The coalition government has reached a consensus with EH Bildu on a housing law that had been stuck for many months. Nearly three years after the PSOE and Unidas Podemos first proposed rent regulation, the administration and parliamentary partners have approved a text with meaningful changes to the law previously endorsed by the Council of Ministers. The administration will now implement key provisions reflecting this agreement.
The Housing Act will cap rent growth at 3% in 2024, followed by a new index to determine annual increases.
Rent increase limit
The regulation eliminates the CPI as the reference for updating income. In early 2022, the government established a 2% cap for annual updates to prevent a surge tied to the 7.6% CPI rise observed in February of the following year. That 2% cap remained through 2022 and will apply through 2023. Under the new agreement, increases in 2024 are set at 3%, after which a new index will be created. This index, to be prepared by the National Institute of Statistics (INE) before 2025, should be more stable and lower than CPI growth. It aims to limit income increases tied to annual renewals. (Source: Official housing policy draft and INE projections)
Definition of major owners
The housing law defines a major owner as a natural or legal person holding more than 10 rental properties. The agreement allows the figure to be adjusted in markets under strain, potentially lowering the threshold to five. The autonomous communities will decide, consistent with their circumstances, how to implement measures that target major beneficiaries, such as capping rents in stressed areas. (Source: National housing framework documents)
Stressful market areas
The standard’s measures apply predominantly in areas designated as having a stressed housing market or where housing is scarce under favorable conditions. At the request of each community, an area will be categorized. The criteria include: three years where the average mortgage or rent plus utilities exceeds 30% of the regional average income, or price growth at least 3 points above CPI over the last five years. Only one of these conditions must be met. (Source: regional housing assessment guidelines)
Ceiling price
Beneficiaries in stressed areas will not be allowed to raise rents beyond the built-in updates (2% in 2023; 3% in 2024; and later aligned with the index) when signing a new contract during the declaration’s validity. An exception exists: rents can rise by up to 10% if the annual housing cost reaches at least 10% of the property’s purchase value. (Source: housing cost safeguards)
Discounts for major owners
Large owners, whether individuals or corporations, must reduce rents in the stressed areas. The cap applies at contract signing or renewal, pegged to the reference price index set by the Ministry of Housing. New or recently vacant properties over the last five years are also subject to these adjustments, regardless of ownership scale. (Source: housing affordability measures)
Bonus system
To incentivize smaller landlords in distressed zones to lower prices, the regulation introduces a personal income tax credit system. A 90% credit applies when rent is reduced by at least five percent; about 70% if the property is rented to tenants aged 18 to 35; and 60% if the dwelling has undergone rehabilitation in the previous two years. If conditions are not met, the credit is reduced. (Source: tax policy provisions)
Tenant protection
The standard requires landlords to cover real estate management expenses and contract formalization. In effect, tenants seeking rental housing should not bear charges to the real estate agent. Additionally, it prohibits rent increases through new, unnecessary expenses. (Source: tenant protection rules)
Evictions
The agreement strengthens eviction protections. Evictions without a predetermined date and time are prohibited, with extended timelines for eviction procedures and mandatory access to out-of-court settlements for vulnerable tenants. Government housing funds can be used to offer alternate housing options. (Source: eviction safeguards)