Updated 6 March: The Government is having another go at introducing legislation regulating rentals with Cabinet approving a new Bill last week. The legislation comes into force today but must again get Congressional approval. Unlike in February, however, when legislation failed in Congress, this time might be different because an election has been called for 28 April (see HERE), and so Parliament has been dissolved, meaning the Bill will be approved instead by a Parliamentary Committee and anyway counts on support from several minority parties: it is much likelier to succeed this time
As before, the new law extends rental contract durations from three to five years (seven if owner is a business), and restricts rent increases to the consumer price index – only applicable to contracts signed from and including today. As before, too, any required can be no more than the equivalent of two months’ rent, and contract and administration fees must be paid by the landlord if a business or other legal entity (i.e. not if the landlord is a private individual). The new legislation also incorporates the previous legislation’s protection in cases of evictions of the socially vulnerable for rent arrears: these can only take place after the Court and Social Services have arranged alternative accommodation. Finally, once again, the decree allows owners of apartments to agree to limit use for tourism. The full law is HERE.
Updated 7 February 2019: The Spanish Congress has failed to approve this legislation, and so all the law reverts to the previous measures. This means that there now will not be an increase in the period of residential rental contracts which will continue to be renewable with extensions for three years not the five the new law envisaged. Also, protections proposed for socially-vulnerable tenants will be lost, as will those concerning contract and administration fees charged by business landlords. Finally, lost too will be the reduction to 60% of the vote required for a community to change its Statutes to limit or ban future holiday letting: this will now remain at 100%. To preserve legal security, any contracts signed between 19 December and 22 January – the date the Bill was presented and the day it was rejected – will remain valid even if their terms were drawn up to comply with the new and now overturned legislation. As in the UK, the Socialist Government in Spain is a minority one and any legislation can find it fails to gain a majority in the House.
Original post 18 December 2018: The Spanish Government has this morning published a new Ley de Arrendamientos Urbanos (LAU – Urban Letting Law) which amends existing non-touristic rentals of private property. The legislation, Real Decreto-ley 21/2018, de 14 de diciembre, de medidas urgentes en materia de vivienda y alquiler, comes into effect tomorrow, as always 24 hours after its official publication, and will apply to any and all contracts signed from that point on. I’ve updated the page on the legal situation HERE, but in bullet point form the main changes under this amended law are that:
- the three year automatic renewal period returns to a five year minimum as it was prior to being reduced to three years;
- after the first five years, further renewals are automatically for three years rather than the sole year currently;
- in addition to the normal month’s deposit, any bond required can be no more than the equivalent of two months’ rent;
- evictions of the socially vulnerable for rent arrears can only take place after the Court and Social Services have arranged alternative accommodation;
- contract and administration fees must be paid by the landlord if this is a business or other legal entity (i.e. not if the landlord is a private individual);
The new regulations are intended to reinforce longer-term tenants’ rights given increases in rental costs and decreases in properties available for residential lets. The law explicitly does not cover holiday rentals which are deemed to be an economic activity governed by tourism legislation. As such this new legislation, being a national Urban Letting law, is unconnected with regional tourism legislation, whether the main tourism law or the Vivienda Vacacional decree which is currently being redrafted: tourism rules concerning rentals in the Canaries are as I’ve described HERE.
Today’s law does make one change that impacts on complexes, however, namely that the required vote for a community to change its Statutes to limit or ban future holiday letting has been reduced from unanimity to a 60% majority, though since the legislation is not retroactive, any such ban would not apply to any properties that are legally registered as of tomorrow for tourism rentals. The measure is intended to allow residential communities to restrict tourism so as to retain their designated character.