Generous housing benefit for tenants approved

Greater financial help is available to those affected by eviction, or being threatened by it, and grants are being given to property developers building homes destined for renting.

The State Housing Plan 2018-2021, launched by the ministry of public works – led by Íñigo de la Serna – is largely aimed at the under-35s, since only a small percentage of adults in this age group are able to afford to move out of their parents' home. The household income for the tenants in question must be less than a gross €22,558 per annum, rising to €30,078 annually for families with three or more children, single parents of dependent children or households where at least one member is disabled.

Given the ongoing complaints by residents in large cities over escalating rent prices, up to €390 a month will be available to help tenants pay their housing costs, provided their monthly rent is no more than €600, or €900 if they live in Madrid or Barcelona. Other cities may be added to the €900 limit, which will probably include Ibiza town where rental prices have soared over the last few years.

The under-35s will be entitled to 50% of their first €600 in rent if they live in Madrid, Barcelona or any of the other large metropolitan areas later included, plus a further 30% of the next €300, whilst these young adults who live outside of the cities in question will get 50% of their rent price on the first €600. In the first case, the full amount payable is capped at €390, and in the second, at €300, with the tenant required to pay the balance. For tenants aged 35 and over with a gross annual household income of €22,558 or less, those in Madrid, Barcelona and any other cities included will get 40% of the first €600 a month of their rent, and 30% of the next €300, with the maximum payable in all cases being €330.Tenants aged 35 and over living outside the major metropolitan zones will receive 40% of their monthly rent on the first €600, meaning a maximum of €240, again subject to the same maximum household income.

These housing benefits will be backdated to January 1 this year, and are payable for three years, but the tenant is required to notify the ministry and give up their right to financial assistance if their income rises above the upper limit stated. It is not known yet whether the government will renew the scheme after the year 2021.Those whose homes have been repossessed or who have been evicted from a rented property due to non-payment will be entitled to receive 100% of their monthly rental costs, provided these do not exceed €400 – of this, 80% will be paid by the ministry of public works and the remaining 20% by regional governments, and again, is capped at three years, backdated to January 1 and subject to a maximum household income of €22,558, or a maximum of €25,800 for large families with three or more children or single parents of two or more.

Under-35s living in rural areas at risk of desertion can claim up to 20% of the price of the property they hope to buy, to a maximum of €10,800, and provided the house or flat is not on the market for more than €100,000. This assistance is available to those living in villages of fewer than 5,000 inhabitants and with a household income of less than a gross €22,558 per annum.

As yet, the plan has not been rubber-stamped, but a meeting with housing industry representatives and the ministry of public works will be held on Thursday, March 15 and the funds needed will be distributed across Spain's 17 autonomously-governed regions, plus the Spanish-owned city-provinces of Ceuta and Melilla on the northern Moroccan coast. It will be up to regional governments to carry out the means-testing, take applications and provide the cash to successful applicants, and as soon as the regional governments are ready, the funds can be dished out, which De la Serna expects to be 'within two to three months'.

As for how long the funds are guaranteed, De la Serna warns that the budget is 'limited' and, at present, just over €1.44 billion has been put aside for the next four years; 62.4% more than for the previous four years.

Property market experts, however, are worried that the presence of housing benefit will lead to landlords becoming more greedy. Knowing that tenants are able to pay more towards their rent than without the financial help, they may be tempted to push their prices up, eventually bringing the rental market back to square one as it becomes priced out of the pockets of those who most need it – residents on low incomes, particularly young adults who have been unable to leave home.

These specialists also call it 'regrettable' that no help in accessing finance for buying a home has been planned, specifically for the young and for first-time buyers. For a first residence, mortgages are normally capped at 80% of the lower of either the market value or the sale price and, on top of the eventual purchase amount, buyers have to pay around 12.5% in taxes and fees. This means that although house prices are at their lowest-ever outside of major cities and established tourism belts, young people in particular are still barred from the housing market because of the hefty cash deposits required. Beatriz Toribio of Fotocasa Studios says that in the last decade or more, young adults have not been earning enough to allow them to save up for this deposit. Before the housing market completely crashed in around 2008 to 2009, many banks offered 100% mortgages, some with a cashback towards furniture, and loan terms of up to 50 years were frequently offered.

The General Workers' Union (UGT) has also found stumbling blocks in the new Housing Plan, saying it should be extended to cover victims of domestic violence, families with all or some of their members unemployed, and the foreign population. Whilst the plan as it stands is open to anyone of any nationality, the UGT thinks the age barriers should be lifted and the minimum household income maximum increased for foreign residents seeking rental help.