Everything you need to know about the new Houssing Law in Spain: protection for the vulnerable , expansion of the public park and regulation of the real estate market

The new Housing Law in Spain has been approved with the aim of guaranteeing the right to decent and adequate housing, protecting vulnerable people and increasing the public stock of social housing. Currently, the country has around 290,000 publicly owned rental homes, which represents only 1.6% of all inhabited households in Spain. A significantly lower figure than that of other European Union countries such as France, the United Kingdom, Sweden, the Netherlands, Austria or Denmark, which offer around 15% of social housing.

The new Law modifies various regulations related to housing, such as the Urban Leasing Law, the Civil Procedure Law, the Personal Income Tax Law, among others. Likewise, it establishes that the mortgage or rental fee and the expenses of supplies and basics must not exceed 30% of the income of the coexistence unit.

The Law defines a “large holder” as a natural or legal person who owns more than 10 urban dwellings for residential use or a constructed area of ​​more than 1,500 m2 for residential use (without garages or storage rooms). An “exceptional large holder” category is also included, which applies to owners of 5 homes in stressed areas. The autonomous communities will determine these stressed areas.

The Law also establishes the creation of a database in which the bonds, property and other sources are registered, to determine a reference index. The autonomous communities that so wish may apply this reference index to establish rental prices.

Likewise, the Law provides for the stressed areas, which will be determined through studies carried out by the General Directorate of the Cadastre of the Ministry of Finance. To declare a stressed area, one of the following circumstances must be met: that the average burden of the cost of the mortgage or rent and basic expenses and supplies exceeds 30% of the income or average income of the coexistence unit, or that the rental or purchase price has experienced an accumulated increase in the last 5 years of at least 3 percentage points above the accumulated increase in the CPI of the corresponding autonomous community.

The Law will enter into force on June 30, 2023 and will apply to contracts signed after that date, as well as to previous ones in which their submission is agreed. The tax effects of the Law will be applied as of January 1, 2024. The declaration of stressed areas will be valid for 3 years, and may be extended annually following the same procedure. The Law also establishes measures to expand the public stock of social housing, such as increasing the percentage of land allocated to public protection housing from 30% to 50%.