Spain has approved a new “Law on Housing” (Ley de Vivienda), which was considered in Parliament for about a year. 176 deputies voted in favor of the bill, 167 voted against it, and one abstained. The law will be sent to the Senate in an expedited manner so that it can enter into force before the regional and municipal elections on May 28.

Key takeaways from the new law

  • Beginning in 2024, annual rent increases will be capped at 3%, as opposed to the current limit of 2%. By 2025, all annual price increases will be calculated using a special index that will be lower than the standard consumer price index. This will result in lower rents in real terms, given inflation.
  • Owners of more than five properties (as opposed to the previous limit of 10 properties) will be categorized as “large landlords.” More stringent requirements will be set for this group of landlords.
  • A map of “stressed neighborhoods” will be created. It will be where rent and basic goods costs exceed 30% of the average income of residents, or where property prices have risen by more than 3% over the last five years compared to the Consumer Price Index. Should a landlord wish to enter into a new contract in such areas, the landlord must provide the tenant with the same terms as in the previous contract for a period of 3 years. In fact, the rental rate in such areas will be frozen.
  • The property owner, not the tenant, will be responsible for all costs associated with the realtor's work.
  • Homeowners will be given tax deductions on rental income of up to 90% if they 1) sign a new lease for at least 5% less than the previous lease, 2) rent to people between the ages of 18 and 35, and 3) renovate their homes. And all of this is in areas where rental housing is in short supply.
  • If homes or apartments remain vacant for more than 2 years without cause, owners will be subject to an increased annual property tax (IBI). The surcharge on the standard tax can be up to 150% (currently 50%) and will apply to properties that remain vacant for more than two years without good cause and are owned by owners of at least four properties.
  • Eviction of okupas in the form of unscrupulous tenants will become even more difficult and lengthy (2 years or more) if those are categorized as “the most vulnerable segments of the population”.

It is worth noting that the law provokes mixed reactions and was passed despite the opposition of right-wing forces. Many of their representatives believe that its norms are not clear enough and will lead to an increase in prices, rather than to a reduction or containment.