Law for the Right to Housing (ley de vivienda) in Spain: Affordable Housing Measures and Rental Price Limits

The Law for the Right to Housing develops the right to adequate housing as enshrined in the Constitution. It aims to assist disadvantaged groups with more difficulties in accessing housing by implementing measures such as rent price limits and the promotion of public housing.

The Law for the Right to Housing project was approved by the Council of Ministers on February 1, 2022, by the Congress on April 27, 2023, and definitively by the Senate on May 17. On May 25, it was published in the BOE (Official State Gazette) as Law 12/2023, dated May 24, for the Right to Housing. It is one of the reforms included in the Recovery, Transformation, and Resilience Plan.

The law includes measures to increase the supply of affordable housing, prevent tension in the rental market, and support young people and vulnerable groups in accessing housing.

Additionally, it provides autonomous communities and municipalities with different tools to help contain or reduce rental prices and increase the supply of social rental housing.

Promotion of public housing includes:

– Regulation of public housing stock to prevent sales to investment funds.
– Indefinite qualification of protected housing to ensure a minimum period of 30 years.
– Minimum percentage of 50% for rental housing within reserved land for protected housing, increasing the percentage of reserved land for protected housing from 30% to 40% in urbanizable land and from 10% to 20% in non-consolidated urban land.
– Creation and maintenance of an inventory of public housing stock.

Limits on rental prices include:

– Tax or urban incentives for privately owned properties with reduced rent.
– Declaration of tensioned residential market areas for a renewable period of 3 years to apply rent reduction measures.
– Maximum annual rent increase of 3% for existing contracts during 2024.
– Starting in 2025, a new reference index for annual lease contract updates, replacing the Consumer Price Index (IPC) to prevent disproportionate rent increases.

In tensioned areas, the law allows for:

– Possibility of an annual extraordinary extension for tenants after the contract ends.
– Limitation of rent for new contracts and new tenants based on the previous contract’s rent.
– Application of price limit systems to homes that have not been rented in the last 5 years.

The law also establishes the possibility of implementing reference price index systems based on territorial areas, establishing a database of rental contracts for monitoring and evaluation of the adopted measures.

Improvements to strengthen the balance in landlord-tenant relationships include:

– One-year extraordinary extension of lease contracts for situations of accredited social or economic vulnerability.
– Real estate management and contract formalization expenses to be borne by the landlord (e.g., agency fees or commissions).

Protection against evictions includes:

– Improvements to ensure effective communication between the judicial system and social services to provide prompt assistance to vulnerable individuals.
– Housing solutions for affected individuals and extension of eviction suspension periods until these solutions are available.
– When the plaintiff is a “major holder” and the eviction demand affects vulnerable individuals, proof of conciliation or mediation procedures must be provided.

A new definition of “major property owner” and “vacant housing” includes:

– Consideration of “major holder” for individuals holding 5 or more urban residential properties in the same declared tensioned area, upon request by the autonomous community.
– Definition of “vacant housing” to allow municipalities to apply an additional surcharge on the Property Tax (IBI) for homes that have been vacant for more than 2 years, provided the owner owns a minimum of 4 such properties.
– Modulation of the IBI surcharge (currently set at 50% of the net IBI quota), which can reach up to 150%.