Suppose you invest in Spain and consider renting as a way to generate returns. In that case, it is essential to understand Law 12/2023, of May 24, on the Right to Housing, which introduces the concept of “large property holder” and primarily affects entities and individuals who own a significant and closed number of properties. This measure aims to protect tenants and balance the market, particularly in high-pressure areas, to provide stability and predictability to the market.
The text focuses on regulating the rental market and facilitating access to housing, especially for young people and those in vulnerable situations. Among the regulatory frameworks established by the recent Spanish Housing Law in the real estate market, one of the most important is the regulation of large property owners.
For an international investor interested in high-end new developments such as those on the Costa del Sol or the Balearic Islands, this definition only becomes relevant when you scale up your portfolio. If you are buying a property or a small package, you don’t fall into this category. But if you are exploring ‘build-to-rent’ strategies or portfolio purchases, a specific regulatory and tax framework comes into play.
What exactly is a large property holder?
Under Spanish law, a large holder is defined as a natural or legal entity that:
- Owns more than 10 urban properties intended for residential use.
- Possesses more than 1,500 m² of built residential space.
Garages and storage rooms are excluded from this threshold. This designation also applies to legal entities that, through various corporate bodies, hold a similar number of properties. This definition is used to activate specific rules in certain rental scenarios.
This figure aims to establish a clear framework of responsibilities for owners with large portfolios, differentiating them from small owners. Among other provisions, it sets limits and reference points for rent increases in certain contexts, aiming to stabilise the market and improve access to housing.
In specific situations—such as rentals in high-demand areas, annual rent adjustments, contract extensions when vulnerability is evidenced, or certain eviction proceedings— specific rules and steps apply when the owner is a large holder. Being aware of this classification in advance enables you to accurately forecast income streams and timeframes, thereby guiding your investment choices with greater predictability and peace of mind.
Implications of being a large property holder under the new Spanish Right to Housing Law
The implications of being classified as a large property holder in Spain, under the regulatory framework of the new Right to Housing Law (Law 12/2023), are as follows:
Price and rent regulation
Large property holders are subject to a stricter regulatory framework that limits how much they can increase rent annually, even for new contracts or renewals. This measure aims to prevent disproportionate increases that could displace tenants with lower purchasing power.
Imposing additional obligations
In addition to restrictions on rent increases, large property holders are required to contribute to the supply of social housing. The law stipulates that part of their property portfolio must be made available at reduced prices to low-income households or the population. Among other cases, an extraordinary extension may be granted if the tenant is vulnerable and prior conciliation has taken place in certain evictions. These measures are intended to broaden access to affordable housing.
Empty homes and property tax
Local councils can apply local property tax surcharges (such as the ‘Impuesto sobre Bienes Inmuebles' (IBI or Property Tax) to empty houses when certain requirements are met, the causes aren’t justified and for a period exceeding two years. The owner of the home must own four or more residential properties. This surcharge can be up to 50% of the tax and up to 100% if the property has been empty for more than three years.
Transparency and collaboration with the State
The recent Spanish Right to Housing Law establishes that large property holders are responsible for regularly reporting their rental activities and the characteristics of their housing portfolio. The aim is to increase transparency in the property market and enable better planning and state-level regulation.
If you are a large property holder, this is how Prime Invest can help you
Being a large property holder, according to Law 12/2023, entails specific responsibilities aimed at strengthening transparency, curbing speculative behaviour and promoting fairer access to housing. Within this regulatory framework, the General State Administration seeks to create a more stable, predictable and accessible rental market, while still ensuring legal security for investments.
For international investors, being a large property holder isn’t an obstacle, but rather a condition of scale that requires strategic planning: understanding which areas are under strain, optimising tax planning, and maximising occupancy rates. With the right real estate consulting and sales plan, new construction developments in luxury destinations remain a strong appeal in the medium and long term.
Prime Invest offers you company in the selection of real estate developments, the asset positioning and the exit strategy—whether sale or rental—, maximising the returns with legal certainty. Contact us today, and we will be happy to assist you.
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