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What you need to know about Spain's 2018 rent law changes

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What you need to know about Spain's 2018 rent law changes
Photo: Jocelyn Erskine-Kellie/Flickr
08:40 CET+01:00
Essential reading for anyone letting out or renting a property in Spain in 2018.

Spain has just unveiled a new set of rental changes which give homeowners greater veto powers against holiday home rentals and offer extra security for tenants, but still don't solve the issue of rising rent prices in much of the country.

No price cap

Spain’s cabinet has decided against fixing rents in cities and neighbourhoods where prices have spiraled out of control, under the pretext that the country’s Ministry of Economic Development needs more property market data before taking such a measure.

“We agreed during budgetary pact that we had to control rent prices to lower rents,” left-wing alliance leader Pablo Iglesias tweeted following the announcement.

“If the government doesn’t comply with our agreement we’ll vote against the decree.”

The recent leap in rents comes as Spain is still reeling from a devastating economic crisis that kicked off in 2008 when a housing bubble burst, leading to the eviction of thousands of indebted families who had bought their homes on credit.

FIND OUT: Why rising rents across Spain are causing a new crisis

Longer leases

Average tenancy contracts will go from being three to five years long, or seven years in cases where the lessor is a legal entity. It’s a measure meant to give greater security to the tenant, but the measure, as is the case with all others, isn’t retroactive.

In cases where the rental agreement expires and neither the lessor nor the lessee make their intentions vis-à-vis the property known, the implicit renewal of the tenancy agreement (known as plazo de prórroga tácita in Spanish) will now be of three years rather than one.

Maximum two-month’s deposit

Landlords will no longer be able to ask their tenants for anything more than two months of rent as a deposit, unless the tenancy contract is longer than the now five years standard length.

The same applies to any bank guarantee required from the tenant when signing their rental agreement.

Lessors who are legal entities or companies will now also have to cover all agency and contract costs by law (gastos de gestión inmobiliaria y de formalización del contrato).

According to the decree it will now also be easier for lessor and lessee to reach an agreement to revamp or improve the dwelling before the end of the tenancy contract. 

READ ALSO: Five things nobody tells you about renting a property in Spain

Neighbourhood protection against holiday rentals

This change to Spain’s Ley sobre Propiedad Horizontal - the legal code overseeing the regulation of apartment buildings – will allow property owners to decide whether or not to allow short-term holiday rentals in their buildings by calling a vote.

For homestay portals such as Airbnb to be able to operate in any given building, three quarters of the owners that make up a homeowners’/residents’ association will have to approve their entry.

The same ratio will be needed to increase any levees meant to cater for short-term holiday rentals in their building. The measure is again not retroactive so can’t apply to any properties currently being rented out for short stays.

Some tax breaks

Property owners and tenants who register their tenancy contract properly will be exempt from paying property transfer tax and stamp duties (Impuesto de Transmisiones Patrimoniales y el de Actos Jurídicos Documentados ) if the dwelling is for stable and permanent use.

Tenants in social housing won't have to pay council tax anymore and councils with financial surpluses can now use such funds for social housing.

There'll be a reduction in costs short term tenants and property owners who leave properties unoccupied will have to pay more council tax, the Impuesto de Bienes Inmuebles (IBI).

RENTING PROPERTY IN SPAIN - Know your rights as a tenant

 

 

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