in detail the basic rules to which they must be subject". For example, the State has established what is considered a stressed area, how long it lasts and what policies the communities should implement in these cases, without giving room.

This, according to the report, implies a "clear limitation of the powers of organization and management of these.”

It generates legal uncertainty. If the Government begins to regulate issues on which the communities already legislate, it can happen that there are duplicities or, worse, that the State says one thing and the autonomous regulation, another.

This, according to the CGPJ report "will undoubtedly generate a situation of great legal uncertainty, since it is certainly difficult to determine which rule will be applied, the state or the autonomous community, when they do not fully agree with each other.”

You have no obligation to do so. The report prepared by the CGPJ is not binding. If the Government wanted to have it before the law was passed, it was to know what to do and to make sure that it did not violate constitutional principles or procedural issues. I wanted to have the blessing of Justice before I passed the law.

But precisely for this reason, even if what the CGPJ says is not binding, it is important.

"What the report says can have very important repercussions, because it can give rise to many judicial conflicts. If the CGPJ itself speaks out against some aspects of the law, there will be people affected who will use these arguments to appeal it. The Government can pull forward worse the sensible thing is to rectify", explains Gonzalo Bernardos, professor and director of the Real Estate Master of the University of Barcelona.

"In Berlin we saw it when they applied price control: courts collapsed with owners who did not agree," warns José García Montalvo, professor of Applied Economics at Pompeu Fabra University. This is the postcard that could be reproduced if the law is passed without court endorsement.

# Spain housing law conflict explained #