Housing is undoubtedly one of the most important assets for any person, not only because it is a basic necessity, but also because, once acquired, it is one of the most important expenses in our monthly budget.
Therefore, it is crucial that public policies related to housing are effective and fair to ensure access to decent and affordable housing for all. In this post we are going to see the measures included in the New Housing Law 2023 and, above all, those that are focused on the rental market.
New Housing Law 2023
This April an agreement was reached in the Council of Ministers for the approval of the New Housing Law in Spain that began its journey in February 2022. Its approval is expected in May 2023, but some measures are already known to be included in this law. Let’s see the main measures that directly influence the rental market:
Increase in offer
One of the main measures that is expected to be included in the New Housing Law is the increase in the supply of affordable rental housing. To put it into operation, the construction of new subsidized homes will be promoted and owners will be encouraged to put their empty homes on the rental market. It is also expected that the administrations regulate the rental price to avoid abuses by the owners.
Protection of the tenant
Another of the measures that will be included in the new law is the protection of tenants. Measures will be established to avoid unfair evictions and mechanisms will be established to resolve conflicts between owners and tenants in a more agile and effective way.
Rehabilitation and improvement of homes
The new law will also encourage the rehabilitation and improvement of existing homes. To carry out this measure, tax incentives will be established for owners who make improvements to their homes and rehabilitation works will be promoted to improve the energy efficiency of homes and reduce the carbon footprint. In this way, the quality of rental housing will increase and the market will be renewed, benefiting owners and tenants.
How does the New Housing Law of 2023 affect homeowners?
Homeowners will be affected by the New Housing Law of 2023 with different measures, one of which is focused in terms of regulation and taxation. Tax incentives will be established for the rehabilitation and improvement of existing homes that can be beneficial for owners, since they imply a reduction in income taxes or in the Property and Real Estate Tax (IBI), and can encourage investment in improvements and renovations that increase the value of the property in the long term. Let’s see other important measures that affect the homeowner:
New definition for owners
The new law will establish a change in the distinction between large and small owners. The large owners or holders will be the natural or legal persons who have 5 or more homes and the small holders those who have less than 5 homes.
Regulation of the rental price
Among the measures of the new law, a regulation of rental prices is also expected. While this may seem detrimental to homeowners, it may actually have long-term benefits, as it would encourage investment in affordable rental housing and could increase the supply of available housing on the market. This undoubtedly contributes to increasing property values and the demand for quality rental housing.
Another positive aspect is that the regulation of the rental price can guarantee greater stability in the income of homeowners, since prices will be subject to certain limits and cannot be modified arbitrarily.
Rental price in stressed areas
The rental price of the new contracts, whether for large or small holders, will be regulated by the new law; however, it will not be applied in areas that have not been declared as stressed. The price limits will be established depending on the type of contract and whether it is a small or large owner.
In the case of small owners, the price limit will be indexed to the previous contract in force. In other words, if a home was rented for 800 euros per month, the new contract may not exceed that price plus the increase in the current index.
For large holders, the price containment index would be applied, which has not yet been defined in the new law. On the other hand, the rental homes included in the stressed areas will also be limited in price and it will be the responsibility of each autonomous community to set those limits.
Protection for owners
Another important measure that the New Housing Law will bring us is that protection mechanisms can be established for homeowners, avoiding unfair evictions and establishing faster and more efficient procedures to resolve disputes with tenants.
Obligation of the owner to pay the commission of the real estate agency
With the approval of the new law, the expenses and fees of the agency in charge of renting the house will always be borne by the owner. Before, the agency commission, which used to be 10% of the annual rental price plus VAT, had to be paid by the tenant, but now it will be the owner who will be responsible for these expenses.
Tax benefits for owners
For now, the tax credits that will benefit owners are not known, but according to the draft of the 2022 law, they could be up to 90%. A 50% discount is also provided for owners who wish to rent their home and 70% for those who rent it for the first time to young people between 18 and 35 years of age.
The highest bonus (90%) will be applied to the personal income tax of owners who rent their homes in stressed areas. In this way, the increase in the price of the new contract is compensated and that it is limited with respect to the previous contract.
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