The Spanish New Housing Law, Law 12/2023: Key Facts
The new Housing Law introduces a number of reforms aimed to regulate, amongst others, the right to a decent and addequate dwelling and the posibility of using it on proper and affordable way.
On a general basis, the main modifications to the previous Urban Rental Law are the following:
End of CPI as reference to price the rentals and new cap of current rental contracts
The current cap on the increase of rentals will continue to be the 2% until 31st December. On 2024 will rise to 3% and in 2025 a new Rent Index will be applied. Related to the last, a new reference index for the annual updating of housing rental contracts will be issued by the INE (National Statistics Institute) which will try to avoid disproportionate increases in rent.
Rental Tension Zones
Another change introduced in this law regards the declaration of Rental Tension Zones, areas where the market is “Stressed”, which requirements have been lowered to be declared as such, declaration that is to be maintained if the circumstances prevail.
The conditions that apply will be at least one of the following: that the payment of housing costs more than 30% of the income of people living in the area; or that prices have risen more than 3 percentage points above the CPI in the last five years.
Definition of Large Property Owners
In the Stressed Areas mentioned, the number of dwellings required to be considered a large property owner has been reduced from 10 to 5, whether an individual or a legal entity. It will need to be justified by the corresponding local/regional authorities.
New rental contracts and the cap to be applied
The caps to the rental contracts to be applied will depend on whether the owner is a small or large landlord. For the formers, indexation will be applied to the previous rent in force, so that only the increase applied at that time can be applied, i.e. 2% in 2023, 3% in 2024, and the new index applied from 2025 onwards. In the case of large landlords, a price index will be created which will not exceed the new rental index created by each Autonomous Region.
In the event of properties being rented for the first time (or if the property has not been rented in the last five years) the price reference index limits will be applied.
The owner will be the one who has to pay the real estate agent
The agreement rules that real estate fees and expenses incurred in the rental of a property will always be paid by the owner of the property (and not the tenant also or only as it happened so far).
Contracts will not be able to exclude the application of the new Law
Up to the law publication, in a contract it could be stated via agreement clauses the non-application of the measures contained in the Law. That scenario is ruled out by the Housing Law. Furthermore, it is prohibited to increase the rental by means of new expenses (tenants are not subject then to pay community fees, rubbish fees, or any other expenses not included in the original contract).
Enhanced Protection to Subsidized Rental Housing
The percentage of land preserved for subsidized rental will increase from 30% to 40% in new developments; and from 10% to 20% in renovation (and unconsolidated urban land).
Mandatory date and time for evictions
New aspects regarding eviction procedures have been implemented. Amongst others: evictions without a predetermined date and time will be prohibited; there have been put in place mandatory access to out-of-court settlement procedures for vulnerable people; it will be allowed to use funds from state housing plans to offer housing alternatives for people at risk of eviction through subsidized social rents, rehousing of people in vulnerable situations, etc.
It is new, as well, that the local governments will be able to articulate own mechanisms for mediation and alternative housing (large landlords will be forced to comply with these).
There are a bunch of Measures maintained from the previous legislation that will be commented in further blog entries.
This article is not intended to serve as a guide to the law, but a summary of some of the outstanding aspects of the Law. For a detailed and comprehensive approach, please click here