New national rentals law seeking to mitigate effects of higher rent prices and fewer rental properties available fails in Congress

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.

19 Comments

  1. Hi Janet just to clarify does this mean the end of the one months agency /finders fee? by agents.

  2. Presumably the Statute change requires 60% of TOTAL ownership not just 60% of those who vote on the issue at an AGM?

  3. Author

    As I understand it it is 60% of a quota meeting. The law has never taken account of owners who cannot either be bothered to attend a meeting or arrange a proxy.

  4. Is the reverse also true that a 60% vote could see a community allow advertising holiday let’s.

  5. Author

    I don’t know, you will need to ask a lawyer. As I’ve explained above this is legislation designed to help people who can’t find residential rentals because of illegal tourism letting, so I imagine not, but I am not a qualified lawyer.

  6. Hi Janet, just to clarify….. contracts signed prior to these amendments to the law that automatically renew for three years, at the end of that three year term, do those tenants qualify for a three year renewal, or the one year renewal that was offered when their contract was first signed?

  7. Author

    As I understand it the new rules only apply to new contracts, whereas I would define what you’re describing as a renewal of an existing contract and so subject to the law as it was, not the new regulations. A qualified lawyer might disagree, of course!

  8. Hi Janet
    Can you confirm that communities can now vote to change their statutes to ban tourist letting if 60% of owners agree, our administrators are telling me we can vote to ban letting as it will be recorded in minutes of AGM but 100% agreement is still required to amend the statutes in this regard, this is not how I am reading the new law.

  9. Author

    Yes, as it says above, ” 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”. There is a link to the law and the relevant section is Article 17.12 which says:

    “El acuerdo por el que se limite o condicione el ejercicio de la actividad a que se refiere la letra e) del artículo 5 de la Ley 29/1994, de 24 de noviembre, de Arrendamientos Urbanos, en los términos establecidos en la normativa sectorial turística, suponga o no modificación del título constitutivo o de los estatutos, requerirá el voto favorable de las tres quintas partes del total de los propietarios que, a su vez, representen las tres quintas partes de las cuotas de participación.”

    Specifically it says 3/5ths (tres quintas partes) which to my sums is 60%. As always, though, where there is a dispute between administrators and owners, lawyers have to be involved to clarify the law.

  10. Hi Janet from above is the corollary of this that it only takes 60 % of community to vote in favour of being Touristic in a community whereas before it needed unanimity ?
    Equally so with any other statute that needed unanimity?

  11. Author

    I don’t know John, sorry, that’s a question for a qualified lawyer and/or administrator. I note, however, that the wording refers to changing Statutes in order to “limit or ban future holiday letting”, and specifically says that it is an attempt to legislate so that owners in residential communities have a chance to control things to preserve their peaceful residential existence, and as I say above, the Government specifically said the “measure is intended to allow residential communities to restrict tourism so as to retain their designated character.” That does imply it only works one way.

  12. I see the wording , but may be a selective quote .
    Previously it only needed 1 person vote against to prevent changing to touristic or any other Statute thet required unanimity .
    Is this suggesting they now need 60 %to prevent change ?

  13. owners in residential complexes who’s statutes do not prohibit tourist letting are left with no protection from tourist rentals under the VV license.

  14. Author

    The Government is not allowed to provide protection for such owners because the Courts have upheld the Monopolies Commission’s complaint that the law (specifically the Vivienda Vacacional decree) was too restrictive and was intended to benefit the hotel industry. Well-known arguments about rights to a peaceful life didn’t seem to carry as much weight as anti-competition considerations.

  15. Hello Janet

    Thanks again for the update on the Vivienda Vacacional laws, however would I be correct in saying that this only applies to residential properties that are within areas designated for tourism?

  16. Hi Janet, thanks again for the update.
    You wrote about Statutes also. The admin in our complex said “they don’t have statutes because they aren’t necessary… and they are not obligated by law”. I’m confused. Do you know the truth about this?
    Thanks, Frank

  17. Author

    This isn’t an update on the VV decree, Ken, it’s about Urban Letting legislation. As to the VV itself, however, please see HERE for the latest update in December just gone.

  18. Author

    Yes, they are not obligated by law to have Statutes. Many (especially newer) communities have them, but not all do. Many function with just their internal rules.

  19. I can understand sometimes requiring a unanimous vote. I can understand the norm of accepting a simple majority vote. But to me there’s a basic unfairness about having a Yes/No choice and requiring a 60% majority.
    The motion is clearly ‘Do we limit VV?’, so if 59% approve then the 41% minority of owners actually win the day. I really don’t think this has been thought through.
    (Of course, if the question is ‘Do we permit VV?’ then the 41% lose, and the 59% win.)

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