March 1, 2019 / 4:05 PM / 2 months ago

Spain takes steps to cap home rents as election nears

FILE PHOTO: Spain's Prime Minister Pedro Sanchez arrives at Parliament in Madrid, Spain, February 12, 2019. REUTERS/Juan Medina/File Photo

MADRID (Reuters) - The Spanish government on Friday adopted a decree that aims to cap residential rent rises within the term of a contract ahead of a general election in April.

The decree will enter into force in the next few days but will need to be endorsed by parliament later.

Although Prime Minister Pedro Sanchez’s Socialists are in a minority government, the measure is likely to pass with the support of the anti-austerity party Podemos and pro-independence Catalan parties.

Residential rents have risen around 50 percent since 2014, but some say this has more to do with a lack of supply than excessive rent increases.

Under the decree, tenants would be entitled to stay in a flat for a minimum of five years, instead of the current three, and for seven years if the owner is a company.

The new bill could hurt institutional investors such as Blackstone, which currently holds the biggest home rental platform in Spain with 20,000 flats under management.

“It is a very restrictive regulation in comparison with our European counterparts and it would add more upward pressure to price rises in the market and a reduction of the offer,” said Claudio Boada, Blackstone’s senior adviser in Spain.

The government also adopted a decree to extend paternity leave progressively over the next two years, another measure that could prove popular with voters. Optional paternity leave will be extended from the current six weeks to eight this year, to 12 weeks the following year and to 16 weeks in 2021.

Surveys indicate the Socialists will win the most votes in the election, but fall short of a parliamentary majority.

Reporting by Andres Gonzalez; additional reporting by Sam Edwards; editing by Jesús Aguado and Kevin Liffey

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