2023-05-23
Summary New Spain housing law 2023
1 – Expansion of stressed areas in the rental market
"The conditions for the declaration of a stressed area are improved and facilitated, covering more areas for the application of control measures." The declaration of a neighborhood or a municipality as a "stressed area" will depend on each Autonomous Community, including the City Council of the municipality where these areas are being studied in the review.
For an area to be declared stressed, it must meet one of these two requirements: that its price has increased by more than 3 percentage points in the CPI value in the last 5 years or that the average home price exceeds 30% of the average income. from the area.
The determination of stressed areas may be from census districts such as micro zones and even areas as wide as entire Autonomous Communities.
To declare a stressed area for rent, at least one of these two conditions must be met:
- That the average cost of the mortgage or rent plus basic expenses and supplies exceeds 30% of the average household income
Example: if the average income in an area is 3,000 euros per household, the sum of the price of the home (mortgage or rent) plus utility costs cannot exceed 1,000 euros
- That the purchase or rental price of the home has increased at least 3 points above the CPI in the five years prior to the declaration of a stressed area.
Example: if a house cost 300,000 euros in January 2020, the CPI value would have increased in January 2023 between January 2020 and 2023 (12.9%) plus an additional 3 percentage points (15.9%). Thus, the house would have to be worth 347,700 euros.
2 – New definition for large holders
A distinction will be made between large and small owners.
- Large holders: will be those individuals or legal entities that own 5 or more homes in stressed areas or up to 10 homes (or 1,500 m2) in non-stressed areas.
- Small owners: they will be those individuals or legal entities that own less than 5 homes.
3 – Limit of the annual update of the rent eliminating the CPI
This is, without a doubt, one of the most controversial measures of the New Housing Law 2023, since there are many experts who have spoken out against this type of measure.
With the new regulations on rental prices, as of January 2024 (remember that currently the rental update is limited to a maximum of 2% as an extraordinary measure), rental updates will be limited to a maximum of 3% and will be decoupled from the CPI.
Rent updates will always be limited by an index: 2% in 2023, 3% in 2024 and a new rental price update index will be approved in 2025
In addition, it is expected that by January 2025 a new reference index will be created by which all rents will be updated and that it will be more stable and lower than the CPI. For now, the working group assigned for the law is working to define what this will be like. index by which the rentals will be governed.
4 –Regulation of rental prices in stressed areas
The rental prices of the new contracts, regardless of whether they are from large or small owners, will be regulated and capped. This measure is intended to contain and reduce the price of rental housing and will not be applied in areas NOT declared stressed.
This law also contemplates the inclusion of new rental homes on the market within these stressed areas, which will also be limited in price according to the powers of each Autonomous Community.
These limits will be established, depending on the type of contract and who is the owner (small or large holder).
- For small owners: by indexing to the previous rental price in force, that is, according to the rental price of the contract prior to the new rental contract.
Example: If a home had a rental contract for 1,000 euros per month, in the new contract the rental price may not exceed these 1,000 euros plus the increase corresponding to the current rate (2% in 2023, 3% in 2024 and to be defined). according to the new index from 2025) – Thus, if a new contract is made in 2023, its price may not exceed 1,030 euros per month.
- For large holders: by applying the price containment index, which is yet to be defined.
5 – Transfer to the landlord to pay the real estate fees
The new regulations contemplate in Section 1 of Article 20 that "The expenses of real estate management and those of formalization of the contract will be borne by the landlord".
The tenant will continue to pay the deposit and the additional guarantee when signing a new rental agreement.
6 – Prohibition of increasing the rental price with extra expenses
It is prohibited to increase the rental price by adding new expenses (community, garbage fee, etc.)
7 – Prohibition of “agreement between the parties” contrary to the Housing Law
The clauses that allowed the non-application of the measures contained in the Law if there was an agreement between the parties are eliminated. The Urban Leasing Law allows, as in any contract, the parties to reach agreements even if they are contrary to part of the Law.
However, as the draft indicates, "from a preponderant position of the owner over the tenant that usually occurs, the tenant could be forced to waive by contract the measures and rights contained in the Law to obtain the contract."
8 – New protection measures against evictions
This new regulation has several measures to achieve protection:
- Put an end to evictions without a predetermined date. Thus, it should be mandatory to establish a date and time to carry them out.
- New extensions are included in the launch procedures, which will postpone the processes for more than 2 years.
- Mandatory access to out-of-court settlement procedures for vulnerable people.
- The CCAAs will be able to articulate their own mediation and housing alternative mechanisms that they deem appropriate.
- The ability to use funds from state housing plans to offer housing alternatives for people at risk of eviction through subsidized social rents, rehousing people in vulnerable situations or any other policy is recognized.
9 – Tax benefits for owners
Small owners who have a home in an area declared stressed will receive tax incentives in the IRPF to put their home for rent and compensate for the fact that the price increase of the new rental contracts is limited in relation to the previous rental contract. .
For now, the details of the tax rebates have NOT been disclosed, although those of the old draft of the 2022 housing law proposed a rebate of up to 90% of the income obtained by the owners in the event that the rental price falls.
Bonuses:
- 50% bonus to all those owners who rent their home.
- 70% discount: If it is rented for the first time to young people between 18 and 35 years old or If it is a new contract with improvements or rehabilitation
- 90% bonus if it occurs in stressed areas
A tenant (small holder) with a home in a stressed area that sets a rental price of €800/month and applies a 5% reduction on the rent up to €760/month could obtain a reduction of up to 90% of the benefit Net income tax. In this case, it is calculated that the net income would be €6,384, which if they are currently taxed at 60% (€3,830 would be taxed), with the new housing law this reduction would go up to 90%, so the amount subject to tax would be of €638.
10 – IBI surcharge for empty homes
More taxes for empty houses. To encourage the rental of these homes to those that have been empty for more than two years for owners with more than four homes in the same municipality, the Government will allow municipalities to increase the IBI rate for homes that are empty with a surcharge of up to 150%.
11 – Impossibility of changing the public housing qualification
Subsidized housing that is promoted on land whose destination is that of housing subject to some public protection regime will be subject to a permanent public protection regime that excludes disqualification, as long as the qualification of said land is maintained. In addition, the indefinite qualification of subsidized housing is established.
12 – Increase in the rental supply with the incentive affordable housing
In order to increase the supply of housing at prices appropriate to the economic situation of households in each territorial environment, the public powers, within the scope of their respective powers, may promote the existence of affordable housing with incentives, which will be subject, on a guidance and without prejudice to what is established in this regard by the competent administrations. - (c) 2023 Adevinta, in case you redistribute or disseminate our protected content, remember that you must quote us.
More information on the Ministry's website: https://www.lamoncloa.gob.es/serviciosdeprensa/notasprensa/transportes/Paginas/2023/170523-ley-derecho-vivienda-aprobacion-definitiva.aspx
Source: Fotocasa
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2023-02-13
Luxury continues to rise in the Catalan real estate sector. The foreign buyer has stood out above the national, with the French being the most interested in acquiring properties from 1 million euros.
The average price of luxury housing in Catalonia closed the year 2022 with an annual increase of 6´5%. The French buyer stands out as the most active in the purchase of homes. The regions with the most high-end real estate interest in Catalonia are the province of Barcelona (Barcelona, Castelldefels, Esplugues de Llobregat, Sant Just Desvern, Sant Andreu de Llavaneres, Sant Cugat, Sitges and Valldoreix), Girona (Begur, Cadaqués, Calella, Empuriabrava, Llafranc, Pals, Tamariu or Tossa de Mar) and Tarragona (Altafulla, Calafell, Cambrils, Comarruga, L'Ametlla de Mar, Roda de Berà, Salou or Torredembarra).
- Real estate resists inflation well
- Buying homes is the best way to protect capital
- The purchase is an optimal patrimonial refuge in long-term investments
In 2023 there will continue to be an upward trend in buyers:
- Housing will continue to be a refuge value.
- The upward trend of buyers who are currently renting and want to have their own home will continue. Above all, foreigners who, after living a year renting, make the decision to buy to continue residing in Spain.
- Prices will remain stable with slight increases in the luxury segment.
- The increase in the cost of financing will make supply more balanced with demand.
- The evolution of the real estate market will continue to be marked by the instability related to the international war and the increase in interest rates.
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2023-01-30
Luxury housing becomes 6% more expensive in 2022 with the French as 'top' buyers
The luxury real estate sector in Barcelona closed 2022 showing its resilient character and consolidating its importance as a refuge value. The high-end residential segment continues to be one of the favorites of large portfolios looking for a safe investment with stable profitability that does not depend on macroeconomic factors. Luxury housing in Barcelona has increased its average price by 6%, an indicator that has been the main driver of the number of operations registered during the year in this segment.
Regarding the average profile of real estate demand in this luxury market, this year the foreign buyer has stood out above the national, with French citizens being the most interested in acquiring properties from 1 million euros.
The most sought-after homes are those with large terraces or patios and are located in buildings with gardens or communal areas. And it is that properties with exterior elements are much more attractive after the pandemic, so those that do not have them are the most sensitive to a reduction in their publication price so that their sales periods are not so long.
The regions with the most high-end real estate interest in the province of Barcelona are: Barcelona, Esplugues de Llobregat, Sant Just Desvern, Valldoreix, Sant Cugat, Sitges, Castelldefels and Sant Andreu de Llavaneres.
2023 will be an excellent year for the luxury real estate market. Housing will continue to be the best option for those families who wish to protect their savings and increase their quality of life by acquiring a property with better benefits. On the other hand, there will continue to be an upward trend in buyers who are currently renting and want to own their own home, especially foreigners who, after living a year renting, make the decision to buy because of their desire to continue residing in Spain.
In conclusion, the forecasts for 2023 prices will remain stable and with slight increases in the premium segment. The increase in the cost of financing will make supply more balanced with demand. For this reason, the evolution of the real estate market, marked by instability, will surely be related to the duration of the war in Europe.
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