HEALTHPLAN MAGAZINE

Spain's housing landscape underwent a transformative change on May 18th with the enactment of the Ley de Vivienda, bringing significant implications for both tenants and landlords throughout the country. Amidst the extensive array of reforms, one lesser-known clause concerning rental payment methods has sparked a heated debate.

The key change introduced by the new legislation is the prohibition of cash payments from tenants to landlords. Instead, the law mandates that rent must be paid "by electronic means," thereby disallowing the traditional practice of handing over cash.

Bank transfers and digital payment methods are now the sole acceptable modes for rent settlement. Nevertheless, there are exceptions to this rule: situations where either party lacks a bank account or access to electronic payment channels can warrant an exemption.

This groundbreaking decision has made Spain the first eurozone nation to prohibit cash-based rental payments, colloquially referred to as "en metálico" in Spanish. While proponents of the law applaud its intent to curb fraudulent activities, critics argue that the move infringes upon consumer rights, particularly for vulnerable groups and the elderly.

Alejandro Marín, a delegate for Spain's prominent consumer watchdog OCU in Zaragoza, asserts that the law "limits the rights of consumers," highlighting the adverse impact on elderly individuals and vulnerable segments of society. Notably, these groups have already faced challenges due to the increasing closure of bank branches, especially in rural areas, as financial institutions prioritise cost-cutting measures and online banking services.

Marín contends that the law may even contradict the amendment made to the Law in Defence of Consumers and Users, approved last year, which granted consumers the option to pay in cash. He emphasises that cash should not be stigmatised as a suspicious payment method.

In defence of the clause, the Spanish government argues that encouraging cashless transactions significantly reduces the occurrence of fraudulent practices. Furthermore, this move aligns with Spain's broader efforts to combat tax fraud and money laundering, as evidenced by the lowering of the cash payment limit to €1,000 in 2021.

However, critics point out a potential conflict between the ban on cash rental payments and the existing legislation, which permits cash payments for rents below €1,000. This inconsistency raises concerns about the implementation and enforcement of the new law.

In conclusion, Spain's new Housing Law marks a significant digital shift in rental payments, eliminating cash transactions in favour of electronic means. While proponents laud its potential to curtail fraudulent activities, others argue that it may disproportionately affect vulnerable groups.

Learn more about Spain’s new housing law.