Law 12/2023 in Spanish Ley 12/2023, of May 24, on the right to housing, which came into force on May 26, 2023, has transformed the rental landscape in Spain. This regulation introduces significant changes that impact both landlords and tenants, with the goal of guaranteeing access to decent and affordable housing. Below are the main updates in force as of July 2025.
Renting in Spain: Stressed Areas and Price Limits
One of the law’s most notable measures is the regulation of rental prices in “stressed residential market areas.” These areas are declared by the autonomous communities and must meet certain requirements, such as the housing cost exceeding 30% of the average household income, or the purchase or rental price having grown more than 3 percentage points above the regional CPI in the last five years.
In these areas, rental contracts are subject to new limitations:
- Large landlords (more than 5 properties in a stressed area): The price of a new contract cannot exceed the rental price reference index published by the Ministry of Transport, Mobility and Urban Agenda.
- Small landlords: They cannot raise the rental price beyond the rent of the previous contract, applying the limits of the CPI or the new reference index if it is lower.
For example, if a small landlord has an apartment for rent in the center of Valencia, which has been declared a stressed area, and their tenant’s contract ends in August 2025, the new rental price cannot exceed the rent of the previous contract (with the permitted annual updates).
Limits on Annual Rent Updates
Regardless of whether the property is in a stressed area or not, the law establishes limits on annual rent updates:
- Until December 31, 2024: Rental prices could only be updated by a maximum of 2%.
- During the year 2025: The maximum limit for updating rental prices is 3%.
- Starting in 2026: A new reference index will be created for the annual rent update, which will be decoupled from the CPI to avoid excessive fluctuations and provide greater stability for both landlords and tenants.
This means that if your contract is updated in October 2025, the maximum increase that can be applied is 3%, not what the CPI dictates.
Key Changes for Tenants and Landlords
In addition to price regulation, the law introduces other important changes:
- Real Estate Fees: Real estate and contract formalization fees will now be the responsibility of the landlord, not the tenant. This is one of the most celebrated changes for renters.
- Extraordinary Extension in Stressed Areas: Tenants whose contracts end in stressed areas can request an extraordinary extension of up to three years, under the same conditions as the expiring contract, unless the landlord needs the property for personal use or sells the property.
- Prohibition of Increases for Extraordinary Expenses: No new fees or expenses not included in the initial contract can be established to increase the tenant’s rent.
- Greater Protection Against Evictions: Mechanisms for protecting vulnerable individuals in case of eviction are strengthened, requiring additional procedures and waiting periods before the execution of the eviction.
Fiscal Incentives for Landlords
The law includes tax incentives for landlords who lower rental prices in stressed areas or who sign new contracts for young people. For example, small landlords who lower the rent by at least 5% compared to the previous contract can benefit from tax deductions of up to 90% in their IRPF (Personal Income Tax) on net rental income.
Frequently Asked Questions (FAQs)
Does the new Housing Law affect all rental contracts? The law applies to habitual residence rental contracts that are signed or extended after its entry into force (May 26, 2023). Contracts prior to this date are governed by the previous regulations, although some of the new measures (such as the limits on annual rent updates) do apply to them.
How do I know if my property is in a “stressed residential market area”? The declaration of stressed areas is the responsibility of the autonomous communities. You must consult the official publications of your Autonomous Community to verify if your municipality or a part of it has been declared as such. As of July 2025, some communities have declared or are in the process of declaring these areas, but not all have done so.
If I am a landlord, can I continue to update the rent with the CPI? No, from 2024 until the new reference index is created in 2026, the rent update is limited by fixed percentages: a maximum of 2% in 2024 and a maximum of 3% in 2025. The CPI is no longer the direct reference index for annual rent updates.
The new housing law in Spain is an essential guide for anyone in the rental market. It seeks to balance the interests of both parties and create a more equitable environment. By understanding these key changes, both landlords and tenants can navigate the new regulations with confidence and ensure compliance. Staying informed is the best way to secure your rights and obligations in Spain’s evolving rental landscape.
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