Key updates to rental income, tax incentives, and pensions for 2024
In 2024, the annual rent adjustment for residential leases will stay capped at 3%. New personal income tax incentives for rental real estate will start to apply next year, adding a tax efficiency layer for landlords and tenants alike.
These changes are part of the Housing Act approved by the government last May, a reform within the Recovery, Transformation and Resilience Plan and a milestone agreed with the European Commission on the disbursement of Next Generation EU funds.
Consequently, leases active between January 1 and December 31, 2024, that are under review, cannot see rent increases exceeding 3%, a standard confirmed by the government in a Royal Decree issued last March. The economic and social fallout of the Ukraine conflict is addressed in the sixth final provision of the Housing Code.
For primary residence leases, tenants facing rent updates due to the annual validity period expiring can negotiate with the landlord about the update amount. Whether agreement is reached or not, the annual change cannot exceed 3% in both scenarios.
Starting January 1, personal income tax reform aims to promote affordable rental housing by adjusting the net return on primary residences. A 50% discount will apply to new lease agreements (down from the current 60%), with potential increases based on criteria such as stressed areas and rehabilitation projects.
The government has also extended the eviction suspension for economically and socially vulnerable households from their habitual residence, until December 31, 2024, to mitigate housing insecurity in challenging times.
This extension is included in the Royal Decree approved by the Council of Ministers on December 27, designed to ease drought-related impacts and address broader economic and social consequences linked to the Ukraine and Middle East conflicts.
On the transport front, the Ministry of Transport and Sustainable Mobility updated tolls on state highways in 2024 under its administrative privilege. Rates will rise by a range around 5% to 6.65% depending on the concession. The update affected routes such as AP-51, AP-61, AP-6, AP-53, AP-66, AP-7 Alicante-Cartagena, AP-7 Málaga-Guadiaro, AP-68, AP-71, AP-9 and AP-46, with specific increases noted for each corridor.
Under the 2013 pension reform, the retirement age is gradually rising. From January 1, those aiming to retire with 100% of their pension will need to be at least 66 years and six months, with the timeline spanning 15 years. The threshold for those with premium debt changes depending on age and contribution history, shifting the retirement age accordingly. For individuals with over 38 years of contributions, the target age to claim a full pension sits around 65 as of January 1, 2024.
The reform keeps the minimum contribution period for a contributory pension, ensuring at least 15 years of contributions, with two of those periods needing to be within the 15 years before retirement.
Social Security continues to allow voluntary early retirement, up to two years before the standard age. When early retirement is optional, individuals can retire up to four years before the usual age.
Pension increases in the new year reflect different rules: contributory pensions rise by about 3.8%, while minimum contributory pensions grow by around 6.9%. Widows with dependents see a notable boost, jumping from 905.9 euros to 1,033 euros monthly. Non-contributory income and the Minimum Living Income (IMV) also rise by about 6.9%, and the average pension in the Valencia region is projected to increase by roughly 48 euros per month.
Public sector salaries will rise by a fixed 2% in 2024, with the possibility of an additional 0.5% tied to the movement in the harmonized CPI. This agreement, part of the Framework for 21st Century Management signed in late 2022, also envisions salary increases up to 9.5% over three years for public employees.
Legal retirement age remains a central feature of the pension framework, with gradual increases designed to balance retirement security and sustainable public finances. The path ahead emphasizes a combination of higher contributions, longer work horizons, and targeted supports to vulnerable groups to maintain pension adequacy over time.
Legal retirement age and contribution requirements
Under the 2013 reform, those seeking a full pension starting January 1 must meet the age requirements over a 15-year horizon. The target for those with premium debt is 66 years and six months, with particular rules applying to those under 38 and to those with older contribution records. For workers beyond 38 years of contributions, the eligibility age for a full pension is typically in the mid-60s.
The reform maintains the need to accumulate a minimum contribution period to qualify for a contributory pension, including at least 15 years of contributions, with two periods inside the final 15 years before retirement.
Social Security also allows early retirement, either voluntarily or with certain limitations, and sets specific windows for when this can occur before the standard retirement age.
In parallel, pension-indexing rules ensure that pensions tied to contributions, minimum guarantees, and survivor benefits keep pace with inflation and cost of living pressures, supporting retirees across different family situations. The broader implications of these adjustments are seen in the overall balance of public finances and the protection of vulnerable groups through targeted measures and policy safeguards.