Summary notes on the new RENTAL HOUSES LAW 2023

Dña. Maria Dolores Delgado de Molina, legal advisor of the Association of Property Administrators of the Province of Alicante, has prepared these notes on the Law approved by the Council of Ministers on April 27th, however, as of today it is still pending review and approval by the Senate, as well as publication in the BOE, so the final wording is uncertain.

However, as main notes of the aforementioned text, it points out:

  1. The criteria for the autonomous communities to declare “stressed areas” in the rental market are extended.The criteria for the declaration of a stressed area are as follows:- That its price has increased by more than 3 percentage points the value of the CPI in the last 5 years or that the average price of the house exceeds 30% of the average income of the area.- That the average cost of the mortgage or rent plus basic expenses and supplies exceeds 30% of the average income of the households.
  2. A new definition of “big tenants” is given. “Big tenants” means individuals or legal entities that own five or more dwellings in stressed areas, or up to ten dwellings in non-stressed areas.
  3. Annual rent updates are limited by eliminating the CPI. Rentupdates will be limited to a maximum of 3%. In addition, a new specific reference index other than the CPI is expected to be approved in 2025.
  4. Price of rents in stressed areas is regulatedRental prices, regardless of whether they are for large or small tenants, will be capped. These caps will be set according to the type of contract and whether the owners are small or large tenants:- For small tenants: by indexing to the price of the previous rent in force; – For large tenants: by applying the price containment index yet to be defined.
  5. The owner isresponsible for the payment of the real estate agent’s feesand the real estate management and contract formalization fees are to be paid by the lessor.
  6. It is forbidden to increase the price of the rent with other extra expenses.It is forbidden to increase the price of the rent by adding new expenses (community, garbage tax, or any other expense not attributable to the tenant).
  7. The “agreement between the parties” contrary to the Law. Is prohibited,eliminating the clauses that allowed the non-application of the measures contained in the Law, in the event of an agreement between the parties.
  8. Protection measures against evictions are established.It puts an end to evictions without a predetermined date and extensions are included in foreclosure procedures, which will postpone the processes for more than 2 years.mandatory access to extrajudicial conflict resolution procedures is included for vulnerable people.the Autonomous Regions are empowered to articulate their own mechanisms for mediation and housing alternatives.the ability to use funds from state housing plans to offer housing alternatives for people at risk of eviction is recognized.
  9. It establishes tax benefits for homeowners and establishesa series of benefits in the IRPF (Personal Income Tax) for home rentals.
  10. The possibility of establishing IBI surcharge for empty dwellings is given.Possibility for the City Councils to increase the IBI with a surcharge of up to 150% for those owners with more than four homes in the same municipality, empty for more than two years (unless justified cause).In Alicante on May 2, 2023
Por Gestifinc // May 2