Sep 5

Reform of Tenancy Laws

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imagesREFORM OF THE TENANCY LAWS

 

A much needed reform of the tenency laws has already entered into force. Given the fact that many Spaniards and ex-pats have chosen to invest their savings in real estate, while others do not have the means to buy their own housing in Sapin, the reform is a step in the right direction to meeting the needs of all parties. Therefore, law makers have sought to facilitate the leasing of many of these empty homes by altering the rights and obligations of each of the parties in the tenency agreeament..

The main novelties of the reform (law 4/2013, of 4 of June) are as follows:

1) The obligatory express extension of the contract goes from being five years to only three years, while the automatic “tacit extension” goes from being three years to only one year.

2) Faster eviction. In the event of non-payment, the eviction procedure can put into effect in just ten days. However, the tenant can avoid eviction if he or she pays the rent which is owed.

3) The tenant may leave the accomodation, after at least six months, as long as he or she gives warning at least one month in advance and without having to pay indemnities.

4) Landlords may reinstall themselves in the property if the accommodation becomes indispensable either for the landlords themselves, a first degree relative or a spouse (after a divorce or annulment).

5) After buying a property that is being rented, the buyer does not have to respect the terms and conditions of the tenency agreement. However, these terms and conditions will have to be respected if the contract has been registered in the land registry (registro de la propiedad).

6) If a tenant proposes a reform of the property, an agreement may be reached with the owner so that the cost of the reform is discounted from the monthly rent payments.

7) The tenency contract can be registered in the land registry, as a means of sealing the agreement.

8) A late payment register has been created which will allow landlords to find out which potential tenants have already disrespected previous tenancy agreements.

9) From June 1 2013, it is mandatory to have an “energy efficiency certificate” to be able to sell or rent real estate for more than four months.

 

HOLIDAY RENTALS

 

Lastly, one of the most controversial aspects of the reform is that it has suppressed the express acceptance that the old law made of so called “holiday rentals”.

It is no secret that the last few decades have produced a new trend of foreign tourists staying in rental accomodation during their holiday, instead of going to hotels. In 2011, for example, the growth of holiday rentals was 14.8%, while in 2012 the increase was 8.7%.

The decision to eliminate the express mention of theis possibility in the law is probably due to the hotel lobby, which loses significant profits with the popularity of rental accommodation. However, it has been suggested that such a move has infringed the rights of home owners who seek a viable solution to the unfavorable economic situation which we find ourselves in and who struggle to pay their mortgage.

Undeniably, there exists an underground market for these rentals, where taxes on rentals are not paid to the Spanish state, and this illegal leasing by seasons seems especially prevalent in coastal areas. It is estimated that this kind of fraud could amount to nearly to 2.926 billion euros. However, it has yet to be seen whether future laws will offer increased legal protection to those landlords who merely seek to lease their property in the proper legal conditions, avoiding any tax fraud.

Article published by Mark Athos Franklin, native English lawyer at the Rodriguez Bernal law firm.

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