The Senate approved the new Housing law on Wednesday, May 17. It has not yet appeared in the Official State Gazette (BOE) since publication typically takes up to fifteen days. The measure was publicly outlined in a press note from La Moncloa and has already been shared publicly in anticipation of its formal release.
The law touches both rental markets and home sales but places greater emphasis on rentals.
rental price
Rental costs are a key focus. While rents had climbed above the Consumer Price Index in recent years, 2023 saw annual increases capped at 2 percent due to inflation. For leases valid from December 1 to December 31, 2024, the ceiling rises to 3 percent. This reflects the need for a new reference index to be issued by the National Institute of Statistics (INE) by December 31, 2024, which landlords will use to set rents.
The law also introduces that reference index methodologies will be validated across regional areas. The La Moncloa press release does not clarify whether these regional areas refer to municipal or autonomous community boundaries.
A mechanism to declare an area as stressed exists if either condition is met: rental payments exceed 30 percent of local residents’ income, or rents have increased by more than three percentage points above the CPI in the past five years. Such stressed areas may be extended or kept for three years.
In stressed zones, several steps can be taken to curb rental costs.
Precautions for lessors: the big owner concept and tax breaks
The law directly impacts landlords through new definitions and tax rules. One notable change is the expansion of the concept known as the “big owner.” Previously this applied to owners with more than ten urban properties (excluding garages and warehouses) or a total surface over 1,500 square feet. Under the new law, the big owner label can also apply to those with five or more properties in the same stressed area, or over ten properties if they are located in different places. For example, a person with three homes in Valencia and two in Madrid would not be classified as a big owner.
On taxation, the law adjusts deductions. Previously landlords could deduct 60 percent of the tax on rental ownership regardless of property type or tenant. Going forward, the deduction drops to 50 percent and additional conditions apply for further reductions.
To qualify for the 60 percent discount, the property must have been rehabilitated before signing the contract or within the last two years.
Landlords may also qualify for a 70 percent reduction if they rent a home for the first time to a young person aged 18–35 in a stressed area. The largest reduction reaches 90 percent, limited to cases where the home is in a stressed area and the landlord lowers the rent by 5 percent.
While these incentives can appear attractive at first glance, they carry caveats. The base discount drops from 60 to 50 percent, so to maintain 60 percent, owners may need to rehabilitate the home and aim for higher reductions of 70 or 90 percent in a stressed area, according to Antonio Gallardo, a housing expert.
The 90 percent reduction is tied to a 5 percent rent cut. For instance, if a 50 square meter Madrid apartment rents for 1,000 euros monthly, a 5 percent reduction to secure the 90 percent relief could cost the landlord about 110 euros monthly in short-term revenue losses. iAhorro notes that while the incentives aim to balance benefits, the overall effect on landlords depends on how the area is classified and how the discounts are applied.
In short, the program is designed to subsidize housing costs but can cap revenue for owners. The overall impact varies by location and how aggressively the discounts are used, the iAhorro team cautions.
Conditions of rental agreements
The text calls for landlords to disclose more details about rents to be entered into the contract. Tenants may demand information considered essential, though the La Moncloa release does not spell out every item.
Additionally, property management and contract formalities will fall to the owner rather than the tenant. As a result, tenants typically pay only the monthly rent and the security deposit when a home is rented.
protected housing
For subsidized housing, the period during which the unit remains publicly supported is revised. The status is guaranteed for at least 30 years, with the duration possibly extending indefinitely depending on the type of unit.
Historically, subsidized housing could become free at the end of its support period, but that has not always been straightforward. In many autonomous communities, the free period ranged from 10 to 30 years after classification as subsidized housing, notes iAhorro.
evacuations
The act includes provisions for evictions, prioritizing vulnerable tenants by facilitating accommodation alternatives through Social Services. The process for upgrading a residence can be extended by one to two months for individuals and by three to four months for corporate entities. If the plaintiff is a big owner, it must be shown that mediation or conciliation steps occurred before eviction was pursued, La Moncloa’s release states.
Penalty for empty houses
Municipalities may impose a property tax surcharge (IBI) ranging from 50 to 150 percent based on how long a property remains vacant and how many vacant homes the owner holds in the same municipality. The surcharge applies only if a property has been unoccupied for more than two years and the owner controls at least four homes in the same municipality. Local authorities decide whether this measure is implemented, with flexibility across municipalities, explains iAhorro.