New housing law in Spain: what does it regulate and how does it work?

What is Spain’s new housing law?

The Right to Housing Act develops the right to decent housing enshrined in the Constitution. It aims to help those groups with the greatest difficulties in accessing this asset with measures such as rent caps and the promotion of public housing.

Who is affected by the Spanish housing law?

Tenants: They benefit from price stabilisation, a ban on rent increases linked to the CPI (the IGC index is used instead), the assumption of management costs by the landlord, and greater protection against eviction.
Small landlords: Limitations on rent increases and, in areas under pressure, prices may be restricted to reference indices, although tax incentives remain if they rent to young people.
Large landlords (more than 10 residential properties): They have greater restrictions on price setting, rent increases (limited to 3% in 2024/2025) and eviction procedures, requiring prior mediation.
Home sellers: The law requires more detailed information and transparency about the condition of the property before sale.

Homebuyers from the UK

The new Housing Law in Spain and the additional proposals for 2025 impact British citizens (non-EU residents) by tightening access to property ownership with potentially high taxes and restrictions, seeking to curb speculation. The main measures include:

High tax burdens: A tax increase of up to 100% of the property value for non-resident foreigners is being proposed.
Purchase restrictions: Specific limitations for British buyers who do not reside in Spain, especially in areas of high demand.
TIE requirement: British citizens who move to Spain must obtain a Foreign Identity Card (TIE).
90-day rule: The restriction on staying for more than 90 days in a 180-day period without a visa remains in place.

These measures, some of which are still awaiting final approval in Parliament, seek to combat the housing crisis by limiting speculative purchases by non-EU citizens, particularly affecting British buyers.

Property investors and buy-to-let owners

The new Housing Law in Spain (with updates for 2025) impacts investors by limiting rental yields through price caps (IRAV index), imposing higher management costs on landlords and tightening conditions for large holders, especially in areas under pressure. In addition, empty properties are penalised with surcharges on property tax (IBI) and the ‘Golden Visa’ for foreign buyers has been eliminated.

The main effects for investors are detailed below:

Rental Price Limitation: A maximum cap is established for the annual update of contracts. By 2025, this limit will be decoupled from the CPI and set at 2.2%, based on the new Residential Rental Reference Index (IRAV).
Increased Costs and Charges: Landlords must bear the costs of formalising and managing contracts, which were previously passed on to the tenant.
Penalty for Empty Housing: Property tax surcharges of up to 150% are applied to properties that have been vacant for more than two years, putting pressure on them to come onto the market.
Redefinition of Large Holder: The regulations tighten the requirements for those who own more than five properties in high-demand areas (previously it was more lenient), restricting their rental options.
Tax Incentives: Income tax reductions are offered if properties are rented below market prices or renovated, seeking to stabilise prices in areas with high demand.
Elimination of the Golden Visa: The abolition of the residence permit for the purchase of high-value properties (scheduled for April 2025) reduces the appeal for non-EU investors.
Legal Certainty and Risk: The uncertainty arising from the regulation has led some investors to seek alternatives to renting, such as buying, or to diversify their investments to reduce risk.

In summary, the law reduces the direct profitability of renting and increases control over landlords, forcing a reassessment of property investment strategies in Spain.

Landlords and large property owners

The new Housing Law in Spain (Law 12/2023) affects large property owners (individuals or legal entities with more than 10 residential properties or more than 1,500 , although the threshold may be lowered to 5 in areas under pressure) by imposing strict limits on rent, greater tax pressure on empty homes and restrictions on evictions. Its main impacts include limiting prices to the reference index, property tax surcharges of up to 150% for empty flats and mandatory social mediation in evictions.

Main Impacts for Large Holders:

Rent Limitation (High-Pressure Areas): In new areas declared ‘high-pressure’, large holders cannot set prices above the Rental Price Reference Index (IRAV).
Rent Updates: During 2024, increases in current rents were limited to a maximum of 3%, and from 2025 onwards they will be adjusted in line with the new IRAV index.
Property Expenses: Estate agency fees must always be paid by the landlord (large property owner), not the tenant.
Vacant Properties: Local councils may apply surcharges of up to 150% on property tax (IBI) for properties that have been vacant for more than three years.
Evictions and Vulnerability: Procedures have been tightened, requiring mandatory conciliation or mediation procedures before evicting vulnerable tenants, which prolongs the process.
Transparency: They are required to report information about their properties and contracts in official registers.

The regulation seeks to increase supply and limit rents, forcing large landlords to comply with stricter control of the property market.

Key measures of the housing law in Spain

The Housing Law in Spain (Law 12/2023) introduces measures to curb speculation and limit rental prices in high-demand areas, highlighting a 3% cap on rent increases for 2024, tax incentives for freezing rents, and greater protection against evictions. It also regulates seasonal rentals and rooms and penalises empty homes.

The most important measures include:

Rental price limits: A cap of 3% is established on contract renewals for 2024, replacing the CPI. In areas under pressure, increases will be controlled by a new reference index.
Tax incentives: A rebate of up to 100% on personal income tax is envisaged for landlords who renew contracts without raising the price (proposal for 2026) and reductions of between 50% and 90% for renting at affordable prices or in areas under pressure.
Regulation of High-Pressure Areas: This allows autonomous communities and local councils to declare areas where rents are excessive, applying stricter price controls.
Large Holders: Large holders are defined as individuals or legal entities with five or more properties in high-pressure areas, who must comply with a more restrictive price index.
Seasonal Rentals and Rooms: The aim is to prevent fraud by regulating room and seasonal rentals, bringing their guarantees into line with those of regular rentals in high-demand areas.
Protection against Evictions: Prohibition of evictions without alternative housing for vulnerable persons and obligation of prior mediation.
Empty Housing: Possibility of applying a surcharge on property tax to owners who keep properties unoccupied for long periods of time.
Management Expenses: Real estate expenses and fees will be paid by the landlord, not the tenant.

Rent price controls

The Housing Law in Spain (in force since 2023 and updated for 2025-2026) focuses rent control on limiting annual increases to 3% (replacing the CPI) and capping prices in ‘stressed areas’.

The new rent reference index explained

From 2025 onwards, the Rent Update Index (IRAV), which is calculated by the INE, will become the mandatory benchmark for reviewing rents in Spain. It will limit increases to the lowest value between the CPI, the underlying CPI, and an adjusted average rate. This will help to avoid disproportionate increases. The aim is to provide stability in the face of inflation.

Key features of the new reference index (IRAV):

Functioning: It replaces the direct link to the CPI and seeks to limit increases by decoupling rent from general inflation.
Calculation: It is based on the minimum value of the annual CPI, the underlying CPI and an adjusted average rate. This acts as a cap to prevent prices from rising too quickly.
Application: It will be mandatory for the annual update of primary residence contracts from 2025 onwards.
Data: The INE publishes the value monthly. In mid-January 2026, the update index stood at around 2.32%.
Stressed areas: Regardless of the IRAV, the Ministry of Housing's reference price index may limit new contracts in areas declared to be stressed, especially for large landlords.

Limitations:

The new index does not apply to contracts prior to 2023 if the update was not included, nor to rentals of premises or rooms. It can be consulted on the INE website.

Limits on rent increases and contract renewals

In Spain, rent control limits annual increases to 3% in 2024 and, from 2025 onwards, to the new Competitiveness Guarantee Index (IGC) or IRAV. Specific caps apply to areas under pressure. When renewing or signing new contracts, landlords may limit rent to the reference index to prevent excessive increases.

Who is considered a “large property owner” in Spain?

According to Housing Law 12/2023, a 'large holder' or large property owner in Spain is any natural or legal person (company, bank or fund) who owns more than 10 residential properties (excluding garages and storage rooms) or a built area of more than 1,500 m². In areas under pressure, this threshold may be reduced to five or more properties.

Latest updates to Spain’s housing law (2024–2025)

Key changes for 2024–25

Rental limits: In 2024, rent increases were capped at 3%. From 2025 onwards, the Consumer Price Index (CPI) will no longer be used as a reference, and the Reference Index for the Update of Residential Leases (IRAV) will be applied instead. The IRAF is designed to be lower than inflation.
Stressed Areas: The criteria for declaring areas with a stressed residential market have been tightened, which will limit rental prices in new contracts for both large and small landlords based on the state index.
Protection against evictions (2025): Royal Decree-Law 9/2024 extends the suspension of evictions for vulnerable households with no alternative housing until 31 December 2025.
Income Tax Incentives: Tax breaks are maintained for landlords who rent out their primary residence. These breaks rise to 90% if new contracts are formalised in areas under pressure with rent reductions, or to 70% if the property is rented to young people (aged 18–35) in those areas.
Regulation of temporary contracts: The obligation to justify the temporary nature of the contract is reinforced to prevent fraud, with the contract being considered as a primary residence if this is not done.
Large property owners: Regulations are tightened for those with more than 10 urban properties (or five in areas under pressure), forcing them to comply with price indices.

These measures, based on the 2023 regulations, will continue to be rigorously implemented during 2024 and 2025, with a focus on protecting tenants and containing prices.

How the housing law impacts property investment in Spain?

The 2023 Housing Law in Spain affects real estate investment by capping rental yields, particularly for landlords with more than five or ten properties, depending on the area. It sets caps on rent increases (2% in 2024 and 3% in 2025, or the IRAV indicator), transfers management costs to the owner, and imposes IBI surcharges on empty homes. While this creates uncertainty and reduces the supply of rental properties, it does boost sales and maintain upward pressure on purchase prices.

Is Spain still a safe property market for UK investors?

Yes, Spain remains an attractive and secure property market for British investors in 2026, consolidating its position as the leading source of foreign homebuyers, particularly in the coastal regions of the Costa del Sol. Despite Brexit, property rights remain unchanged, offering high returns, stable prices, and an enviable lifestyle.

British leadership: They remain the main foreign buyers of homes in Spain, overcoming past uncertainties and demonstrating great resilience.
Legal certainty and value: Investment is considered safe, with high rental demand and stable or moderately rising prices, which guarantee long-term value.
The impact of Brexit: It has not restricted purchasing power. British investors enjoy the same rights as other non-EU investors, albeit with practical changes in taxation.
Notable areas: The Costa del Sol, the Costa Blanca and Madrid are the strongest focal points for British investment.
Market resilience: Despite the removal of the 'Golden Visa' in certain cases, the luxury property market remains a safe haven, with a boom in foreign property sales expected in 2025–26.

In summary, British investors continue to invest in Spain due to its mature market, stable prices and high-return opportunities, maintaining strong interest post-Brexit.

How can Brassa Homes can help you buy safely in Spain?

At Brassa Homes® - Estate Agents in Moraira since 1979, we have solicitors who specialise in all matters relating to the purchase of villas for sale in Moraira and villas for sale on the Costa Blanca.

We can also help you apply for your NIE in Spain.