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The Housing Law in Spain: a brake on development activity?


The law came into effect on May 26, 2023 and has generated a lot of controversy in the real estate sector. The law contains many articles that are creating legal uncertainty and reducing the supply of rental housing. It is also affecting the main players in the real estate sector, such as developers, builders, investors, landlords, real estate agencies, tenants and lawyers.

For example, promoters and builders are affected by the 40% land reserves imposed by law for protected housing and 20% for interior renovation actions on urbanized land, along with the dedication of 50% of these reservations for protected rentals. These important reserves of land for protected housing, without any compensation in exchange for real estate developers, will cause a significant decrease in development activity or an increase in prices to compensate for the limitations imposed. In addition, the law also affects eviction procedures, by greatly complicating the requirements established to initiate eviction procedures in cases of vulnerable tenants, with very confusing and ambiguous procedural rules, and in some cases difficult to apply.

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