A series of notable adjustments are unfolding in the residential rental market, highlighted by BOE publication No. 12/2023 dated 24 May on the Right to Housing. According to La Moncloa’s official portal, the revision strengthens the right to decent housing enshrined in the Constitution. Its aim is to support groups facing the greatest barriers to housing by introducing measures such as rental price controls and increased public housing initiatives.
Rental price adjustments
Price trends are a central concern for anyone seeking a rental home. The revised law brings clarity to this area as well. The key rule limits annual rent increases to the rate of inflation. As noted previously, there is a maximum 2% rise in lease renewals through the year. Leases that expired before June 30 were required to extend for an additional six months upon tenant request, unless the landlord needed the property for personal use by themselves, their family, or a spouse.
Several criteria aim to boost transparency in rental agreements. For instance, information about security deposits will flow more freely between administrative bodies, and the state system that references rental price indices will be enhanced. This modernization helps tenants and landlords make better-informed decisions about the market.
Autonomous regions may also develop their own indices to exercise their regulatory authority, including rental assistance programs at the regional level.
What changes affect tenants?
There are a few new features tenants should know. For example, when the rented property is sold, the new owner must honor the existing rental agreement, regardless of whether it is registered in the Property Registry. In addition, guarantees can now be limited to a maximum amount at contract signing, with a deposit equivalent to two months’ rent. Previously, there was no cap on guarantees, which could allow risky practices.
Furthermore, if a lease is signed with a legal entity, the landlord will bear the costs of property management and formalization, and initial signing expenses may be reduced for tenants.
Landlords’ new rights
The changes aren’t only favorable to tenants. Landlords also gain certain protections. If a tenant breaches the contract, the landlord may pursue an oral trial for disputes. This approach may be used for claims up to 6,000 euros, offering lower costs and quicker resolution than traditional court procedures.
Additionally, improvements and upkeep of the property are encouraged. If both parties agree, renovations can occur in exchange for a rent increase, provided these works exceed standard maintenance duties expected of the owner.
Regarding tourist rentals, communities with owner-occupied properties will have greater oversight. With approval from three-fifths of owners, they can restrict or condition tourist rentals and may raise common expenses by up to 20% in certain cases.
Key changes to timelines
The new law introduces several adjustments to timelines, mirroring some provisions found previously. The Ministry of Transport, Mobility and Urban Agenda has published the latest guidance on its housing rental page.
- The mandatory extension period has risen from three years to five years, and if the landlord is a legal entity, it may extend up to seven years. During this time, homeowners can reclaim the property for personal use or family use only if this was specified in the contract at signing.
- An implied extension of one to three years may also apply in certain circumstances.
- If a tenant decides to move out, the notice period for the tenant remains two months, while the landlord must provide four months’ notice.
For those wanting more detail on the new housing framework, the frequently asked questions section offers a clear overview, along with information about rental assistance from autonomous communities.