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Property in Spain: What changes about renting and buying in 2023?

The Local Spain
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Property in Spain: What changes about renting and buying in 2023?
A beautiful old street in Tarragona. There are lots of changes in store for people who rent or buy property in Spain in 2023. Photo: MR/Unsplash

Limits to rent increases, a new housing law, possible restrictions for foreign buyers, property price forecasts and aid for young people and low-income families to help with rents and mortgages - 2023 will see many changes to Spain's property market.

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No big rent increases

The Spanish government has agreed to continue limiting the amount landlords can increase the rent of tenants by a maximum of two percent throughout 2023, shielding renters from rising inflation. Spain’s ruling Socialists first introduced the rent increase cap in March 2022, which was meant to be a temporary measure to protect the 30 percent of people in Spain who rent, from spiralling inflation. 

READ ALSO: Spain to keep limiting rent increases throughout 2023


Outlook for Americans

The strength of the US dollar this year has meant that many more Americans have been buying up properties in Spain. US nationals have been able to buy houses in Spain that work out to be 18 percent cheaper for them in 2022 than the previous year, according to property giant Idealista.

Despite the current rate of inflation and economic uncertainty in the world, according to analysts at American bank Wells Fargo, the US dollar will remain strong early next year, but it will begin to weaken in mid-2023, so it means that there’s still time for Americans to buy a home in Spain in early 2023 if they want.

READ ALSO: Should Americans rush to buy a Spanish home while the dollar is strong?

Possible limits for foreign buyers

Housing shortages for residents and overcrowding are just two of the property issues on some of Spain's islands, so much so that the Balearic government has agreed to debate whether limiting the number of properties that can be bought by non-resident foreigners would benefit the archipelago.

There have also been calls in Spain’s Canary Islands to limit the purchase of properties by non-residents and foreigners. Whether or not the authorities can legally do this is another question, but it’s likely that the possible introduction of higher taxes and rules against Airbnb rentals will help keep the numbers down.   

READ ALSO: Will Spain’s Canary Islands limit sale of properties to foreigners?


Harder to find a place to rent

Demand for apartments to rent is growing, especially in Spain’s big cities, but it is also becoming increasingly difficult to find one due to strict rules and prerequisites. The apartment is not open to people who work remotely, you need a contract of at least €2,100 per month, you need to be over 35 years old, you need an annual income of over €25,000 and you need to prove you’ve been working non-stop over the past two years. These are just some of the unrealistic demands agencies and landlords and have been asking tenants in the last few months of 2022 across Spain. 

The amount of shared accommodation available in Spain has also halved over the past year, making it increasingly difficult for young people and those with fewer financial means to find a room to rent. There were 45 percent fewer shared properties on the market in 2022 than in 2021. 

READ ALSO: Stricter requirements and screenings: Why it’s getting harder to rent in Spain


What will happen to property prices in 2023?

The European Central Bank (ECB) has warned that house prices are due to drop by as much as nine percent across Europe over the next two years. With inflation affecting economies across the continent, the ECB took the radical monetary policy move of raising interest rates and the Euribor, the rate tied to mortgages in Spain, has risen steeply since then. This will have an effect on housing demand and prices in Spain in 2023, but it won't be anywhere near as severe as other European countries.

Experts predict that 2023 will see the end of strong rises the Spanish property market has enjoyed in the last couple of years, during which both sales and prices rose at rates not seen since before the 2007 housing market boom. Though the overall number of property transactions (sales and purchases) looks set to fall by around 15 percent in 2023, the fall in house prices is forecast to be only 0.9 percent, according to Atlas Real Estate.

READ ALSO:  What will happen with property prices in Spain in 2023?


A new housing law

Expect Spain's government to roll out a new housing law in 2023 which is meant to address everything from the lack of social housing to rent or buy in the country, new taxes for empty homes, greater regulation to solve the issues of squatting and evictions, tax breaks for landlords who don't increase the rent of tenants and plenty more.

Unfortunately, the law has faced many stumbling blocks over the last two years, but Sánchez's government will need to approve the law in 2023 in order to receive billions more from the EU's recovery fund.

READ MORE: Six things to know about Spain’s new housing law

Rental allowance fund for young people extended 

The Spanish government recently announced that its Bono de Alquiler Joven - a youth rental bonus to help young people with the rising cost of living and rental prices, will be extended into 2023. Those aged 18 to 35 are able to benefit from the €250 handout, provided that they earn under €24,300 a year and their rent does not exceed €600 a month or €300 in the case of a room. 

READ ALDO: What is Spain's rental allowance fund and how can I claim it?


Aid for homeowners to help pay variable mortgages 

The Spanish government and the country's banks recently agreed upon a set of measures to help protect more than one million low and mid-income families from rising variable mortgage rates. The deal will help alleviate the effects that high-interest rates are already having on variable mortgage bills.

It will be available to those families who earn less than €25,200 per year and includes measures such as being allowed to pay only the interest on a mortgage loan for five years and having the period in which to pay back the loan extended to 40 years.

The agreement is still going through its final approval stages but is thought that it will be brought into force in 2023. 

READ ALSO: How Spain will help homeowners with rising variable mortgage rates


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