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In April 2023, the new housing law in Spain came into force after two months of negotiations to reach a final agreement.

This new legislation will regulate very different areas of the real estate market with the aim of making it more accessible, avoiding evictions or limiting rental prices in the so-called stressed areas.

From 1Mast we wanted to summarise and simplify the most important content and highlight the most important changes that this new law will implement.

New housing law: most important changes

One of the most important new features of this legislation is the modification of the conditions necessary to declare an area as a “stressed area”, which are those that meet at least one of the following requirements:

Increase of more than 3% with respect to the CPI in the last five years.
The average cost of the mortgage or rent is more than 30% of the average income in the area.

It is worth mentioning that the physical space covered by a “stressed zone” is variable and can range from micro-zones to areas as large as an entire Autonomous Community. Another of the most significant changes is the definition of large landlords as those who own 5 properties or more.

Regulation of renting in the new housing law

One of the contents of the new housing law that has been most commented on in the media has been the limit of the animal rent update. From January 2024, it will be decoupled from the CPI and will be limited to 3%.

There are forecasts that by the beginning of 2025 a new index will be designed to serve as a reference and will be used to update all rents. Although no further information has been provided on this index, it has been announced that it will be more stable and lower than the CPI.

From now on, it has also been established that the costs and fees of the real estate agents that occur in a rental contract must be borne by the owner in a compulsory manner.

If we take into account the average rental price in Spain and that the commissions applied by real estate intermediaries is 10%, it is estimated that tenants can save up to 1,300 when moving into a rented property. Similarly, the new housing law prohibits increasing the rental fee by adding new expenses such as community or rubbish collection fees.nueva ley de vivienda

New situation of evictions

The new regulation aims to protect the most vulnerable people from evictions. From now on, evictions cannot be carried out without a predetermined date, and new extensions are added to eviction procedures for more than two years.

The Autonomous Communities also articulate their own mechanisms for mediation and alternative housing that they consider appropriate, and the possibility of using state housing funds to offer housing alternatives to people at risk of eviction through rent subsidies is opened up.

Tax advantages for landlords

Owners who fall into the category of small tenants who own a property in a stressed area will obtain personal income tax benefits if they decide to put their property on the rental market.

Although the details of the tax benefits of this new legislation are not known in detail, in the draft that was made last year a benefit of up to 90% was proposed if they decide to lower the price of their rent.

Other measures in the new housing law

In addition to these measures, the new law includes others that are expected to curb the rise in rental and housing prices in Spain. For example, it is proposed that new developments will have to reserve at least 30% of housing for public housing.

There will be a commitment to promote the construction of incentivised affordable housing and the creation of a social housing fund that will serve to create a public housing stock.

It will also regulate the situation of empty homes, which will have a higher tax burden in terms of IBI, even reaching a 150% increase.