The approval of the new housing decrees has provoked a reaction from large real estate investors, who warn of a possible halt in operations and a reduction in the rental supply in light of the new conditions, more favorable for tenants.
The decision to keep homes off the market to push prices up could have legal consequences, although not all withdrawal of investments constitutes sanctionable conduct.
The Government approved two new royal decree-laws on October 6 after their previous versions were rejected by Congress. Among the announced measures are the extraordinary extension of rental contracts for a maximum of two years and new restrictions on certain operations of large holders.
The warnings from the real estate sector raise a question that goes beyond the confrontation between the Executive and property owners: to what extent can the State intervene if large funds decide to deliberately restrict the housing supply?
The funds warn that they will halt investments
The information published in recent days reflects a growing discontent among large residential investors due to the Government's new measures.
La Vanguardia reported on October 4 that institutional investors were progressively withdrawing from the Spanish residential market due to legal uncertainty. According to that information, large funds had invested about 25 billion euros since 2017, of which approximately 8.5 billion were allocated to generating new rental supply.
For its part, El País reported on October 9 the warnings from several real estate consulting firms. Antonio de la Fuente, head of residential at Colliers, noted that investors could reduce or halt their investments in housing intended for rent until the regulation changed.
In that same information, Carlos López, CEO of Catella, anticipated a possible slowdown in the residential market and a shift of capital towards other investments.
The restrictions also affect the sales strategies of large owners. BNP Paribas Real Estate had estimated that between 35,000 and 40,000 currently rented homes could be sold individually over the next few years, an operation that would be conditioned by the new contractual extensions.
However, there is a fundamental difference between paralyzing new investments, selling homes when contracts end, and deliberately withdrawing properties that are already available for rent.
The Penal Code punishes the withdrawal of essential goods
Article 281 of the Penal Code establishes penalties of one to five years in prison and fines of twelve to twenty-four months for anyone who withdraws raw materials or essential goods from the market with the intention of causing shortages, forcing a price alteration, or seriously harming consumers.
The regulation does not expressly require that prices rise, but rather that the withdrawal occurs with one of the contemplated purposes.
The main difficulty in applying this article to the real estate market lies in determining whether homes can be considered essential goods for the purposes of this crime.
The Supreme Court has recognized in certain rulings on fraud that the primary residence can be considered an essential good, but this doctrine does not automatically imply that Article 281 can be applied to funds that maintain vacant properties.
There is also no consolidated jurisprudence from the Supreme Court that has specifically punished speculative withholding of homes under this article.
The manipulation of real estate prices is also contemplated
Article 284 of the Penal Code offers another possible course of action, by punishing certain behaviors aimed at fraudulently altering the prices that would result from free competition.
Unlike Article 281, this provision expressly mentions real estate.
However, its application requires that the means or behaviors prohibited by the regulation are present, such as deception or other artifices. It is not enough for a company to own numerous homes or decide to wait to market them when it considers the market more favorable.
To establish criminal responsibility, it would be necessary to prove a specific conduct that fits the crime.
The CNMC could intervene in the event of an agreement between funds
A third possibility is found in the Competition Defense Law. Its article 1 prohibits agreements between companies and concerted practices that have the object or effect of restricting competition, including price fixing and limiting production, distribution, or investments.
If several real estate funds agreed to keep homes off the market to artificially reduce supply and raise rents, the National Commission of Markets and Competition (CNMC) could investigate a possible infringement.
However, the coincidence of several investors in announcing a halt to operations does not demonstrate that there is an illegal pact. Evidence of coordination among competitors would be necessary.
The Government can also act through the IBI
Apart from criminal and competition responsibilities, legislation provides fiscal instruments to disincentivize certain homes from remaining vacant.
The regulations of the Property Tax allow municipalities to establish surcharges on permanently vacant homes, subject to requirements such as the duration of the vacancy, the ownership of the properties, and the absence of justified causes.
The application of these surcharges is not automatic. It is up to the municipalities to establish them through their ordinances and verify that the required circumstances are met.
Furthermore, legislation recognizes situations in which a home may remain empty for justified causes, such as certain works, judicial proceedings, or marketing periods.
Where is the limit between business freedom and speculation?
The main obstacle to intervention against large funds lies in differentiating legitimate business decisions from behaviors aimed at manipulating the market.
A property owner may decide not to make new investments or modify their business strategy, but that freedom does not protect illegal agreements to restrict competition or fraudulent actions aimed at altering prices.
Representatives of the real estate sector argue that the new restrictions increase legal uncertainty and reduce incentives to invest in rental housing. The Government, for its part, defends that its measures seek to protect tenants and contain the rise in the residential market.
For now, journalistic information collects warnings of a halt in investments and real estate operations under review, but does not allow concluding that large funds have organized a coordinated withdrawal of homes from the market.
The eventual intervention of the authorities would depend on whether specific violations were proven, either due to the existence of anti-competitive agreements, due to non-compliance with regulations on vacant homes, or due to behaviors that could fit into the crimes provided for in the Penal Code.