The housing rights law 12/2023 of 24th May, in force since 26th May 2023,  harms the interests of all property owners, especially the so called “Big holders”, limiting the faculties deriving from their property rights.

Said Law is the basis of numerous limitations imposed under the following arguments:

a) Article 47 of the Spanish Constitution recognises the right to decent and adequate housing and imposes on the public powers the duty to promote the necessary conditions which guarantee equality in the exercise of the rights and the fulfilment of constitutional duties and to establish the corresponding rules for the effectiveness of said right.

b) Property rights and the  liberty to conduct business when operating in the housing sector must fulfil a social function and must serve the general interest, within the framework of equality for all Spaniards in any territory of the State.

The holders of real estate property who are worst affected are the Big holders, defined as natural persons or legal entities who are holders of more than 10 urban properties for residential use or a constructed surface of more than 1.500 square metres for residential use, excluding garages and storage rooms.

However, in stressed residential market environments, this definition may be extended to those holders of five or more urban properties for residential use located in said area, when the tension is established by each autonomous community and justified by an explanatory report.

The areas where the residential market is stressed are territorial areas wherein there lies a particular risk of an insufficient supply of housing in good condition making it affordably accessible in the market, in accordance with the different territorial requirements.

Thus, in purchase and sale operations and/or the lease of housing, above all in areas where the residential market is stressed, the Big holders are particularly at a disadvantage since they must assume (among others) the following obligations:

  • Collaboration and supply of information to public administration on the properties they own, referring to a year prior to the date of the request, relating to certain aspects regarding identification, regime of use and justification of the duties as owners.
  • Minimum information to be provided to buyers and lessees in the event of sale or lease of housing (among others, indication that the property is located in a stressed market area, the amount of rent that has been in effect during the last five years, the value according to the applicable reference index of housing rental prices).
  • For owners who are not Big holders, the agreed rent may not exceed the amount of rent that has been in effect during the last five years, after applying the legal rent adjustment, which may be increased up to a maximum of 10% only in certain cases (renovation or improvement works, leases with a term of ten years or more with the possibility of extension for ten years or more).
  • For Big holders, the agreed rent may not exceed the maximum limit of the price applicable according to the reference price index system, taking into account the conditions and characteristics of the leased property and the building in which it is located.
  • Bearing the expenses of real estate management and the formalisation of
  • Maximum rent adjustment of 2% for 2023; 3% for 2024 and a new system to be established by the National Institute of Statistics as of 1st January 2025.
  • Accept an extraordinary extension for annual periods up to a maximum of three years, at the lessee’s request, after the expiration of the mandatory or tacit extension established by law.
  • The payment of the rent must be made by electronic means. Only exceptionally when one of the parties does not have a bank account or access to electronic means and at the request of the latter, payment may be made in cash at the rented property.
  • To attend a prior conciliation procedure if the property constitutes the occupant’s habitual residence and the occupant is in a situation of financial vulnerability.
  • To specify and prove, in an eviction lawsuit for non-payment, in compliance with the established legal requirements, whether or not the defendant is in a situation of financial vulnerability.
  • To bear the delay in the action of the public administrations before executing an eviction.

In conclusion, in view of the multiple obligations that this law imposes on property owners, it will be essential for all contracts entering into force as from 26th May 2023 to provide for the most appropriate clauses in order to mitigate the limiting effects on the right of property ownership that have been introduced by said law.

 

 

Mireia Bosch

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

23rd  of June 2023