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Government to limit rent increases to 3% and make landlords pay letting agency fee

Government to limit rent increases to 3% and make landlords pay letting agency fee

Under the proposed new law, rent controls on residential property will stay at a maximum two per cent increase for this year, followed by a planned three per cent in 2024

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MADRID.

Friday, 21 April 2023, 12:29

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The coalition government agreed to one of its showpieces of planned legislation last week when it approved a new housing law that limits rent increases on homes.

After three years of negotiations, MPs are expected to be asked to vote in the next month on a three per cent ceiling on rent increases until 2024. Landlords and not the tenant will also now be made to pay letting agency's fees at the start of a contract.

The way was cleared for the housing reforms to get a majority of MPs' support after two left wing nationalist parties - EH Bildu and ERC - accepted the terms.

Under the proposed new law, rent controls on residential property will stay at a maximum two per cent increase for this year, followed by a planned three per cent in 2024. After that, a special national rent increase index will be created that will never be more than inflation.

In addition, in certain circumstances, whole areas can have even tighter rules when contracts come up for renewal; areas of Spain where rent prices have risen by three points more than inflation in recent years or rent payments account for more than 30% of local average household income. Here the rental price cannot be hiked up on renewal. Those owning five properties will have tighter conditions imposed.

The problem of adequate housing at affordable prices has become a main topic of conversation in politics in Spain in recent weeks. Parties have begun competing to offer solutions to an issue that resonates with voters ahead of elections this year.

In recent days the government has also announced long-term plans to put over 90,000 new homes on the market to rent.

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