Buy to Rent: new housing law (I)

Buy-to-let has been an attractive strategy for many investors. However, the new Urban Leasing Law has generated doubts and concerns among buyers. If you are considering investing in a buy-to-let property and are concerned about how this legislation will affect your investment, this analysis will guide you through the challenges and opportunities it presents.

THE MAIN CHANGES IN THE NEW LAW

1. Limits and extensions

One of the most notable aspects is the establishment of limits on rental rents, which are subject to stressed market zones defined by each autonomous community. In addition, new mandatory extensions have been established for lease contracts, which could extend the tenants' stay beyond what was initially agreed.

2. Unoccupied houses and tax benefits

The new legislation introduces surcharges for unoccupied homes and modifies the IRPF tax incentives for landlords, although the latter change will not come into force until January 1, 2024.

3. Evictions and transparency

Eviction proceedings may experience delays due to the new provisions. In addition, the need to provide detailed information in the purchase and rental processes has intensified.

CONSEQUENCES FOR THE LANDLORD

Rent updates

One of the most sensitive points is the limit on rent updates in existing leases. By 2024, the limit will be 3%, which may generate complications for landlords. In a context of high inflation, where a 4.1% increase was recorded in April 2023 and an average of 8.4% in 2022, landlords may face an economic challenge by not being able to adjust rents to the pace of inflation.

More room rentals?

Given the impositions, some landlords are considering room rentals as a more flexible and cost-effective option.

Tax implications

If the decision is made to lower the rental rent, will there be a consequent reduction in taxes payable? This is a point that many landlords are wondering about and will depend on how the tax authorities interpret and apply the new rules.

FREQUENTLY ASKED QUESTIONS (FAQs)

1. How does the new law affect existing leases?

Existing leases may be affected by the rent escalation limits. It is crucial to review the terms of each lease and consider the provisions of the new law.

2. What happens to vacant properties?

The new law provides for surcharges for those homes that remain unoccupied, as a measure to encourage rental supply.

3. If the autonomous community in which my property is located decides not to apply some measure of the new law, what happens?

There may be differences in the application of the law depending on the autonomous community. It is essential to be informed about regional decisions and how they affect landlords and tenants.

CONCLUSION

In a constantly evolving legal landscape, especially in real estate, it is essential to have a reliable ally. Valido Home has a specialized real estate law team that not only advises those looking to invest safely in the market, but also provides solutions to landlords facing challenges with current leases. With Valido Home, your investment and your interests are protected every step of the way, request a no-obligation call now!