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Housing Law: these are the changes that harm you the most if you are an owner

Date: March 4, 2024 Time: 01:41:38

With just under two weeks since its entry into force, the new Housing Law continues to sow doubts among property owners. As of January 1, 2024, tax incentives for property rentals will be implemented, as established in the Law. With this new regulation, the right to decent housing has changed for owners and tenants. Likewise, the objective of this new regulation is to reduce the problems of access to housing faced by the most vulnerable groups, through the rental price cap and the creation of public housing.

The new Housing Law seeks to protect vulnerable tenants and regulate non-payment of rents, modifying Law 1/2000 of January 7. Its main objective is to guarantee the rights of tenants in a situation of vulnerability, present rules to regulate evictions and provide assistance to access social and affordable housing. In addition, the creation of a set of public housing at more affordable prices is expected.

With the entry into force of the new Law, it is understandable that many owners have doubts about how to raise the rental price, declaration of a stressed area or who should pay the real estate fees.

Measures of the Housing Law that succeed owners

As we have already mentioned, this regulation affects both tenants and owners. Regarding property owners, these are the measures that harm them the most with the new Housing Law:

Stressed area​Rental price ceiling​Tax incentives

How does a stressed area affect the owners?

The new law obliges owners who will have more than 5 homes for rent, to lower the rental price in the areas with the greatest demand. It is important to highlight that it must be defined which areas will be considered as stressed, which is the responsibility of the Autonomous Communities and the municipalities.

To consider a stressed zone, the law establishes that two circumstances occur, without it being necessary that they occur at the same time. The norm focuses on the financial burden that falls on the owner in paying the mortgage and the tenant in paying the rent, as well as the increase in housing prices during the last five years.

In specific terms, the norm establishes that an area is considered stressed if the average price of the house exceeds 30% of the personal or household budget. To determine if this situation is fulfilled, the total expense to be paid for the home is taken into account, including basic expenses and supplies, in relation to the means or the average income of the household.

How much can my tenant’s rent go up in 2023?

It is common for many landlords to have questions about how to notify tenants of a rent increase. The new Housing Law seeks to reduce the price of privately owned real estate through fiscal and urban planning measures. The annual increase in current rental contracts is limited to 3% until 2024 and, starting in 2025, a new reference index is ensured instead of the CPI to annually update the contracts and avoid disproportionate increases in rent.

Likewise, in order to increase the rental price of a property, the owners must notify the tenants one month in advance before the first year of the contract is over. According to article 18 of the Urban Leasing Law, “during the term of the contract, the rent may only be updated by the landlord or the tenant on the date on which each year of the contract expires, in the terms agreed by the parties. In the absence of an express agreement, the rent update will not be applied to the contracts.”

Meeting the dates is crucial, since if the tenant does not comply with the provisions of the Urban Leasing Law, they will not have the ability to increase the rental price of the property.

Tax incentives in personal income tax What can the owner of a rented apartment deduct?

According to the new Housing Law, owners who lower the rental price in stressed areas and sign new lease contracts as of January 1, 2024, will receive a 90% reduction in personal income tax on net income. In the event that it is a used rental home in a stressed area and it is rented to young people between 18 and 35 years of age, a 70% deduction will be allowed on the net income as part of the incorporation into the market.

When do tenants start paying real estate expenses?

Law 12/2023, of May 24, for the right to housing, introduces a series of improvements in the regulation of lease contracts through modifications in Law 29/1994, of November 24, on Urban Leases.

Among the novelties of the new Housing Law, it stands out “the introduction of an extraordinary one-year extension at the end of the contract, which may be requested in proven situations of social and economic vulnerability when the landlord is a large homeowner, as well as such as the establishment of the obligation that the expenses of real estate management and those of formalization of the contract are borne by the landlord”. From May 26, the owner will be responsible for assuming the expenses generated by the real estate service that is provided.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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