What you need to know about Spain’s Rent law changes for 2019

Spain has just released a new set of rules regarding rental properties which give homeowners the power to veto short-term rentals in their communities while also helping to protect people who rent.

 

The new laws, however, may not have fully addressed the problem of ever-increasing rent in certain parts of the country.

No set price

The current government has decided against imposing rent controls in cities where prices continue to soar using the excuse that the Ministry of Economic Development needs to study what are the factors pushing rent prices up before coming to a final decision.

“We agreed during the budgetary pact that we had to control rent prices to lower rents,” left-wing alliance leader Pablo Iglesias tweeted following the announcement.

“If the government doesn’t comply with our agreement, we’ll vote against the decree.”

Spain is still recovering from a devastating crisis in 2008 which saw a bubble in the housing market that caused many of its citizens who could no longer afford their mortgages being evicted from their homes.

Longer tenancy agreements

Average rental agreements in Spain will be increased from three to five years long, or seven years in cases where the person renting is a legal entity. The new law is meant to give renters greater protection, but like all other parts of the new law is not retroactive.

In instances where the current rental agreement expires and neither party makes their intentions known regarding the on-going rental of the property the previous rental agreement known as plazo de prórroga tácita will increase to three years rather than the now normal one year contract.

New rules for deposits

Property owners will no longer be able to ask their prospective tenants for more than a two-month deposit unless the rental agreement is for more than five years. The same rule also applies to any bank guarantee asked for by a landlord when tenants sign the rental agreement.

Any company or legal entity that rents out property will now be required to pay all agency fees and contract costs (tgastos de gestión Inmobiliaria y de formalización del contrato).

Also according to the new law, it will now also be easier for lessor and lessee to reach an agreement to revamp or improve the rental property before the end of the agreed tenancy contract.

Community protection against short term rentals

Changes to the Sobre Propiedad Horizontal – the legal code overseeing the regulation of apartment buildings in Spain – will give property owners in the building the right to decide whether or not to allow short-term holiday rentals by calling a vote of the building’s residents.

What this means is that a flat owner renting out their property with large agencies can be stopped from doing so if 75% of the building’s occupants do not approve.

Again in this new law is not retroactive, therefore it does not apply to homeowners already renting out their properties providing they have the correct licence from the municipality that oversees short term lets.

A few tax breaks

Providing the rental property is suitable for letting property owners and tenants who register their tenancy contract with the authorities will be exempt from paying transfer tax and stamp duties (Impuesto de Transmisiones Patrimoniales y el de Actos Jurídicos Documentados ).

People living in social housing will no longer be required to pay council tax while property owners who leave flats unoccupied will be required to pay more in local council tax.

Basically here the government is trying to hurt individuals and companies who leave properties empty most of the year, preferring to rent during the summer season only rather than year-round.

Photo courtesy of Jocelyn Erskine-Kellie/Flickr

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This site uses Akismet to reduce spam. Learn how your comment data is processed.