Access to housing has become one of the major concerns for a good part of the population living in Spain. At this point, the new Housing Law has introduced new features to regulate rental prices. One of these measures is the declaration of stressed areas.
What are stressed zones, and how are they defined?
The stressed areas are those in which, due to their specific circumstances, there is a risk of insufficient supply for the population. With the declaration as such, the goal is to control rental prices to make it more accessible.
In order to declare an area as stressed, the new Housing Law establishes that one of the following requirements must be met:
• That the average cost of the mortgage or rent, added to basic expenses and supplies, exceeds 30% of the average income of households in that area.
• That the purchase or rental price has increased at least three points above the CPI in the autonomous community in the last five years.
The declaration will be valid for three years. However, it may get extended if the circumstances that led to it remain.
Measures to apply in stressed areas
The essential purpose of declaring an area as stressed is to implement measures to reverse the imbalances in rent costs. Measures that go beyond the maximum 3% increase in rental income:
• Extraordinary annual extensions of up to three years at the end of the current rental agreement. Except in extraordinary circumstances, the landlord is obliged to accept them.
• In the case of new contracts, limitation of the rent to that one of the previous contract. The same rent update clause will apply. Besides, the expenses not included in the prior contract won't be in the new one either.
• Exceptionally, the property owner can increase the rent by up to 10% over the last contract if they have done improvement or accessibility works. Also, when signing a 10-year rental agreement.
• The consideration of a large holder is modified, which becomes any owner with five or more properties for rent.
• Tax incentives: bonuses of between 70% and 90% on personal income tax.
Who can declare an area as stressed?
It is the autonomous communities that, according to the law, have the power to declare stressed areas. This decision must always be suitably justified. Specifically, it must have an information procedure and include a justifying report. Additionally, they must deliver a plan of specific measures.
However, most regions have rejected this new situation. Therefore, even if the requirements are met, it is likely that in most of them, stressed zones will not be established for the time being. Catalonia alone has declared 140 municipalities as stressed areas. In this autonomous community, rental limits will come into force in February 2024.
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