As a result of these reforms, the Spanish government establishes a new rental price index.

 

Minister for Development: José Luis Ábalos

The Spanish Council of Ministers recently agreed to new rental market reforms, with a royal decree to boot. Almost everything from the previous decree is included in the new text, with the exception of a few measures. The measures that are different are things like lease contract duration increasing and a fixed annual income linked to the Consumer Price Index (CPI) and the creation of a new housing price index. house and lot for sale

According to the new royal decree law on renting in Spain, which is published in the Spanish Official State Gazette (Boletín Oficial del Estado or BOE), and which must be validated by the Congress of Deputies, the new rental decree goes into effect when it is formally published in the BOE and will continue to be valid until it is modified or repealed by a subsequent legislative decree. This time, the Cortes will be dissolved on 5th March before the election on 28th April in Spain. In the deputation, which will be granted 30 working days to study the matter, a vote will be conducted.

In the table below, we provide a summary of the measures for rental housing in Spain as proposed by the new Royal Decree-Law (RD-Ley 21/2018 of 14th December) and those which the Spanish government has recovered from the previous decree (RD-Ley 21/2018 of 14th December) but which was rejected by the Congress of Deputies in January:

For the portion of the reform of the Law on Urban Leases (Ley de Arrendamientos Urbanos or LAU) that pertains to contracts, the relevant body has done a review of existing contracts.

The duration of the mandatory extension period for rental contracts has been extended from three to five years, and tacit renewal, the period in which neither the landlord nor the tenant wishes to renew the contract, has been extended from one to three years for natural persons.

The contract, which the lessor must comply with, is seven (7) years and the implicit renewal term is three (3) years.

Beginning at the start of the rental agreement, rental price increases will be tied to the consumer price index (CPI) (5 years).

Down payments other than the deposit will be limited to two months of rent, unless long-term contracts are involved.

The landlord must notify the tenant four (4) months in advance if the landlord wants to renew the rental agreement. In the event that the tenant wishes to leave, two (2) months' notice is required.

The property must be specifically listed in the lease contract as something the landlord is entitled to recover and forfeit in advance, such as if they need it for their own residence, their children's or spouse's, or if family circumstances change.

In cases where the buyer has purchased a property that is currently being rented, the buyer must respect the lease contract, even if the lease contract is not registered in the Land Registry.

There is no need to sign a new contract if there is an agreement between the owner and the tenant.

A landlord who is a legal person is responsible for the fees associated with the management of an estate agency, as well as the formalization of the contract.

The Ministry of Development claims that there will be a new index created for renting homes, which they plan to use as a source of information for the Autonomous Regions. This index will enable each of the autonomous regions to design their own indices for the price of renting a home in Spain, and apply them for their housing policies, with a goal of offering tax incentives.

The Ministry of Development will publish this index within the next eight months. Information from a number of different sources, including Spanish tax agencies, registrars, notaries, registered bonds, and real estate portals, will be gathered. Each year, this website will be completely reworked and will feature the most up-to-date rental information organized by city, district, and neighborhood.

Although previous sources have denied that implementing this price index is the first step in restricting rent prices, since only a new law could affect state interference in such a fundamental right as private property, they agree that these same sources believe the index will be used as the price control methodology.

This new rental reform will influence how much you pay in taxes as follows:

SOME CITY COUNCILS CAN INCUR A TAX DEDUCTION OF UP TO 95% OF THE ANNUAL PROPERTY TAX (IBI) FOR LEASED HOMES. It means, in other words, that the tax break is given to those with government-subsidized housing and who decide to rent their property, but it has a maximum value determined by the local council or Autonomous Community.

No Stamp Duty or ITP transfer tax is assessed when leases are signed for permanent use. To be more specific, all Autonomous Communities' tenants are free of the ITP requirement.

As a type of commercial activity, short-term lets for tourists aren't included in the regulation of the LAU. It is subject to the communal living space law (Ley de propiedad horizontal), which governs how property is held.

It is possible for the residents of your building or local estate to limit or condition the use of the vacation rent of housing as long as three-fifths of the property owners in the homeowner's association (the comunidad de vecinos) agree to it. They have two options: they can either vote to ban short-term rentals or they have to give a larger portion of their tax dollars to the community (up to 20 percent more).

as it pertains to evictions in Spain, the Civil Procedure Law (Ley de Enjuiciamiento Civil) will be revamped:

The judge must also notify social services to ensure that help is provided to the tenant until new housing is found. If the owner is a private individual, the eviction will be delayed for one (1) month. If they are a legal entity, the eviction will be delayed for three (3) months.

After the judge issues an eviction order, they must inform the social services department immediately so that the exact time and date of the eviction process can be remembered.

Where a property is being rented to vulnerable groups such as the elderly, the disabled, or minors, as well as those who are financially vulnerable, and the leaseholder who signed the lease contract dies, the other tenants will not be evicted and the rent will be reallocated to them.

Fernando Encinar, Head of Research at idealista, explains that the government's new rental regulations are a carbon copy of the Royal Decree recently rejected by the Congress of Deputies. The Royal Decree attempted to greatly increase the supply of rental housing while also lowering the cost of rental units. Many of them, with this new law, might be tempted to move into a property they own instead of renting. This is directly contrary to the goal of the Decree. Rising supply and increased prices are possible because of this landlord discrimination.