These changes affect long-term rentals mostly.
If the landlord is a natural person:
- 5 years mandatory renewal period on long-term rentals (plus 3 years silent renewal). Before it was three years plus one.
If the landlord is a legal person:
- 7 years mandatory rental period on long-term rentals (plus 3 years silent renewal). Was three years plus one before.
- Additional bank guarantees demanded by a landlord on long-term rentals may not exceed a two-month deposit. Landlords typically request additional guarantees besides the compulsory one-month tenant deposit, especially when a tenant is a non-resident (because of the increased financial risk). These guarantees are now capped for legal persons acting as landlords. For physical landlords there is no change and they may keep requesting additional guarantees in excess of the 2-month deposit.
- Landlords - by law - will pay the commission to estate agencies on tenancy agreements. It was the case that tenants paid half or all this commission, whether directly or not.
The following changes affect all people, regardless of the legal status of the landlord:
- Inflation update: unless specified, all contracts will now be updated to bring them in line with inflation, referred to the IPC index as a benchmark reference during the first 5 years. Given how rental yields increased by two digits year-on-year over the previous three years, this measure basically caps any rental increase at one digit only.
- Non-renewal (for tacit renewal periods only): landlords must now give a 4-month notice, tenants 2-month notice.
- ‘Necessity clause’: must now be expressly worded into the contract to be triggered by a landlord. This clause legally allowed landlords to cancel a long-term contract ahead of the agreed duration (for personal use, for family use etc).
- Selling property: property buyers must now respect the whole duration of pre-existing lease agreements, even if they are not registered at the Land Registry. This may seriously jeopardise sales. If you want to sell your property, don’t lock yourself into an 8 or 10-year rental contract.
- Transfer Tax: payment of Transfer Tax by tenants on signing rental agreements has been removed.
- Subrogation: in the event that the tenant dies, if his family are in a vulnerable position (under aged children, physical or mental disability and over 65-year-olds) they can take over his legal position as tenant throughout the duration of the contract.
There are some more new laws that pertain to short-term holiday lettings:
- Spain’s Horizontal Act is amended allowing the Community of Owners to vote by a simple majority of 3/5 to ban outright holiday rentals within a community. This agreement has no retroactive effects.
- Spain’s Horizontal Act is amended allowing the Community of Owners to increase the communal quota assigned to a landlord (capped at 20%) of the overall community budget. In plain English, communities of owners may now vote to increase the community quota of a property owner who uses his property/properties as holiday lettings. This agreement has no retroactive effects.