THE Spanish Congress has adopted legislation that will end rent controls on residential and commercial property and boost income for real estate companies. The Congress has also begun a final debate on measures to codify existing restrictions on commercial business hours. The rental law, which will take effect on January 1 next year, stipulates that rent controls should be phased out over five to 10 years. The law includes some exemptions for low-income renters but will permit landlords and real estate companies to seek market-rate rents on properties that have had fixed rents - some for more than a century. 'This is a very important event for us,' said Pedro Gamero, vice-president of real estate company Vallehermoso. 'We have a lot of property affected by the old law. We are definitely going to take advantage of the new law.' Under various old rental laws, renters were guaranteed fixed rents that they could pass down from generation to generation. That has affected real estate companies which have already suffered through a recession. The real estate sector has under-performed the IBEX index of leading Spanish stocks. Vallehermoso fell 18 per cent in the first 10 months of this year and Metrovacesa dropped 22 per cent, compared with a 12.6 per cent drop in the IBEX. This year, Vallehermoso expects to collect 5.3 billion pesetas (about HK$307.4 million) in rental income. That figure would nearly double to 10 billion pesetas if all its rental properties were subject to market rates, Mr Gamero said. Vallehermoso controls 6.99 million sq ft of commercial and residential rental properties in Spain, of which slightly less then half are governed by some form of rent control. In its residential division, more than 1.2 million sq ft of its 2.36 million sq ft space have rents frozen below market rates. Mr Gamero said Vallehermoso had hundreds of tenants in 3,200 sq ft flats in some of Madrid's best neighbourhoods paying as little as 8,000 pesetas a month (about HK$464.00). A flat of that size in Madrid would probably fetch more than US$3,000 a month at market prices. The Congress has also been debating a law that would codify and possibly expand restrictions on commercial business hours. In June, bowing to pressure from the small business association, the Cabinet adopted measures that ban stores from staying open for more than 72 hours between Monday and Friday. The measures also prohibit stores from opening on more than eight Sundays a year. The Congress is now debating turning those provisional measures into a law that would be in place until 2000. The legislation is aimed at giving small businesses a chance to adjust to the new retail reality dominated by huge hypermarkets that do not close for the traditional three-hour Spanish lunch break, stay open beyond 7 pm and keep their doors open on Sundays. The new law would allow shops to open a minimum of eight Sundays each year, but it would be up to the regional governments to decide the maximum number of Sunday openings. While sales at the large hypermarkets have already been hurt by the provisional measures, the law will also have some benefit for them. It will allow them to open some Sunday's in certain regions like Catalonia.