The New Law 12/2023 on the right to housing entered into force on 24 May. Among the most important changes introduced by this law are the following:
1. The extension of stressed areas in the rental market: The declaration of a neighbourhood or municipality as a “stressed area” will depend on each Autonomous Community, including the City Council in the review. A stressed area is understood to be one in which the average cost of the mortgage or rent plus basic expenses and supplies exceeds 30% of the average household income and will mean that the competent Administration will have to draw up a specific plan with measures to correct the existing imbalances.
The Public Administrations will be able to require the collaboration and provision of information on the use and destination of the dwellings they own from the owners of dwellings in areas with a stressed residential market in order to establish formulas for “collaboration with the owners” that favour an increase in the rental supply; among them, the price of the new rental contract will be the same as the previous rental contract, adding the price update according to the index in force at that time (2% during 2023 and 3% during 2024) and the new index in 2025, eliminating the application of the CPI for the annual update of rental contracts.
The areas defined as a stressed market will be reviewed three years after the entry into force of the law in order to adapt them to the reality and evolution of the residential market.
2. Definition of large holder: natural or legal persons owning 5 or more dwellings in stressed areas or up to 10 dwellings (or 1,500 m2 ) in unstressed areas.
3. Property management costs in rentals, as well as contract formalisation costs, become the responsibility of the lessor, modifying section 1 of article 20 of the Law on Urban Leases.
4. Measures to protect against evictions:
a) Eviction and eviction proceedings suspended by application of Articles 1 and 1a of the urgent measures to tackle COVID-19 shall only be resumed at the express request of the plaintiff if the plaintiff proves that it has submitted to conciliation or mediation procedures established by the Public Administrations to analyse the circumstances of both parties.
b) Paragraph 4 of article 150 of the LEC is modified insofar as there is a notification with a date of eviction of those who occupy a dwelling, and the public administrations will be notified in case their action is appropriate. Likewise, eviction lawsuits will be inadmissible in which it is not specified whether the property is the habitual residence of the occupant, concurrence of the owner’s situation of major holder, and in this case proof will be required as to whether or not the defendant is in a situation of vulnerability (to be accredited by the owner).
c) Mandatory access to out-of-court settlement procedures for vulnerable persons when the owner is a major tenant and the dwelling is the habitual residence of the occupant. If it is not proven that the plaintiff has submitted to conciliation or mediation, the claims will not be admitted.
d) Inclusion of extensions and suspensions in the launching procedures in order to adopt protection measures proposed by the Public Administrations or in the case of being the habitual residence of the occupants.
5. Extension of rents for housing use for stressed market areas:
a) Article 10 of Law 29/1994 on Urban Leases is amended insofar as it introduces the possibility of an additional extension at the request of the lessee for annual periods of up to three years, once the minimum duration of 5 or 7 years established in the Law on Urban Leases has elapsed.
b) In addition, upon request by the lessee, another extraordinary extension may be applied, in addition to that of article 10.1 mentioned above, for a period of one year during which the same terms and conditions will continue to apply. In order to benefit from this extension, it will be necessary for the lessee to accredit a situation of social and economic vulnerability with a certificate issued by the social services, and this extension must be accepted by the lessor when the lessor is a large tenant.
c) In the event that the rented property is located in a stressed residential market area, when the extension periods of article 9.1 or the previous section come to an end, the tenant may request an extraordinary extension of the rental contract for annual periods of up to a maximum of three years, during which time the same terms and conditions will continue to apply. This request for extension must be accepted by the lessor unless otherwise agreed between the parties or a new lease contract has been signed with the rent limitations provided for in the new law.
6. Tax benefits in the IRPF, IS, IRNR and patrimony for owners who rent their property in stressed areas: this rebate will be given, for example, in cases where the initial rent has been reduced by more than 5% in relation to the last contract, or if the property is rented for the first time to young people between 18 and 35 years of age, among others.
7. IBI surcharge for owners of unoccupied dwellings: The third final provision of the new law regulates the surcharge for permanently unoccupied residential properties. In order to encourage the rental of these properties to those that have been empty for more than two years for owners with more than four properties in the same municipality, local councils will be allowed to increase the IBI rate for empty properties with a surcharge of up to 150%.
8. Publicising unoccupied dwellings: The administrations will offer information on the use and destination of the housing stock in their territorial area that is inhabited by households and constitutes their habitual residence, as well as those that are uninhabited or empty, publishing these annually with measures to optimise their use.
9. New regulation of rental contracts for use other than as a dwelling: The present Law does not apply to such contracts, but establishes that within six months of the entry into force of the Law, a working group will be set up to prepare a regulatory proposal to regulate this type of contract for use other than as a dwelling.
10. Obligation of agents involved in the transfer, rental and transfer of housing (including estate agents) to provide full information to the person concerned.
11. Lease contracts entered into prior to the entry into force of this law and subject to Law 29/1994 on Urban Leases shall continue to be governed by the same, remaining unaltered.
12. Payment of rent by electronic means, as a general rule: section 3 of article 17 of Law 29/1994 on Urban Leases is modified insofar as payment shall be made by electronic means unless one of the parties does not have a bank account or access to these means.
13. Regulation of the price of rents in stressed areas: in these cases, the rent agreed at the start of the new contract may not exceed the last rent of the habitual residence rental contract that has been in force for the last five years, once the annual rent update clause of the previous contract has been applied, and may only be increased beyond what is appropriate by a maximum of 10% when the dwelling has been subject to renovation or improvement or the contract is signed for a period of 10 or more years.
