Summary Note on the Main Aspects of the New Rental Law

1.      Law 12/2023 of 24 May on the right to housing has introduced a series of relevant amendments regarding the regulation of leases of permanent dwellings.

In this article we analyse the main key points of the law in relation to rentals, from its entry into force on 26 May 2023.

The application of the stressed zones regulations will be from 15 March 2024.

For the time being, the rental of seasonal housing and commercial premises are outside the scope of the new law.

2.       Lease rent at stressed areas

The new law establishes the concept of stressed areas, which will serve as a basis for the limitation of rents in dwellings included in these geographical areas.

So far, only the Community of Catalonia has established a list of stressed areas, comprising 140 municipalities, which basically correspond to the metropolitan area of Barcelona, the second zone, the provincial capitals and other municipalities with a larger population.

https://portaldogc.gencat.cat/utilsEADOP/PDF/8984/1989356.pdf

3.       Large landlord concept

The law establishes the category of large landlord, which are individuals or companies owning 10 or more dwellings, or 5 in stressed areas.

A Large landlord is also considered to be someone who owns more than 1500 m2 of residential use (excluding storage rooms and garages).

4.       Extension of the term of existing agreements

The duration of the lease term, in agreements in force at the entry into force of the new law, will have the following extensions:

• If the owner qualifies as a Large landlord and the dwelling is in a non-stressed area, he/she/it will have an extension of 1 year in addition to those already in the lease, provided the tenant requests it and proves its vulnerability.
• If the property is in a stressed area, an additional 3-year extension of the agreed duration, which is binding on all landlords regardless of the tenant’s financial

5.       Updating of rents

The new law establishes a maximum on the updating of rents, both for new contracts and for those that were already in force when it came into force, which aims to decouple the Consumer Price Index (CPI) for the updating of rents. To this end, it has been established the following maximum rent updates:

Year 2023 update 2%.

Year 2024 update 3%

Year 2025. The INE (National Statistics Institute) is expected to prepare a new rate for updating housing rents, which will replace the CPI.

6.       New agreements

All new agreements, from the entry into force of the new Rental Law, will have the following limitations:

• Agency fees for new agreements may not be charged to the
• The rent for housing housing lease agreements located in non-stressed areas will have no limitation on the price of the rent, nor will they include items such as Land Tax (IBI) or community expenses, to be paid by the tenant.
• New housing lease agreements in stressed areas, not previously leased, will have the limitation of the maximum reference price for their area. (Currently only in force in Catalonia).
• New housing lease agreements of small landlords in stressed areas, who have already been leased in the 5 years prior to the entry into force of the law, will be limited to the initial rent equivalent to the previous rent plus the annual update. It will NOT be possible to include the tenant’s community expenses or Land Tax (IBI).
• New housing lease agreements for large landlords of a house /dwelling previously leased will have the same limitations as for small landlords, with the additional limitation that the rent may not exceed the price index established for the relevant area.
• Only if the new housing lease agreement is established for a term of at least 10 years or if comprehensive renovation and/or energy efficiency improvement

works have been carried out in the dwelling, the new contract may increase the rent by 10%.

7.       Amendments related to court procedures

The law introduces different amendments related to the eviction procedure initiated by the landlord. The main one is that the landlord will have to prove with his claim that the tenant is not vulnerable.