How will the New Housing Law affect homeowners in Alicante? Which areas would fall within what the Government considers to be stressed market areas?
On 27 April 2023, the Cabinet of Ministers finally reached an agreement on approving the new Housing Law in Spain. This law aims to regulate different areas of the real estate sector with a particular focus on the rental market, although it will also include measures to encourage access to housing and the regulation of evictions.
So how will the new Housing Law affect the province of Alicante? Which areas could be affected by the new price regulation measures announced by the Government?
Definition of stressed area
As stated in the text of the New Housing Law, for a territorial area to be considered a stressed area, at least one of the following circumstances must occur:
- That the average mortgage or rent burden plus basic expenses and supplies exceeds 30% of the average income or average revenue in the area. ‘Expenses and supplies’ means the cost of energy supplies, water, telecommunication services and community fees.
- That the purchase price or rental price of the property has risen in the last 5 years by at least three points more than the CPI in the territory concerned.
Stressed areas in the province of Alicante
According to the definition of a stressed area, and according to the latest available data, the consultancy firm Atlas Real Estate Analytics, which specialises in the development of data science tools, has concluded that 47.8% of the postcodes in the province of Alicante meet at least one of the requirements established by the Government to be able to consider a territory as a stressed area.
This percentage, already quite high in itself, could be even higher if we take into account that the territories that would fall within the definition of a stressed area are those that currently represent the largest proportion of the population. Specifically, 70.46% of Alicante households are located in one of these areas.
70.46% of Alicante households are located in areas that could be considered stressed according to the New Housing Law.
Stressed areas in the province of Alicante | Source Atlas Real Estate Analytics.
Stressed municipalities in the province of Alicante
Focusing on specific municipalities and according to the same source of information, it is the large cities and coastal municipalities that account for the highest proportion of stressed territories. Without going any further, 20 of the 24 postcodes in Alicante city would fall within the definition of a stressed area, but so would towns in its metropolitan area such as San Vicente, Sant Joan or El Campello.
Stressed municipalities in Costa Blanca
Some of the most popular tourist towns in Costa Blanca could also be affected, some of which fall within the scope of our real estate services in Costa Blanca. We are talking about towns such as:
- Denia
- Pedreguer
- Benissa
- Altea
- Calpe
- Callosa d’en Sarrià
- Finestrat
- La Nucia
- L’Alfàs del Pi
- Benidorm
- La Vila
Is Moraira a stressed area?
As can be seen on the map drawn up by Atlas Real Estate Analytics, Teulada-Moraira could indeed be considered a stressed market area according to at least one of the criteria established by the regulations, as its territory is marked in red.
Furthermore, if we turn to other sources of information such as Idealista, we can see how the price of housing in Teulada-Moraira has risen by 30.64% over the last 5 years, from 2,666 euros per square metre in January 2018, to 3,483 euros per square metre in January 2023.
Evolution of housing prices in Moraira | Source: Idealista
Bearing in mind that according to the National Institute of Statistics the CPI in the province of Alicante has risen by 15.6% in the same period of time, Teulada-Moraira would already be fulfilling one of the requirements established by the Government for the territory to be considered a stressed market area, namely that the price of housing has risen in the last 5 years by over 3 points more than the CPI.
Teulada-Moraira could be considered a stressed market area as the price of housing has risen by 30.64% over the last few years whereas the CPI has risen by 15.6%.
How will the new Housing Law affect me if I want to rent in the province of Alicante?
If you’re renting out a property in a municipality in the province of Alicante that ends up being classified as a stressed area, you will have to take into account that the rent updates will be limited in the following way:
- Rent updates in 2023: will continue to be governed by the 2% rent cap.
- Rent updates in 2024: will be limited to 3%.
- Rent updates in 2025: a new index lower than the CPI is planned to update prices.
These price limitations in the updating of rents will not affect properties located in municipalities defined as non-stressed.
Property management in Costa Blanca
Although this regulation was approved by Congress on 27 April, it still has to be approved by the Senate and included in the Official State Gazette (BOE), which is expected to happen before June 2023.
Do you have a property in Costa Blanca and you don’t know how to make it profitable after the approval of the latest developments? Not sure whether to rent or sell? Do you want to know specifically how the new Housing Law could affect you? Contact Hispania Homes and we will help you make the most of your property.
