Housing Rent Changes in 2024: What Need to Know?

Understanding Housing Rent Changes in 2024: What Landlords and Tenants Need to Know”

2024: A Year of Change

Housing Rent: The dawn of 2024 ushers in a host of alterations in the dynamics between property owners and tenants.

Housing Rent: Soaring Rental Costs

The cost of rental housing remains steep, standing at an average of 11.8 euros per square meter in Spain, a staggering 9.4% increase from the previous year, according to data sourced from Idealista in October.

Housing Rent: Impacts of the Housing Law

Following the approval of the Housing Law last April, several significant changes were introduced. It redefined stressed areas, consequently prohibiting rent hikes according to the Consumer Price Index (CPI). Additionally, it eliminated the requirement for tenants to pay agency fees.

Housing Rent: Rent Changes for 2024

The maximum permissible increase in rental rates in 2023 was capped at 2%. However, for 2024, this cap will be raised to 3%. Starting in 2025, a new reference index, distinct from the CPI, will be employed to adjust rental prices.

Housing Rent: Other Changes in 2024

2024 will also bring other pivotal changes. For instance, in the case of new leases, landlords will bear the cost of agency fees if they utilize such services. Landlords will have the liberty to set their rental property prices at their discretion, except in areas declared as stressed by their respective autonomous community or city council.

In cases of stressed areas, rental prices will be determined based on the last contract’s price, adjusted by a 3% increment. If a property remains unrented for five years or longer, the price will be determined based on a containment index provided by the National Institute of Statistics (INE) or, if applicable, an index validated by the INE within the relevant autonomous community.

landlords will not be allowed to pass on housing expenses, such as IBI or garbage fees, to their tenants. The Housing Law also includes tax incentives for property owners who choose to rehabilitate homes, rent to individuals under 35 years old, or reduce rent by 5% compared to the previous contract.

Housing Rent: Implications for Tenants

For new contracts signed in 2024, tenants will no longer be required to pay agency fees. This could potentially lead to the discovery of more affordable housing options in stressed areas. Rental contracts will be adjusted in line with the CPI or the relevant reference indicator, with clauses contrary to the law rendered void to prevent landlord exploitation.

Housing Rent: Renewing Contracts

While 2024 is expected to conclude several rental contracts, more than 150,000 rental agreements may be extended for up to three additional years. This extension arises from a modification to the Urban Leasing Law (LAU) enacted on March 5.

This modification altered the notice period for termination. Instead of a 30-day notice period for either party, the landlord now must provide a four-month notice if they choose not to renew, and tenants must provide a two-month notice if they wish to discontinue their lease.

This implies that if landlords do not notify tenants four months in advance of their decision not to renew by November 6 of the current year, over 150,000 contracts could be extended for three more years, provided their contracts expire on or before March 6, 2024.

Landlords’ Responsibility

Property owners will need to adhere to an updated rental income cap of 3% at most and are restricted from imposing expenses not included in the contract on their tenants.

The new regulations are expected to shape the rental market in 2024, benefitting both landlords and tenants alike.

Q&A sections:

Q1: How much has the average rental cost increased in Spain in the past year?
A: The average cost of rental housing in Spain has surged by 9.4% in the past year, reaching 11.8 euros per square meter, according to data from Idealista in October.

Q2: What is the maximum rent increase allowed in 2024?
A: In 2024, the maximum permissible increase in rental rates is set at 3%. This is an increase from the 2% cap observed in 2023.

Q3: Are tenants still required to pay agency fees in 2024 for new contracts?
A: No, starting in 2024, tenants will no longer be obligated to pay agency fees for new rental contracts, making it potentially more affordable for them to find housing in stressed areas.

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