On May 9, 2023, it is expected that the Senate will approve the new Housing Law that was passed by the Congress on April 27, 2023. The new Housing Law includes new terms that had not been considered in any previous legislation and that affect all actors in the real estate market. Among the main changes of the Housing Law, we must highlight the following:
Firstly, the increase in rental prices will be limited to 3% in 2024, with the provision of establishing a new index from 2025 in areas with high demand. This limitation will affect large and small property owners, and will apply to both existing and new contracts. In the case of new lease agreements, they will be affected by a limitation in the rental price, applying the reference price index.
Another change is the explicit attribution of the payment of real estate management expenses and contract formalization to the property owner.
On the other hand, the Housing Law provides for a system of tax incentives in the Personal Income Tax (IRPF) for owners of rental properties in tense areas, however, it is only foreseen for new lease agreements, rehabilitated housing or decreases in the rental price.
Regarding evictions, the Housing Law establishes new extensions that could delay the processes for more than 2 years. In addition, an extraordinary extension of one year is established in cases of accredited situations of social or economic vulnerability in rental contracts.
The new law also introduces changes in the figure of the large property owner of houses, which can be either a natural or legal person, with 10 or more properties, who must apply a limitation index of the price in tense areas.
The regulation also establishes a mechanism for municipalities to penalize empty homes for more than 2 years in the Property Tax (IBI). The penalty will range from 50% to 150% depending on the duration and number of properties owned by the same owner. Likewise, the Housing Law relaxes the requirements to consider an area tense, which can be declared if one of two conditions is met: if the financial effort exceeds 30% of the average income or if prices have increased at least three points above the CPI.
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