Spain’s parliament has gone through a strategic point on housing law on April 27, 2023, and remarkable decisions were made about Spanish property regulations. The new housing law aims to solve issues on annual rent increase rates, price limits, and eviction procedures in Spain.

What Does New Spanish Housing Law Say to Homeowners?

Homeowners will be able to rent their homes for short or long term freely, in the context of allowed criteria stated by the new Spanish housing law. Legal requirements for Spanish property owners who rent their homes have changed to safeguard both the tenant’s and landlord’s rights equally.

The parliament had discussed possible solutions to prevent the steep increase in rental prices, especially in places called “stressed areas”. Precautions were taken under the Spanish real estate law. The new Spanish housing law is expected to enter into force in the following weeks.

The impact of the new Spanish housing law, or Ley de Vivienda is expected to eliminate possible abusive acts between tenants and owners, to safeguard both parties’ rights. A key motivation that lies behind these precautions is to provide a sustainable, open market for each individual who wants to live in Spain comfortably. Here are the topics discussed at the statehouse.

Annual Rental Increase Rates are Capped

spain-parliamentThe rental prices were previously determined according to the annual inflation rate. However, this widens the gap between earnings, consumer expenses, and housing affordability in Spain.

The new changes to Spanish property laws also contain rental price controls in Spain. To reduce living costs and lessen the burden on the tenants, the new law capped the rental increase at 2% in 2023 and 3% in 2024.

No More Agency Fees for Tenants

The total of the real estate agency fees must be covered by landlords. The tenants will not be required to pay any part of the agency fee with the new regulations.

Price Limits are Regulated for Stressed Areas

Stressed areas (Zona Tensionada) are considered residential areas with high rental prices that are driving out tenants because of their priciness. These areas could be provinces, districts, or neighborhoods where the average cost of rents and mortgages is higher than 30% of the average household income.

Landlords who already rented their houses will be able to increase the rent prices within the allowed annual increase limit but not more. If a property has not been rented yet, the rent prices must comply with the new INE index.

Eviction System is Improved

The eviction process has turned into a systematic process. Now, the tenants can only be evicted by the predetermined date and reasons. With the new regulations, tenants will get enough time to find an alternative place to live until the eviction date. Any eviction without a preset date notified to the tenant is prohibited.

New Control Mechanism Over Vacant Properties

spain-sea-home-mountains-palmsIf a landlord will not reside in or rent their houses for consecutive 2 years, they will get a penalty for their properties which were considered not-in-use for a long time. If a property remains empty without a justifiable reason for more than 2 years, the penalty will be applicable on the IBI tax amount, which changes between 50% - 100%.

If the landlord owns more than two not-in-use vacant properties situated in the same municipality can be penalized up to 150%. With this regulation on empty properties, it is expected to increase the number of new units in the Spanish real estate market.

The Definition of a Large Landlord has Changed

Landlords who own at least 5 or more properties in a stressed area are now considered large landlords. They are distinguished from regular owners and specific measures apply to large property owners.

The changes are expected to come into effect around May or June 2023.