For members


Five key points about Spain’s new housing law

Spain’s new housing law or Ley de Viviendas finally comes into force from Thursday May 18th, here's what you need to know about how it will affect you.

Five key points about Spain’s new housing law
Spain's new housing law enters into force on May 18th. Photo: falco / Pixabay

Spain’s long-awaited housing reforms, the Ley de Viviendas finally comes into force. The Spanish government is to approve the new law definitively this Wednesday, May 17th without changes, which will prevent it from having to return to Congress, meaning that it will be up and running in time for the regional elections on May 28th.

It will be published in the Official State Gazette (BOE) the next day and come into force from this Thursday, May 18th.

Here are five key points about the law you should know and how they will affect you, whether you rent a property or you’re a landlord.

Regulation of rental prices

One of the most important features of the new law is that it allows communities and town councils to indicate ‘stressed’ market areas in order to establish limitations on rental prices.

For an area to be considered ‘stressed’, it must meet at least one of two requirements. These are areas that exceed the Consumer Price Index (CPI) of their respective province by five points and areas where families dedicate more than 30 percent of their salary to paying the rent.  

In these ‘stressed areas’, the price limitations on leases will be different depending on whether the owner of the apartment is someone who has more than ten homes – a limit that can be reduced to five if the council so wishes – or if they own less than five. Owners of more than five properties will be obliged to lower prices up to a certain limit that will be established by the Ministry of Transport through an index. 

READ ALSO – MAP: The high-demand areas in Spain where rents will be controlled

Rent control index

Up until now, during the first five years of the rental contract, the landlord had the right to increase the price each year by the same percentage as the CPI, but the new law will also establish a new index that will replace inflation when it comes to limiting the annual increase for rental payments from 2025 onwards.  

In 2022, faced with relentless inflation, the Spanish government approved a law to prevent annual rent increases in line with the CPI during 2022. In doing so, they set a two percent ceiling on increases, which the Spanish Cabinet then subsequently extended and will remain in force throughout 2023.  

In 2024, a ceiling of three percent will apply, whatever the level of inflation. Landlords may not raise the price of their contracts already in force above these percentages.  

READ ALSO: What Spain’s new housing law means for you if you’re a landlord

Agency fees

Anyone who has ever rented an apartment will be aware of agency fees and what an extra financial burden and worry they can be. In Spain, agency fees are usually equal to one month’s rent, sometimes more, and fortunately for renters the new law shifts the onus to pay fees onto owners, not the tenants.

In addition, the law also prohibits increases to fees beyond what is advertised or in the contract, such as forcing tenants to pay expenses for ‘la comunidad‘ community or municipal fees.

READ ALSO: How Spain’s new housing law will affect you if you rent

Tax penalties for empty apartments

The new housing law will offer municipalities the possibility of financially penalising those who keep their properties empty or unoccupied in order to encourage them to go on the market.

This penalty will be levied through a surcharge on the Real Estate Tax (IBI) of up to 150 percent. A property will be considered “permanently unoccupied” when it remains empty “continuously and without justified cause for a period of more than two years”, provided that its owner has four or more houses. 

If the property has been empty for two years, the IBI surcharge may be up to 50 percent or “up to 100 percent of the net tax rate when the vacancy period is greater than three years,” the law states. City councils may increase the surcharges for landlords who own two or more empty properties in the same municipality.

Tax incentives

This is the only part of the law that will not enter into force this from May 18th, but will instead do will do so as of January 1st, 2024. The current system of tax incentives will remain in force throughout the rest of this year.

From 2024 onwards landlords may be able to benefit from the new housing law through several tax incentives. Currently, landlords can deduct 60 percent of the amount they charge the tenant from their personal income tax payment, but this will be reduced to 50 percent in areas that are considered to be ‘stressed’.   

However, depending on the rental prices that landlords in ‘stressed’ areas charge, these deductions can almost double. The tax deductions can go up to 90 percent if the owner lowers the rental price by at least five percent compared to the previous contract; and up to 70 percent if a new home is put on the market and rented to a young person between the ages of 18 and 35 or if it is rented to the public administration.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members


The new health and property tax deductions in Spain’s Valencia region

Valencia's regional government has announced tax cuts that could give millions of Valencians rebates on property purchases as well as mental health, dental and sports activity costs.

The new health and property tax deductions in Spain's Valencia region

During the regional election campaign in Valencia in May, Spain’s right-wing Partido Popular (PP) government campaigned, partly at least, on tax cut commitments.

Now the PP President of the Generalitat, Carlos Mazón, has announced a raft of “tax relief” measures for millions of Valencian residents that focus on rebates for property purchases, dental and optician’s expenses, mental health treatment and sports and exercise costs.

This builds on the PP election pledges, and comes after its abolition of Inheritance and Gift Tax in the region.

Mazón, along with regional Minister of Finance, Ruth Merino, will incorporate the further tax cuts into the region’s 2024 Budget. The relief package is based on two main branches of fiscal reform: firstly, deductions in Income Tax (IRPF as it is known in Spain) and, secondly, by applying a new reduced rate for the Property Transfer Tax.

The regional president has been keen to signal a new direction in tax policy in the Valencian Community. “The change has begun and this change is being carried out,” Mazón said when outlining the new measures to the press. The tax cuts will, according to Generalitat estimates, have a fiscal impact of €200 million.

READ ALSO: Why many people in Alicante feel cheated by the Spanish State

Of the cuts, 180 of the estimated €200 million will come from income tax cuts. For IRPF, the PP led regional government has proposed a series of deductions in seven key areas of income tax for individual declarations of income up to €32,000 and joint income declarations of up to €48,000.

In total, Mazón pointed out that taken along with the abolition of Inheritance and Gift Tax, the regional government has made total tax cuts of €365 million: the almost €200 million in deductions and slashing of property taxes, in addition to the previous €166 million in Inheritance and Gift Tax, a measure yet to be approved by the regional executive.

READ ALSO: EXPLAINED: How to pay less Spanish IBI property tax

“It is aimed at those who need it most, at the lowest income brackets”, Mazón said, pointing out that more than two million taxpayers will be eligible for rebates, “almost nine out of every ten” in his words. It should be noted, however, that these proposals in the draft bill are still subject to debate in the Valencian regional Cortes, and Mazón stressed that they present a “draft bill as a proposal open to dialogue” with proposals that can “enrich the text”.

The deductions will also be applied retroactively from 1 January 2023 for the next income tax return and will be cumulative, that is to say, deductions for sporting activities can be added to those for oral health expenses, for example.

Property tax cuts

A main pillar of the reforms focuses on property taxes, especially for young people, and cuts the property transfer tax (Impuesto de Transmisiones Patrimoniales, ITP).

Mazón has announced a “super-reduced ITP rate” of 6 percent, lowering it from the current 8 percent for all young people under 35 years of age who buy a home of up to €180,000. This measure is expected to benefit some 15,000 young people and have an impact of €14.7 million.

READ ALSO: Where are the best and worst places for inheritance tax in Spain?

“The priority is for those who earn the least, those who are currently under the most tax pressure,” Mazón said, adding that the government hopes that tax cut measures will provide incentives for young people to get on the property ladder. In addition, there is also a reduction on this rate for purchases of a main residence that is social housing when the price of the property is below €180,000. 

The super-reduced rate will also apply to large families, women victims of gender violence or people with disabilities wanting to purchase property up to €180,000, who will see their rate reduced from 4 percent to 3 percent on property purchases.

Health deductions

The new rafts of tax cuts also introduce a series of rebates on health expenses.

These deductions will be 30 percent for dental health expenses up to €150, 30 percent up to €100 for optical expenses, 30 percent up to €150 for mental health treatment and support expenses, and 30 percent up to €150 expenses associated with sports.

In the case of sports costs, Mazón gave examples of club and federation fees, expenses and gym membership costs.

This builds on tax deductions of up to €100 for families with someone suffering a chronic illness, which is extended to €150 if it is a large or single-parent family, and deductions of up to €100 for expenses generated by family members with Alzheimer’s disease or brain damage, again extended up to €150 if it is a large or single-parent family.

READ ALSO: Alicante vs Valencia – Which one is better to live in Spain?