The keys to the new rental law

The Government has approved a Royal Decree Law of urgent measures in the matter of housing and rent that modifies, together with other norms, the Law of Urban Leases (LAU) of the year 1994, and has suffered numerous reforms during all these years, adapting to the social and economic necessities of every moment.

The Government has approved a Royal Decree Law of urgent measures in the matter of housing and rent that modifies, together with other norms, the Law of Urban Leases (LAU) of the year 1994, and has suffered numerous reforms during all these years, adapting to the social and economic necessities of every moment.

The Government has approved a Royal Decree Law of urgent measures in the matter of housing and rent that modifies, together with other norms, the Law of Urban Leases (LAU) of the year 1994, and has suffered numerous reforms during all these years, adapting to the social and economic necessities of every moment.

This new revision, which came into force at the end of December 2019, has as its main objective to strengthen tenants’ rights in the face of rising prices and a shortage of affordable housing. However, the rule has not finally included any measure to legally limit the price of rent. And in addition, as we are seeing by the trend in rent, the only thing that will bring is a brutal distrust of the landlord, to decide whether or not to put their property on the market.

New Maximum duration

Article 9 of the LAU regulates the minimum duration of leases. Although the years of rent are freely agreed by the parties, tenant and landlord, the law establishes a minimum duration. In this way, if the contract is agreed for a period lower than the legal minimum, the tenant may demand that it be extended until this limit is reached.

The new regulation modifies this minimum term, extending it from three to five years, or seven years if the lessor is a legal entity. Therefore, the minimum legal period in which the tenant can continue in the dwelling is extended.

And this is one of the most controversial aspects of the new law. 5 years, with a tenant, is a barbarity, especially when many times, and due to incompatibility or inappropriateness, not even one more is extended. Fear, not only because of non-payment, but also because of the treatment and possible damage to property, is enormous, and this type of government measures only increase this distrust.

Tacit renewal

Article 10, concerning the extension of the contract after its expiry, is also amended. Until now, if the contract or any of its extensions – up to a maximum of 3 years – expired and neither the landlord nor the tenant had notified the other of their intention not to renew the contract, the contract was extended for a further year. From now on, the tacit extension period will be 3 years.

Deposit

To put an end to abuses of landlord bail requirements, the Royal Decree Law approved by the Government amends one of the most important articles of the Urban Leases Act, article 36.

At present, in addition to the deposit (cash delivery in an amount equivalent to one month’s rent), the norm established that the lessor and the lessee could agree on any type of guarantee of compliance by the lessee with his obligations, in addition to the delivery of the deposit. This in practice gives rise to abuses by the lessor, requiring all kinds of guarantees, which was an added burden for the future tenant, but it was the insurance to which the tenant grasped to have the confidence to rent.

The approved Royal Decree-Law limits these additional guarantees to a maximum of 2 monthly payments, except in the case of long term contracts, thus limiting the economic burden on the lessee.

Improvement works

It is also envisaged that tenants and landlords may enter into agreements to improve or renovate the dwelling for the duration of the lease.

Expenses

The rule approved by the Government also expressly provides that the costs of real estate management and formalization of the contract (when it is entrusted to specialized companies or consultants or lawyers to draw up the contract) is borne by the lessor in the case of a legal person (company or company), except for costs that are the direct initiative of the lessee. In this case, it also specifies, provided that the lessor has not requested the real estate agency to search for housing.

Holiday rentals

The law also provides for a series of measures aimed at regulating tourist rental, referring to the applicable law.

A very important issue that is also dealt with in the approved norm is the modification of the Horizontal Property Law so that the communities of owners can adopt agreements by a majority of 3 fifths of the owners, to limit or condition the exercise of the tourist rental activity of housing. Come on, that if the communities were small kingdoms of Taifas, now and directly small republics, which will have the right to decide not by common areas, but also by private.

Evictions

The Royal Decree Law published today establishes the possibility of suspending housing evictions when the Administration appreciates that there are signs of a situation of vulnerability. Thus, when the tenant is required to pay the rent, the law requires that the tenant be informed of the possibility of going to Social Services, and if the Administration considers that this situation occurs, it should immediately notify the Court, which will suspend the eviction until the measures that said Social Services consider appropriate are taken.

This suspension will last for one month if the landlord is a natural person, or two months if the landlord is a legal person. Once the measures have been taken, the suspension will be lifted and the proceedings will continue.

Tax reductions

In the tax area, the norm establishes the exemption of the Tax on Patrimonial Transmissions and Documented Legal Acts (AJD) in the subscription of contracts of lease of housing for stable and permanent use, with the purpose of reducing the fiscal burdens that entails the market of the rent.

It also retouches the Law Regulating Local Treasuries to modify the Real Estate Tax, the IBI, in two cases, firstly when it is a social rental of housing and the lessor is a public entity, the lessee may be exempted from the tax. In addition, City Councils with a surplus in their accounts are allowed to promote their public housing stock, establishing a bonus of up to 95% in the IBI quota for dwellings subject to rental at a limited price.

The law also introduces in the Law on Local Treasuries the definition of “permanently unoccupied property” for the purpose of applying a surcharge on Real Estate Tax. City councils may thus demand a surcharge from owners of up to 50 per cent of the tax liability.

In short, an interventionist law, which instead of helping tenants, will help many landlords not choose to rent, and whether to sell or make short-term contracts, and camouflage long-term contracts in temporary or vacation housing contracts. A step back, now that some were coming out of vacation and embracing the long season.

SOURCE: “EL PAÍS”