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New housing law approved in Spain. Rental agreements. Stressed rental areas. Large ‘owners’. Rent cap. Key aspects. (Part 1)

A new housing law has recently been passed in Spain which introduces very important and significant changes in the real estate market and rental contracts between landlords and tenants. In this week’s article we will discuss some of its main novelties, such as the concept of ‘large landlord’ and ‘stressed market areas’, how the law will affect the property tax, the rent cap, etc. We will complete our analysis, next week, by putting the focus on eviction procedures, tax incentives, and other key issues.

Large owners/landlords

The requirements to be considered a large landlord have been modified by this law. Until now, it was enough to have more than 10 properties (excluding garages and warehouses). From now on, anyone who has more than five properties in the same stressed area declared by the respective Autonomous Region, may also be considered a ‘large landlord’.

Stressed renting area

This is undoubtedly one of the most revealing changes. The different regions of Spain, (known as autonomous communities) will be able to declare a market area to be ‘stressed’ when one of the following conditions is met:

– The cost of rent or mortgage loans has risen by more than 30 per cent compared to the income of the area.

– That prices have risen by more than three points above the Consumer Price Index (CPI) in the previous five years.

The measures that can be taken in these areas are very broad. At the end of the lease, landlords will be forced to grant an extraordinary extension to tenants if they request it. The price of new leases, with exceptions, will be limited to the price of the previous lease. Etc.

Property tax surcharges increase

Town halls in Spain will be able to impose surcharges up to 150 per cent in the IBI (Property Tax) to unoccupied properties if certain requirements are met.

Cap on the rental update

Landlords won’t be able to update the monthly amount of rent by more than 3 per cent during 2024. In principle, a new index will be approved for the year 2025, that is more stable than the current Consumer Price Index.

At White-Baos Lawyers we are experts in property law, rental agreements, etc. If you are either a landlord or a tenant, and you want to know in detail how this law affects to your rights, please do not hesitate to contact us. We will study your case and offer you expert advice.

You may be interested in the following services and articles:

Have you signed a home lease or rental contract?. Can you terminate the contract?. Should you pay any compensation?.

Tips for selling a property in Spain. We explain how to avoid the most common mistakes: Land Registry. Cadastre. Capital Gains Tax. Plusvalía. Etc.

Who should pay for repairs during a lease contract?.

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

White & Baos 2023 – All Rights Reserved

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Written by

Gillian

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