The Housing Law enters into force this Friday, May 26, except for those related to tax incentives applicable in personal income tax to rentals of real estate for housing, which will come into effect on January 1, 2024. Specifically, the Law 12/2023, of May 24, for the right to housing, published yesterday in the Official State Gazette (BOE), introduces different modifications on the conditions of the leases in Law 29/1994, of November 24, of Urban Leases and one of them concerns real estate expenses.
The rule expressly prohibits the fees of the real estate agency for intermediating in the rental of a home from falling on the tenant. Until now, the Urban Leasing Law (LAU) did not define who should assume the agency commission and most owners charged tenants with this expense. However, the Housing Law ends this freedom of choice and determines that it is the owner who must bear this expense. Specifically, the text says the following: “The real estate management expenses and the formalization of the contract will be borne by the landlord.”
Tenants are thus freed from one of the initial expenses that they must face when renting an apartment. Until now, the disbursement when signing a contract could amount to four or five monthly payments: the deposit, the first month’s rent, the real estate commission (one month or one tenth of the annual cost of the apartment plus 21% VAT) and one or two months of additional warranty, although it does not always apply.
Therefore, in the best of cases, a tenant who rented a home managed by an agency had to pay three monthly payments (deposit, current month and agency commission), provided that no additional guarantee was applied. That is, for a flat of 900 euros, the initial payment amounted to 2,700 euros. However, all rental contracts signed from this Friday will no longer be able to charge the agency commission. Thus, for the same example, now the new tenant will only have to pay 1,800 euros initially. “This ends the abusive real estate expenses and fees that prevent many people, especially young people, from accessing a home due to the initial outlay that it entails,” stated the document presented by ERC and Bildu in mid-April after presenting agreement with the government.
The norm also prohibits increasing rental income by way of new expenses, which would force tenants “to pay community expenses, garbage fees or any other expense not attributable to the tenant that were not previously agreed”, which will avoid ” a possible way for legal fraud” and “the clauses that allowed the non-application of the measures contained in the law to exist an agreement between the parties” will be eliminated.
Likewise, another of the great measures of the law is the limitation of the annual update of the rent. In 2023, current contracts cannot increase by more than 2%, in 2024 they will not be able to do so by more than 3% and from 2025 a new index will be used that is yet to be defined. However, the law also allows an increase in the rental price of up to 10% when the home has been rehabilitated in the last two years to improve energy efficiency or when the term indicated in the contract is 10 years or when the lessee to extend the contract on the same terms and conditions for 10 or more years. On the other hand, if the home has never been for rent or has not been for rent during the last five years, the rental price may not exceed the maximum limit of the applicable price according to the reference price index system.
