Spain’s ruling coalition in disarray over rent control

OVIEDO, Spain

Tension is growing within Spain’s first coalition government as the Socialist Party and junior partner Unidas Podemos clash over a new housing law.

“This isn’t just a negotiation like other times,” Spanish daily El Pais quoted a Unidas Podemos member saying on Friday, suggesting that if the Socialists do not change course, “all-out war” could result.

Speaking to journalists, Podemos Minister Irene Montero also slammed the law proposed by the Socialists, adding that the party ruled by Pedro Sanchez would have to “change partners” if more is not done to tackle rising rents.

In a draft of the new housing law, the Socialists propose giving significant tax breaks to landlords who cut rents 10% in parts of Spain where housing prices have skyrocketed in recent years.

“Our agreement with the government clearly said that we must regulate rents, and what we’re seeing from the Socialists is a proposal to transfer money from Spanish taxpayers to big landowners, vulture funds and speculators. It won’t solve any problems for families who are spending most of their income paying rent,” said Montero.

According to a recent study, the average rent in Spain is €819 ($974), down 7.4% from a year ago – thanks in part to more housing shifting away from vacation rentals amid the pandemic. Even so, rent in Spain has jumped around 50% in the last five years.

The pandemic has also caused wages in Spain to plummet by 3.1% – the sharpest annual drop in 50 years. The average monthly wage is now €1,641 ($1,951), according to Adecco. At the same time, around 4 million people were unemployed in February, compared to 3.2 million in February 2020.

Poverty in Spain has no doubt grown since the pandemic began. Spain’s main food bank association reported regularly serving 1.6 million people last month – around 600,000 more than before COVID-19.

The government has enacted a temporary moratorium on evictions for vulnerable families, but when the protection is lifted, thousands of people could face homelessness.

Unidas Podemos, and other progressive parties backing the governing coalition, want to see market regulations that limit rent hikes and prices instead of tax incentives.

But the Socialists are confident that their proposal will work to reduce rents without interfering with property rights.

Jose Luis Abalos, the Socialist minister who crafted the bill, has said it is better to incentivize than penalize. “The measures are some of the most progressive in Europe today,” he said in Parliament on Thursday, asking his coalition partners to “study the proposal in detail.”

Several other Socialist ministers have also voiced support for his proposal in recent days, driving a further wedge between Spain’s more traditional left and the more radical approach favored by Unidas Podemos.