The Ley de Vivienda Explained

Spain's housing law (Ley de Vivienda), passed in 2023 and updated through 2025, introduced significant changes to the rental market. Whether you're a landlord, tenant, or considering buying to let, here's what you need to understand.

Rent Caps in Stressed Areas

In designated "stressed market areas" — which include parts of Madrid, Barcelona, Valencia, and several coastal cities — annual rent increases are capped at the CPI (inflation rate) rather than the previous CPI ± 2% formula.

The cap applies to existing and new contracts in these zones. To check if a property is in a stressed area, consult the regional housing authority.

Longer Contract Terms

Residential rental contracts now default to a minimum of 5 years (7 years if the landlord is a company). The previous minimum was 3 years.

Tourist Lets (Viviendas de Uso Turístico)

This is where the biggest changes have happened. Many regions now require:

• A specific licence from the local town hall
• Compliance with community rules (many buildings have voted to ban tourist lets)
• Registration in the regional tourism register

In cities like Barcelona and Valencia, new tourist let licences have been effectively frozen. If you're buying a property intending to do holiday rentals, check the local regulations before you buy.

Tenant Protections

The law strengthened tenant protections:

• Deposits are capped at two months' rent (three for long-term corporate lets)
• Landlords must give 30 days' notice for non-renewal
• Tenants can leave with 30 days' notice after 6 months

What This Means for Investors

Buy-to-let is still viable in Spain, but the landscape has changed:

• Long-term rentals offer more stability but lower yields (typically 4-6% gross)
• Holiday lets can yield 8-12% but face increasing regulation
• New builds in some regions are exempt from certain rent cap rules

Summary

Spain's rental market is still attractive, but it requires more due diligence than before. Always check local regulations, get proper legal advice, and make sure your investment strategy aligns with the current legal framework.