New reform of the leases in Spain
The Council of Ministers has approved a new law decree on housing and rentals; the new measures will benefit the tenants.
For a few days, all rental contracts signed in Spain must assume the changes established by the new reform. The modifications, regarding the current legislation, affect mainly to the durability of the contracts, the limit when updating the rents during the years of its validity, as well as the periods of notice in case that tenant or/and landlord want to cancel the contract.
Measures on the new rental decree:
- Extension of the mandatory extension.
The new reform increases the term of the mandatory extension of rental contracts from 3 to 5 years, as long as the owner is a natural person. If it is a legal entity, the duration of the rents is seven years.
In addition, the tacit extension increases from one to three years in both cases, if neither of the parties communicates to the other their willingness not to continue with the rent.
The difference regarding the previous decree is that if, during those 5 years of mandatory extension, the owner wants to get back the house, he/she can only do so if this was established in the rental contract at the time of signing.
- Greater notice to break the contract.
The deadline to notify that one of the parties can break the rental contract is extended. The tenant must notify the landlord if they wish to end the rental two months in advance, while the landlord must inform the tenant four months in advance.
- Guarantees are limited to two months.
The tenant must pay the “deposit in cash in an equivalent amount to one month’s rent in the houses rental.” In addition, at the time of signing the contract, the owner may require guarantees to the tenant for a maximum of two months.
So the tenant would need to have the amount corresponding to four months of rent (current month, bond and two months maximum of complementary guarantee). It could also be added the costs of real estate.
- The rent can’t go up more than the CPI.
All contracts signed as of the new reform will be subject to the Consumer Price Index (IPC) -which measures the evolution of the products prices and services consumed by Spaniards- for their annual update. That is, no owner can raise the rent over the IPC to the tenant during the five years of validity of the contract. You must wait for the renovation to increase the price.
- If a third party buys the house, you will have to respect the contract.
If a person buys a house that is rented, the new owner must respect the rental agreement and the current conditions, whether or not it is registered in the property registry.
The objective of this measure is to avoid possible investment fund practices that acquire leased housing and decide not to assume the terms and conditions of the current contracts.
In addition, having in mind the right of first refusal and retraction, when a landlord sells an apartment that is rented, the tenant has a preferential right to buy that dwelling if he/she equals the offer of the potential buyer.
- If the tenant dies, family members can continue with the rent.
In cases in which the tenant dies, family members may remain in the rental housing in cases of social vulnerability, that is, in homes where there are people with disabilities, minors, or people over 65 years of age.
- Real estate expenses.
Usually, and even if it wasn’t established by law, the tenant was the person who paid the real estate expenses and formalization of the contract if the apartment had been found through an agency.
The new decree differs at this point according to the landlord is a natural or legal person. If you are a natural person, the expenses can still be demanded from the tenant. But if the apartment is owned by a company, it must always take charge of the real estate expenses without exception.
- A reference index of the rental price is created.
The decree establishes a period of eight months to develop a state system of reference index of the rental price for a better knowledge of the market.
With data from the Tax Agency, the cadastre, the property registration office, the registration of bonds and other sources, the average monthly rent values in Euros per square meter of housing will be offered annually per neighbourhoods, municipalities, provinces, autonomous communities. The autonomous communities may establish their own benchmark indexes for the purpose of designing their public housing policies and programs.
- Tourist rentals are limited.
The communities of neighbours will be able to condition or limit the tourist flats with the favourable vote of three fifths of the neighbours, compared to the unanimity that was required until now. They will be able to agree that this type of flats make a greater contribution to the general expenses, up to 20% more.
- The obligation to pay the AJD tax is eliminated.
Tenants won’t have to pay the Property Transfer Tax and Document Duty when a rental agreement is signed.
- If you do not pay, can they evict you?
When a tenant doesn’t pay the rent, the landlord can appeal to the court exactly as before to request the eviction. However, the new decree modifies the procedure to be followed: the court will be obliged to request a vulnerability report from the tenant to the social services. If they determine that this situation occurs, the procedure is paralyzed one month to find the tenant a place to live. When the owner is a legal entity, the stay is for up to three months.
In addition, from now on the judges must indicate with exact date and time the date on which the launch will take place, as demanded by anti-evict platforms.
Given the specialty of the subject, we recommend that you go to a law firm specialized in this sector. If you are in a similar situation and need our legal assistance, you can contact our office through the inquiry form on this website, the email email@example.com or telephone us to 958 63 19 38.