The clubs voted in favour of the measure at a shareholders’ meeting on Tuesday.
Clubs were previously allowed to spread the cost of a transfer fee over the duration of a player’s contract.
This meant they could sign players on long contracts and not suffer the impact of the transfer spending.
For example, if a player signed for £50 million on a five-year contract, the transfer would cost the club £10m annually for the next five years.
The lack of legislation in this area allowed Chelsea to make several high-profile signings, which sparked criticism from many people.
The Blues signed Mykhailo Mudryk for £62m on an eight-and-a-half-year contract, while Enzo Fernandez joined them for a £106m fee on a deal until 2031.
However, Premier League clubs have now voted in favour of a measure that will see contracts limited to a maximum of five years.
Luckily for Chelsea, the rule change will not be backdated to include transfers that have already happened.
Clubs in the English top-flight can lose a maximum of £105m over three years.
The Toffees have appealed against the decision, but it is unlikely to be completely overturned.
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