Fan groups have for years complained about the state of the Estadio de Vallecas, built in 1976 and owned by the regional government of Madrid, which allows Rayo to use it under concession. The issue has been at the centre of long-running frictions between fans and owner Raul Martin Presa.
Mariano de Paco, Madrid's regional head of sport, culture and tourism, told reporters on Tuesday that Rayo's concession was being suspended after an audit detected serious safety deficiencies at the stadium, requiring urgent works expected to take between two and six months to complete.
"We've tried to get this back on track, but we've reached a point of no return - the lack of maintenance has been certified. The club wasn't complying, so authorities had to take action," he said.
The club did not immediately respond to Reuters' requests for comment.
'Risk of Legionnaires' disease or fires'
The decision comes after an audit commissioned by the regional government ahead of the venue's planned renovation concluded that "widespread obsolescence" and "serious regulatory non-compliance" compromised the stadium's safety and operational viability.
The government's report cited the risk of Legionnaires' disease outbreaks or fires due to the accumulation of refuse and debris, as well as faulty electric installations and emergency lighting, among other problems.
Images attached to the report seen by Reuters appeared to show rubbish bags, bottles of liquid fertiliser, cardboard boxes, plastic packaging, paint cans and other objects piled up inside the stadium.
Last week, the UEFA Conference League finalists launched their season ticket renewal campaign with an average price increase of 15% for adults. Season ticket prices have more than doubled since the team's last promotion to the top flight in 2021, reaching an average of €590 for the upcoming season.
A clause in the renewal contracts stipulates that if, for force majeure reasons, matches cannot be played in Vallecas, the club would provide season ticket holders with seats "in the most similar location possible" at the chosen alternative venue.
In February, Rayo played their home game against Atletico Madrid at Leganes' Butarque stadium after the match was relocated due to Vallecas' "unplayable" pitch conditions.