The new Spanish government are planning to limit rental prices in a bid to stabilise property letting.
British overseas property investors have long supported the Spanish property market and will be keen to find out how the new plans may affect them.
The legal document known as the Rental Price Index is almost complete and Spanish government members hope it will limit rental prices in areas with high demand and rising costs. The index compares recent leases registered in the IRPF with the individual characteristics of the property recorded in the cadastre.
Data corresponding to the income of landlords from 2015 to 2018 was also given to development experts for analysis. To finish the process, Ministry technicians in collaboration with the Bank of Spain and the National Institute of Statistics, are cross comparing all the information relating to rented properties.
At first, the Index was created as a reference for autonomous and municipal governments to construct their own official indexes to regulate the ever-growing rental market. However, according to the new program signed by PSOE and Unidas Podemos, the document will now become the official basis for limiting rental prices in especially affected areas.
The new rental price index will be renewed annually and will show the average values of monthly rent in different neighbourhoods and districts countrywide.
While the limits on rent are welcomed by many struggling tenants, regions including the Community of Madrid have already confirmed that they will not put a cap on their rental market. The Town Hall of Madrid announced it would be willing to go to court if the new housing measures were imposed on the city.
Other communities like Catalonia and the city of Barcelona have been trying to control the rise in rental prices for months. However, Spanish government efforts to help were not supported by all the parties in the Spanish Parliament.
It is yet to be confirmed if or how holiday lets will be affected by the new plans.