Before and after keys to the Housing Code
The initial draft of the Housing Act was approved by the Cabinet in late 2021 and moved forward as a bill in 2022. It has since progressed through the legislative process, drawing ongoing debate from supporters, business groups, and real estate portals who question its effectiveness in addressing Spain’s housing challenges.
Following months of extensive discussions within the coalition and with parliamentary groups, the Act received approval from Congress on April 27 and the Senate on May 17. It then moved to the Official State Gazette, taking effect on May 26, marking a significant step in the country’s housing policy reform.
This law represents a landmark in Spain’s democratic framework and is a key element of the Recovery, Transformation and Resilience Plan, aligning with the European Commission’s expectations for Next Generation EU funds.
Rent limits, large landlords, and evictions
Among its measures, the Act sets new boundaries on rent growth nationwide and aims to curb the influence of large landlords. It reduces the threshold for defining large property owners from ten to five units in certain situations and tightens eviction processes when tenants face vulnerability, requiring prior accommodation or arbitration before evictions proceed.
The Act maintains a 2% rent growth ceiling for the current year and raises it to 3% in 2024, establishing a regional reference index that is distinct from the consumer price index through the end of next year. It also narrows the category of landlords deemed large enough to be subject to additional controls, extending these restrictions to natural persons in stressed areas.
Additionally, the law includes measures to cushion economically vulnerable tenants from displacement, particularly when the landlord owns multiple properties. Evictions now require a scheduled date and time to ensure due process and transparency.
Tax incentives and IBI surcharge for vacant homes
The Personal Income Tax (IRPF) regulations have been updated to support affordable, long-term rental of primary residences. The changes adjust the deduction for net returns on habitual rental income, with a 50% discount on new lease contracts, and potential increases based on location and rehabilitation factors.
Local authorities may impose a property tax surcharge on homes vacant for more than two years, with some exceptions for justified temporary vacancies, provided the owner holds multiple residences. The surcharge now includes a modulation of the charge that can reach up to 150% of the liquid IBI quota, depending on the number of vacant properties in the owner’s municipality and the duration of vacancy.
Incentive Affordable Housing
The framework introduces the concept of subsidized affordable housing to boost short-term supply. This includes tax or civic benefits in exchange for privately owned homes used as discounted rentals for households with limited income, including third-sector organizations such as associations and foundations.
The law also supports the promotion of protected housing for rent at controlled prices, setting a minimum quota of at least 50% for rental housing on land set aside for subsidized housing. The share of land allocated for subsidized housing is raised—from 30% to 40% on developable land and from 10% to 20% on non-consolidated urban land—reflecting a broader commitment to affordable options.
Establishment of the Housing Advisory Council
The legislation contemplates creating a Housing Advisory Council to ensure broad participation in policy planning and development. This state-level body will provide technical guidance and strategic input for housing programs, drawing on representatives from ministries with housing responsibilities, third-sector groups, and other relevant associations. It will include stakeholders from business and professional sectors affected by the law, as well as academics and researchers in housing, finance, and urban planning.
Permanent public protection of subsidized housing
Subsidized housing is envisioned as a long-term commitment, with a guaranteed minimum duration of 30 years. State-level standards define a permanent protection regime for subsidized units promoted on reserved land, while other cases establish a minimum 30-year disqualification period for ineligible properties. The process emphasizes applicant registration for subsidized housing and clear criteria for grants and access.
Industry response to the law
Real estate portals and industry bodies have voiced criticism, noting a shortage of supply as the core issue in the rental market. Critics from associations and the General Council of Spain’s Official Colleges of Realtors have described the law in terms ranging from confusing to intrusive and unstable, arguing that price control measures may interfere with constitutional rights and threaten ownership. Industry leaders warn the Act could have unintended consequences, potentially slowing down the market or failing to resolve current housing challenges. Observers point to regional experiences where similar policies have produced mixed results, stressing the need for a balanced approach that increases supply without dampening investment.