New property rental laws came into effect on Wednesday after being approved by the Spanish cabinet five days ago.
The new measures which were introduced by Pedro Sánchez’ PSOE party are primarily aimed at protecting tenants and providing them with stability, at at time when finding affordable housing has become increasingly difficult.
Carmen Calvo, the Deputy Prime Minister said that the decree was “an action plan for an unacceptable situation” and that the measures will be of great help, especially to young people looking to rent.
The measures will only affect new lease agreements after the 6th of March 2019 with any previous contracts covered by existing legislation. The main takeaways from the new law include the following.
Rental Contract Extensions
The minimum length of a rental contract will now be extended from the previous three years to five years or seven years if the landlord is a business.
So that tenants will have more stability, the tacit renewal period has also been extended from one year to three years. This means where the landlord or tenant does not make their intentions known, the tacit renewal period will come into play meaning an extension of three years rather than the existing one.
Once the mandatory renewal period is over, the landlord must give four months notice to the tenant to end the contract. The tenant will have to give the landlord two months notice if they wish to end the contract.
This replaces the existing rules where a landlord would have to give two months notice and the tenant just one.
Rent Increases Will Be Limited To CPI
Under the new legislation, any rent rises during a tenancy must not exceed the Consumer Price Index (CPI) or the measure of inflation. This will bring an end to rental contracts which included an obligatory annual rent increase.
Cap on Deposits
Landlords may only ask for a deposit of one month’s rent and may only ask for addition deposit guarantees to a maximum of two months of rent. Where the landlord is a legal entity, they must pay any real estate agency and contract costs.
Selling a Property
Another implication of the new law is that tenants rights under a tenancy agreement will be protected if a property is sold, even if it is not registered at the land registry.
If you plan on selling your property, you will need to make sure you do not lock yourself into a rental agreement of eight or 10 years!
Tenant evictions in Spain are high and the new legislation will aim at reducing this.
Before any tenant can be evicted, it will now need to go through social services to determine whether the tenant can be classed as being in a ‘vulnerable situation’.
If they are deemed to be, the eviction can be pushed back one month if the landlord is an individual or three months if the owner is a business, giving the tenant sufficient time to find a new home. A judge will also have to communicate the exact date to the tenant in that they will evicted.
Price Benchmark System
The decree will also outline a new state benchmark rental price index, which can be used by prospective tenants to easily assess whether a property and it’s rental price are realistic based on the area the property is located in.
The index will be created over the next eight months and will be updated annually.
One measure which is aimed at reducing the impact of online rental websites such as AirBnB in city centers is to allow owners of apartments to collectively have a say and place limits on the use of apartments for tourist accommodation.
The new decree will need to be ratified by congress within one month before it can become written in law. The PSOE party has already been assured of support for the new decree from the left-wing Podemos and Catalan nationalist party PdeCAT. The Basque nationalist party are also expected to put their weight behind the new legislation.