More flexibility, more control, and new rights: How the Spanish government wants to boost the crippling tenancy market and what implications this will have.
By Daniel Olabarría
On 6th June of this year the Law 4/2013 of 4th June on the Spanish Tenancy Market came into force. The reason for the revised version of the former Spanish Tenancy Law is explained in the preamble:
“The Spanish real estate market is characterised by a high number of real estate and a weak tenancy market. In Spain, only 17 per cent of the population live in rented accommodation, as opposed to the European average of 30 per cent,”
it says.
The measures adopted are mainly targeted at private owners of vacant dwellings that are to be encouraged to enter long term rental agreements.
New rent act in Spain: More flexibility, more control, and new rights.
The previous law provided for a very high legal tenant protection. The result was that landlords preferred to leave the apartments empty rather than let them, and risk being bound five years to a tenant. Also the sale of a real estate was made difficult by the letting of property.
The new requirements now apply to all contracts as of 6th June 2013. A key change is that the specific rules in the tenancy agreement are no longer in detail enshrined in the law. Instead, landlords and tenants can make their own arrangements, as long as they respect the legal framework of the Tenancy Law.
Contract duration
Until now the required minimum tenancy was set for five years and extended itself respectively automatically by a year. This period has now been reduced to basically three years.
However, tenant and landlord may agree on a shorter tenancy, and the landlord is entitled to terminate a tenancy agreement because of own needs. Previously own needs had to be expressly stated in the agreement in order to later be able to be invoked by the latter in the event of termination of the agreement. According to the new law, however, a simple notice now suffices.
In the case of an implied contract term of three years, in which neither the tenant nor the landlord terminate the tenancy, the tenant has the right to remain a further year. Previously the law stipulated that a tenant could stay up to three more years.
Termination by the Tenant
The tenant may terminate the tenancy agreement any time. The only requirement is that at least six months have elapsed since the beginning of the tenancy, and a notice of termination of 30 days is given. Even if a longer period has been agreed upon in the agreement, such a communication to the landlord is deemed to be sufficient to terminate the agreement without having to pay an indemnity. According to the law you can however add a clause in the agreement, which stipulates that the tenant in event of termination has to pay the landlord the equivalent of one month’s rent per pending contract year. This regulation is supposed to enable more flexibility. Tenants can so respond more easily to any change in their personal circumstances.
Sale of the apartment
Very popular for long term rent in Mallorca: Comfortable Villas with sea view.
The parties may agree that the tenant waives the right of first refusal. Otherwise, the seller is obliged to inform the tenant about the terms and conditions of purchase, so that the latter can exercise the right of first refusal. Previously, waiver clauses were also inserted in permanent tenancy agreements, however, these were null and void.
According to the old rules, the buyer of a rented apartment had to take over and maintain the conditions of the tenancy agreement. Only after expiry of the agreement, the new owner could inhabit the property himself/herself. According to the new regulation this obligation is now only applicable if the tenancy agreement was also registered in the land registry. Otherwise, the new owner can give the tenant a period of three months to leave the apartment. It is also specified that other rights of the tenant can only be exercised against third parties if the agreement has been registered in the land registry.
Debtor’s list
In the coming months, in order to provide the owners more legal certainty, a list of the Court rulings on unpaid rent will be set up. It shall inform about the risks of letting property to people, who in the past did not meet their specified payment obligations and were sentenced to vacate the property.
Thus owners are supposed to be protected against letting to such persons, who did not pay their rent.
Also the old distinction between conventional and luxurious apartments has been abolished and the parties enjoy here also contractual freedom within the legal framework. Distinct rules applied in the past to let apartments with a living area of more than 300 square meters or an annual rent, that exceeded the level of the statutory minimum wage by 5.5 times. These contractual relationships were previously not subject to the existing Tenancy Law.
A further innovation has great significance especially for the Balearic Islands as a tourist destination. Now Holiday Rentals are for the first time excluded from the regulation of the Tenancy Law and are subject instead to the tourism laws of the respective regions. That gives the regional government more leverage (MZ reported).
While revising the law also articles with respect to the Civil Procedure Law were adjusted in order to facilitate such procedures. Despite all appearances, this will not result in a reduction of the periods of forced evictions.
Hi, Looking into the tenancy law updates and the fact that landlords or agents are supposed to be registered by law I believe we were caught short somewhat. We had what just looked like a typed up contract by our last agent working for the owners villa in Andalusia which outlined basics and a one year residency. The villa was filthy and we cleaned it up and the agent had two cleaners in for two days also after we said it was bad. After travelling a long way to get there in a camper van we needed a stopping break from our travels so we persevered with things. The details would take to much time to tell you, or though I have photos and a written account of things. Anyway to cut the story short as it neared to the one year expiry we sent an email to the agent saying we were going to move out 30 days before the year was up. His response from the owner and himself was if they cannot get a replacement in then we would be expected to pay the rest of the year and pay utilities up to the last as well. I asked the agent if he was registered as he has been selling and renting for years, to which he said NO and none of his other properties were. We said we would be leaving on a set date after all and he was going to collect the keys but didn’t as he sent a friend along, another tenant incidentally. We turned the electric off for safety as their was a swimming pool too, but lo and behold they found someone else to take the contract on when my year was up and not before and gave them access to move things in and clean a bit (rubbish as it was well cleaned) and they turned on the electric and changed water in the pool etc and says we are still responsible for the bills to the end of the month. They even kept €50 euros of our deposit even though they had a separate €200 for utility bills also and the water was only just paid. I could go on and on. Disgusting treatment and to cap it all after so much effort decorating and fixing the garden nicely they put the rent up €150 per month for the new tenant, that tells you how much we did to the property huh.