Few regulations have sparked as much debate in recent years as the Housing Law. Since 2023, landlords, tenants, agencies, and investors have been adapting to a framework that has changed the rules of renting, created new legal entities, and provided administrations with tools that did not previously exist. Furthermore, it has done so through a process of constant evolution: new indices, declarations of stressed areas, and tax surcharges that are already being applied in several cities.
The problem is that much of what is written about this law is outdated or simply incorrect. It conflates expired caps, figures that have changed, and obligations that depend on the location of the property.
The Housing Law is the national regulation that governs the right to access decent housing and establishes a set of measures to intervene in the rental market, curb prices in the most stressed areas, and protect the most vulnerable groups. Its official name is Law 12/2023 of May 24 on the right to housing, and it is the first national law in the democratic era to address this matter comprehensively.
In practice, it functions as an umbrella: it sets general principles and limits, but leaves significant leeway for autonomous communities and municipalities to decide how and where to apply the strictest measures. Therefore, it is important to understand from the outset that its effects are not uniform across Spain. What applies in Barcelona does not necessarily apply in Madrid or Seville.
The origin of the regulation lies in a problem that had been festering for years: rental prices were rising far above wages, especially in large cities and tourist areas. Many households were already spending more than 30% of their income on rent, a threshold considered an indicator of excessive financial burden.
With that starting point, the legislature set several objectives: to increase the supply of affordable housing, curb excessive rent increases, mobilize vacant apartments into the market, and provide greater protection to young people, families, and individuals in difficult situations. The underlying idea is to intervene in a market that, according to the Government's approach, was not self-regulating.
It should be noted that this approach does not enjoy consensus. Critical sectors, including landlord associations and a large part of the real estate industry, argue that price caps reduce supply and increase rental costs in the medium term. Proponents of the law respond that without caps, the market excludes households with fewer resources. It is an ongoing debate with data that both sides interpret differently.
The law was published in the Official State Gazette on May 25, 2023, and came into force the following day, May 26, 2023. That date has become a key reference point, as it marks a legal boundary: contracts signed before that date are governed by the previous rules, while those signed after are subject to the new conditions, especially regarding rent adjustments.
However, coming into force did not mean that all measures began to function simultaneously. Some required further development. The clearest case is the reference index for updating rents, which was not operational until early 2025. Others, such as the declaration of stressed areas, depend on each autonomous community taking the initiative.
The short answer is: almost everyone involved in housing, although in very different ways.
If there is one concept that must be clearly understood to navigate this law, it is the "stressed residential market area." This is the key that triggers the most restrictive measures regarding rental prices. Without the declaration of a stressed area, many of the limits discussed in the media simply do not apply.
When an administration declares an area as stressed, general rules no longer apply in that territory, and specific caps come into play. This is when limitations on the price of new contracts, extraordinary extensions, and many of the tax incentives designed to lower rents are introduced.
Outside these areas, the landlord retains much more leeway. They can set the rent with greater freedom in a new contract and are not subject to the reference price indices that apply within stressed environments. Therefore, determining whether a property is in a stressed area is the first thing to check before signing any contract.
The declaration is not permanent: it is made for an initial period of three years, renewable annually if the situation of stress persists. It is a measure intended to act while the problem lasts, not indefinitely.
For an area to be declared stressed, it must meet at least one of these two criteria:
Meeting just one of these is sufficient for the competent administration to initiate the procedure. The declaration is the responsibility of the autonomous communities, which must justify it with a report and follow the steps established in the law itself. It is not automatic, nor is it decided by the State: it depends on the political will of each territory, which explains why the map is so uneven.
The definition of a large-scale landlord is probably the most discussed aspect of the entire regulation, and also one of the most misunderstood. It is a category that imposes additional obligations on those who own a high number of properties.
Generally, a large property owner is defined as any individual or legal entity that owns more than ten urban residential properties, or a constructed area exceeding 1,500 square meters for residential use, excluding garages and storage units from the calculation. It is important to note that the law does not distinguish between primary residences and other properties: all are included in the total.
This is where many people become confused. The ten-property threshold is the general rule applied throughout the country. However, within a stressed area, the situation changes.
The difference is significant. In a stressed area, an owner with five apartments may be classified as a large property owner, with all the associated obligations, whereas outside those areas, one would need to exceed ten. It is also important to note a detail that often goes unnoticed: the five properties must be located within the same stressed area, rather than spread across different parts of the country.
The possibility of lowering the threshold from ten to five properties has been one of the most debated aspects of the law. Proponents argue it is a necessary tool to regulate those who concentrate significant housing stock in areas under the most pressure. Critics argue that it unfairly and disproportionately groups small investors who own five apartments with investment funds holding hundreds of properties.
A common mistake is assuming that the reduction applies automatically in any stressed area. This is not the case: the autonomous community must explicitly justify the reduction in the supporting report that accompanies the declaration. If it fails to do so, the general threshold of ten remains in effect.
This brings us to one of the most critical sections for both tenants and landlords: how much rent can be increased and what the limits are. The answer depends on three factors: the type of landlord, whether the property is in a stressed area, and the date the contract was signed.
It is helpful to distinguish between two different scenarios: signing a new contract and the annual update of an existing contract.
For new contracts within stressed areas, the rules are stricter. If the landlord is a small-scale owner, the rent for the new contract generally cannot exceed the updated rent of the previous contract. If the landlord is a large property owner, or if the property has not been rented in the last five years, the rent is subject to the reference price index system, which sets a maximum based on the characteristics of the property and the building.
For the annual update of an existing contract, the limit applies to the percentage increase. This is where the major change of recent years comes into play.
For decades, annual rent increases were linked to the Consumer Price Index (CPI). This benchmark worked well when inflation was low, but it became problematic during the price surges of 2022 and 2023, which threatened to cause rents to skyrocket.
As a transitional measure, caps were implemented: a 2% limit during 2023 and 3% during 2024, affecting small property owners and large holders alike. These caps had an expiration date and ended at the close of 2024. As of 2025, the CPI is no longer the default reference index for contracts signed after the law came into effect. It continues to be published and may still be agreed upon, but it is no longer applied automatically.
In its place, the IRAV—the Housing Rental Reference Index—was introduced. It is prepared by the National Statistics Institute and published monthly. It serves as the maximum update limit for primary residence rental contracts signed after May 26, 2023, that include an annual review clause.
Its primary advantage for the tenant lies in how it is calculated. The IRAV is defined as the lowest value among three metrics: the annual variation of the CPI, the underlying CPI, and an adjusted average rate that smooths out peaks. By always selecting the lowest figure, it remains below the CPI during periods of high inflation, preventing the full impact of price increases from being passed on to the rent.
Throughout 2026, the IRAV has remained within a contained range, around 2.4%–2.5% monthly, compared to a CPI that has been significantly higher. Since the value changes every month, the correct reference is always the one corresponding to the month of the contract anniversary, which can be consulted on the INE website.
For contracts signed before May 26, 2023, the situation is different: they continue to be updated using the CPI or the index originally agreed upon, unless both parties agree otherwise.
Let’s look at the numbers, as that is the clearest way to understand it. Imagine a rent of 1,000 euros per month:
The difference between both cases, nearly 100 euros annually in this example, clearly demonstrates the cushioning effect of the new index. Furthermore, there is a rule that is sometimes overlooked: if the contract does not expressly include an update clause, the rent cannot be increased during its term, neither by the IRAV nor the CPI.
This change is one of the most welcome for tenants and, curiously, one that generated the least media attention. Since the law came into effect, real estate management and contract formalization expenses are borne by the landlord. In other words, the agency commission is paid by the owner, not the tenant.
Previously, it was common for the tenant to pay the equivalent of one month's rent in agency fees upon signing. That practice is no longer legal for primary residence rentals. Furthermore, anyone who has paid those fees for a contract signed after May 2023 can claim a refund, as this is an inalienable right: any clause that shifts this cost to the tenant is void, even if it has been signed.
For the owner, this represents an additional expense that should be factored into profitability calculations. For the tenant, it is a significant saving at the start of the contract.
It is not all about limitations. The law includes a range of tax incentives designed to make renting worthwhile for property owners, especially when done at more affordable prices. These benefits are structured as reductions in net rental income for personal income tax purposes and are focused on contracts for properties located in high-demand areas.
It is worth running the numbers before ruling out affordable renting: in many cases, a 90% reduction in the taxable base more than compensates for a 5% reduction in rent. This is a calculation that every property owner should make with their advisor, as the result depends on the marginal tax rate and their specific situation.
Another key tool of the law seeks to bring vacant properties onto the market through fiscal measures: by allowing municipalities to apply a surcharge on the property tax (IBI) for unoccupied homes.
The regulation defines a residential property as permanently unoccupied if it has been unused for more than two years without a justified reason. The nuance regarding a justified reason is important, as the law provides for numerous exceptions. For example, properties left vacant due to work or educational relocation, health or dependency issues, seasonal second homes, or those in the process of being sold, rented, renovated, or involved in litigation are not penalized.
The surcharge is not intended for the occasional owner of a vacant apartment due to specific circumstances, but rather for those who accumulate multiple unoccupied properties. In fact, the highest bracket is reserved for owners with a large number of properties in the same municipality. The philosophy is clear: to pressure banks, investment funds, and large property owners to mobilize their idle real estate assets.
One detail worth remembering: this is not an automatically applied national measure. Each municipality decides whether to incorporate it into its tax ordinances. Without such a municipal decision, the surcharge does not exist in that territory.
The surcharge is applied on a sliding scale, based on how long the property has been vacant and the number of unoccupied properties held by the owner:
Before the law, the maximum margin available to municipalities was 50%. The new regulation significantly raises this ceiling to 150%, which can substantially increase the tax bill.
Since the decision is municipal, the landscape is uneven and changes as local governments update their ordinances. Cities such as Barcelona, Valencia, and San Sebastián are among those that already apply it or have studied it in greater detail. In many other municipalities, especially smaller ones, the surcharge has not yet been adopted. It is best to consult the relevant municipal tax ordinance directly, as this is where it is specified whether the surcharge exists and under what terms.
The most direct way to avoid the surcharge is also the one the law intends: putting the property to use. Renting it out, including long-term leases or through affordable housing programs, removes the property from the unoccupied category. It is also possible to provide documentation proving a justified reason for the vacancy. And, of course, one should check whether the municipality applies the surcharge, as it remains inactive in a large part of the country.
One of the core pillars of the law is to strengthen the protection of individuals and families in vulnerable situations against the loss of their homes. The goal is not to prevent evictions entirely, but to introduce safeguards and timeframes that prevent anyone from being left on the street without an alternative.
When an eviction proceeding affects a vulnerable household, the law strengthens communication between the court and social services. The latter must be informed so they can assess the case and seek a housing solution. While that alternative is being arranged, the law provides for the extension of eviction suspension periods, ensuring that the process does not occur immediately when minors, the elderly, or individuals in particularly difficult circumstances are involved.
The most significant development in this area concerns large property holders. When the party seeking eviction is a large property holder and the proceeding affects vulnerable individuals, it must be proven that a prior conciliation or mediation process has been attempted. Without this step, the lawsuit cannot proceed. This is a way to ensure that all avenues for an agreement are exhausted before an eviction takes place, marking a clear distinction from small property owners, to whom this requirement does not apply.
The duration of rental contracts is another area where the law provides stability for the tenant, in line with reforms initiated in previous years.
The tenant has the right to remain in the property for a guaranteed minimum period, even if the contract is signed for a shorter duration:
All these rights are non-waivable. If a contract includes a clause requiring the tenant to waive them, that clause is void, even if it has been signed.
Three years after its approval, the law has transitioned from a text on paper to a reality with concrete effects, although these vary significantly by region.
The most established change is the update index. The IRAV has become the standard reference for adjusting rents for primary residences signed after the law, effectively replacing the CPI in almost all such contracts. In parallel, property tax (IBI) surcharges on vacant homes have moved from being a theoretical possibility to being implemented in several cities.
Regarding stressed areas, the map remains very limited. Catalonia has been the most active region in designating these areas, with hundreds of municipalities affected, while other regions have chosen not to apply this measure within their territories. This disparity means that, in practice, whether one lives under the strictest regime of the law or almost outside of it depends largely on one's postal code.
Looking ahead to the coming years, all signs point to the IRAV remaining the central reference for rents, with values dependent on inflation trends. The debate over whether to expand stressed areas will remain closely tied to the political leanings of each autonomous community, making it likely that the map will continue to be heterogeneous. Furthermore, the pressure to mobilize vacant housing, along with the push for protected and affordable housing, will continue to drive the agenda. As with any developing regulation, it is advisable to periodically review its status, as details may change from one year to the next.
The same law is experienced very differently depending on your role in the market.
If you own one or a few properties, the law limits rent increases via the IRAV, shifts agency costs to you, and, if your property is in a stressed area, restricts the rent you can set. In return, you gain access to significant tax deductions if you rent at capped prices. The key is to run the numbers: in many cases, the incentives outweigh the restrictions.
You are, to a large extent, the beneficiary of these protections: more controlled rent increases, no agency fees, greater stability in contract duration, and additional guarantees if you are in a vulnerable situation. The downside is that, in some areas, the rental supply has decreased, which can make finding a home more difficult despite the price caps.
For investors, the law requires a recalculation of profitability: less room to raise rents, the potential classification as a large property holder, and new costs and obligations. For agencies, a historically significant source of income—the commission charged to the tenant—has disappeared, pushing the sector to rethink its business model toward property management services for owners.
Law 12/2023 of May 24 was published in the Official State Gazette (BOE) on May 25, 2023, and came into effect the following day, May 26, 2023. This date marks the boundary between contracts subject to the old rules and those falling under the new framework.
The declaration is the responsibility of the competent autonomous community, which must justify that the territory meets at least one of two legal criteria: that the cost of rent or mortgage exceeds 30% of the average household income, or that prices have risen more than three percentage points above the regional CPI over the last five years. The declaration is made for three years and is renewable.
Generally, more than ten residential properties or a built area of more than 1,500 square meters for residential use. In stressed areas, when justified by the autonomous community, this threshold may be lowered to five or more properties located within that same area.
For primary residence contracts signed after the law, the annual increase is limited by the IRAV published monthly by the INE. Throughout 2026, it has hovered around 2.4%–2.5%. Contracts signed before May 2023 continue to be updated using the CPI or the agreed-upon index. If the contract does not contain an update clause, the rent cannot be increased.
It does not prohibit them, but it introduces safeguards. It requires notifying social services of proceedings, allows for the extension of eviction suspension periods when vulnerable households are involved, and, if the plaintiff is a large property holder, requires proof of a prior attempt at conciliation or mediation before proceeding.
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The Housing Law has reshaped the rental market in Spain with a clear objective: to curb prices and protect tenants, especially the most vulnerable. Along the way, it has introduced concepts such as "stressed areas" and "large property holders," replaced the CPI with the IRAV, and provided municipalities with tax tools to mobilize vacant housing.
Its actual impact, however, depends heavily on the region and individual circumstances. What represents greater stability and savings for a tenant implies more limitations for a landlord to offset with incentives, and forces investors to recalculate their figures. In such a regulated and changing environment, understanding the rules of the game and regularly reviewing their evolution is the best tool for making sound decisions, whether you are looking for a home or seeking to make your assets profitable.
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Funded
100%
598.506,15 €
Target
598.506,15 €
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