New Property Law and Long-Term Rentals in Malaga

Published on 31 May 2023

A new Property Law (Ley de Vivienda) was approved by the Spanish Government on April 27th, 2023, and after having passed all required instances, it came into force on May 26th 2023. The Law introduces several important changes about Spanish long-term rental market. We have summarised some of them – let’s see how it may affect Malaga long-term rentals:

-    Introduction of “tension areas” (zonas tensionadas) where long-term rental prices plus basic utilities contribute to more than 30% of the average income or where the property prices have suffered significant increase. Declaration of those areas will be within the responsibilities of each Autonomous Community. Those could be as small as a district in a city and as big as a whole autonomous community. Malaga and big parts of Costa del Sol meet most of the above criteria and therefore are expected to be named as such.

-    New definition of “large holders” (grandes tenedores) in case of property owners in the above mentioned “tension areas”. A large holder will be considered any property owner, possessing 5 or more properties. Small owners are those possessing less than 5 properties. In “non-tension areas” a large holder is still the one possessing 10 and more properties. 

-    Limit of annual rental price increase, which until now has always been regulated by the official inflation index IPC. This will no longer be the case. The law establishes new price increase limits as following: for 2023 max 2%; for 2024 max 3%. As of year 2025, a new reference index will be introduced. It will be more stable and lower than IPC 

-    Rental price regulation and maximum price caps for new rental contracts in the “tension areas”. For small property owners the price of a new rental contract cannot exceed currently valid overall price increase limit. For large holders the price will be regulated by the price regulation index which is still to be defined. 

-    Payment of estate agent’s fees by the property owner, not by the tenant. We’ve noticed that some estate agents have already applied this change and are now charging the owners. Others however have just renamed it and now call it a “professional service” or a “property capture service” and still require a tenant to pay it.

-    Clear payment responsibilities between the owner and the tenant. While until now the parties could agree differently, current law doesn’t leave any room for interpretation and assigns payment of all extras (such as community fees, rubbish collection, property tax etc) to the property owner.  

-    Prohibition of “agreement between parties” if it contradicts the law in any of its aspects – something which until now has always been possible in case the parties wish to regulate their contractual relationship differently than the letter of the law. Well, this is no longer possible when it comes to regulation of long-term rentals.

-    New measures against evictions with the purpose to protect most vulnerable. Measures include necessity of announcing the exact date and hour of the eviction; further prolongation of the eviction process; extra procedures requiring property owner to prove the situation of their tenants; application of mediation mechanisms and involvement of local authorities in offering alternative solutions

-    Various tax benefits for the property owners over their long-term rental income 

The above are not, but some of the most important measures of the new law. We find some changes are very positive, such as for example clearly regulated payment responsibilities between the parties. Other changes, especially those implying further limitations on the owners and lack of protection mechanisms in case of “okupas” (squatters and non-paying tenants) may turn many owners away from the long-term rental market in Malaga.

This will reduce even further an already limited inventory of long-term rental properties in Malaga and will make the tenants qualification process even more stringent and demanding. Especially negatively it may affect expats recently arrived to Malaga and those with no Spanish work contract. The time will show.

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