Big changes in the Spanish rental law in 2019
The Spanish Official State Gazette published the new Decree Law 7/2019 on urgent measures in residential and leasing properties on the 5th March (Real Decreto-ley 7/2019, de 1 de marzo, de medidas urgentes en materia de vivienda y alquiler). The new measures are intended to improve a rather complicated rental situation in the country. The main problem is that the affordable rentals become more difficult to find due to the increasing demand for Spanish properties. Therefore, the government was forced to introduce measures regarding the Spanish rental laws by adjusting the legal positions of landlords and tenants to ensure greater stability to the relationship between the two and protect tenants, updating the terms of the residential lease agreements to stimulate the growth of property offers.
Reasons of new changes
The main reasons of the new Decree Law 7/2019 include:
- Social and financial vulnerability of tenants who have to rent their housing at market prices;
- Lack of social housing;
- Growth of evicted tenants because they can’t afford the rent;
- Poor situation with housing for disabled people, persons with reduced mobility and persons over 65 years old;
- Constant growth of rental prices and increase of holiday rental platforms.
The key updates of the law regulating Spanish property rentals:
- The minimum term of a rental contract has been extended up to 5 years and 7 years if the landlord is a business. As for the tacit renewal, it has been extended up to three years. To end the contract, the owner must give a 4-month notice and the tenant must give a 2-month notice.
- There are changes in cash guarantees and the broker costs. Now, property owners can ask for additional guarantees to two months of rent. If the landlord is a legal entity, the real estate agency expenses are covered by the landlord.
- The property prices will be indexed by the government. This index will specify the average price in any given part of Spain and undergo annual reviews. Autonomous communities will be able to define their own indices.
- All holiday rent properties, commercialized or not through a platform, are excluded from the Urban Leases Act 29/1994. The new decree also says that community owners may collectively agree to place limits on the use of units for the purposes of tourist accommodation.
- Horizontal Property Law updates: the reverse fund of the community budget has been increased from 5% to a 10%. This fund can be spent on certain works of accessibility. These works are obligatory and it is the community of owners who are responsible for them and communities are granted public aid amounting to 75% of their amount.
- The procedure of eviction has also undergone some changes. The changes intend to make this process more transparent and protect tenants who are a vulnerable situation. According to the updated decree, all the evictions go through the social services and if a tenant in a vulnerable situation, the eviction will be pushed back one month and three months if the property owner is a business. Besides, the judge determines the exact date and time that the eviction will take place.
- Tax and financial measures: the obligation to pass on the property tax (IBI) to the lessee is exempted in case the lessor is a legal entity and the property is with a limited. The penalties for unoccupied housing have been modified. The additional tax properties can be introduced by the local treasuries. There is also a 95% bonus created in the payment of IBI for properties destined to rent and which are in the official protection regime.
The Royal Decree Law 7/2019 on urgent measures in residential and leasing properties (Real Decreto-ley 7/2019, de 1 de marzo, de medidas urgentes en materia de vivienda y alquiler) entered into force on the 6th of March, 2019. The lease agreements signed before this date will continue to be governed by the provisions of the regulations that applied to them: the agreements signed before 19 December 2019 or between the period from 23 January 2019 to 5 March 2019 are governed by the Urban Leases Act 29/1994 (Ley de Arrendamientos Urbanos), and those signed within the period between 19 December 2018 to 22 January 2019 are governed by the previous version of the Royal Decree 21/2018 on urgent measures in the residential and leasing housing matters (Real Decreto Ley 21/2018, de 14 de diciembre, de medidas urgentes en materia de vivienda y alquiler).