New Revised Law on Rentals

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Posted and filed under Legal Issues in Spain, Property in Spain.

New Revised Law on Rentals

Yesterday , a new Spanish law was published Ley 21/2018, on urgent measures to do with rentals, which comes into force today December 19.

It modifies five laws, and reforms the Law of Urban Leases 29/1994, which is the regulation of housing lease contracts.

It also modifies some aspects of the Horizontal Property Law and the Civil Law which covers the eviction procedures.

Regarding rentals, once again, there is another new regime applicable to rental contracts.

Until now we already had the existence of several laws in force, now there is a 5th one. And this law clearly favours the tenants, as these new regulations are intended to reinforce longer-term tenants’ rights.

What the government has aimed to do is balance the legal position of the owner and the tenant in their rental relationship.

As a result, this area of rental law is important to study carefully, when there is a problem, as it needs a lawyer who is aware that there are “five contractual periods” in force with rules for housing leases, depending on the dates of the contracts!  Otherwise when it comes to a Court case the client could find themselves with a problem. We are very experienced in this area.

So what does this new Spanish Rental law actually say? Well, some important points.

1) The law does not cover holiday rentals.

2)In Spain there is an automatic renewal period. This had been reduced in the last legal amendment to three years, now it is five once again, unless the person renting says at least 30 days before the date of termination of the contract or any of the extensions, that he does not want to renew it, or a rental autotmatically renews each year for up to five years (unless the tenant is a company and then it is 7 years). 

3) After the five years are ended, if there is no communication from any of the parties to not renew it, the contract will be extended for three more years, which gives the tenant greater stability as they are no longer exposed to the one year extension previously established in 2013.

4) The mandatory extension of the contract will not proceed if, after the first year of its duration, the landlord informs the tenant they need the rented house to allocate it as permanent housing for himself or his relatives.

5) However this must be told to the lessee at least two months before the date on which the house will be needed and the tenant will be obliged to deliver the leased property within that period if the parties do not reach a different agreement.

6) If, after three months from the expiration of the contract or, if applicable, the effective eviction of the dwelling, the landlord or his family members have not proceeded
to occupy the house, the lessee may choose, within thirty days, between moving into the rented dwelling
for a new period of up to five years, or seven years if the landlord was a company, with compensation for the expenses that having to be evicted from the house would have meant until the time of the reoccupation. Or to be compensated for an amount equivalent to one monthly payment for each year that remains to be fulfilled until five years, or seven if the tenant was a company.

8) Evictions for people with financial problems can only take place after a Court have arranged somewhere else for them to live.

9) It is now not permitted that the deposit is more than two month’s rent on top of the usual month’s deposit (so no more than three months in total).

10) There are some minor changes with regard to Horizontal Property Law to do with the amount of the reserve fund of the communities of owners which is increased up to 10% of the last regular budget.

11) In terms of housing for tourist use, there is also a reform of the horizontal property regime that specifies the necessary qualified majority so that the communities of owners can limit holiday rentals.

The most important thing to remember is that long-term tenants have a lot of rights, and a proper contract is very important and a landlord/tenant relationship should not be entered into without taking into consideration Spanish law in this respect.

If you require any help with a tenant or landlord problem, please let us know.

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