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NEW DECREE-LAW ON HOUSING AND RENTAL IN SPAIN

inform you that the Consejo de Ministros meeting today Friday 01/03/2019, has approved a new Decree-Law on housing and rent, whose publication in the BOE and entry into force is expected for the next few days.

It leaves us an important headline, and that is finally NO system of regulation / limitation of rental prices as it was intended from different parliamentary groups, and whose absence in the previous Decree-Law has already led to its subsequent repeal. .

This Decree seems to reproduce almost all of the measures of the previous Decree-Law that was repealed in January, which in this way will be again applicable, such as the longer duration of the contracts (of 5 or 7 years, depending on whether the owner is a natural or legal person), the extension of the period of tacit extension to 3 years, the limitations to the guarantees attached to the bond at two months, or the exclusion of the holiday rental from the LAU, to name a few.

Regarding the main developments with respect to the previous Decree-Law, at the expense of analyzing the final text that is published, I summarize some of those that seem the most important:

– The notice period foreseen for not renewing the contract for the tenant and four months for the landlord is increased to 2 months.

– Lease contracts not registered in the Property Registry will be effective before “third parties”, so the buyer of a house with a current lease will have no choice but to respect the contract until its completion.

– A state reference index of the house rental price will be created within 8 months, which according to the Ministry of Development, will serve as support to the Autonomous Communities for the purpose of applying tax incentives.

– The updating of the rent will be subject to the IPC during the term of the lease contract.

– The reasons of necessity that activate the faculty of recovery of the house by the owner to assign it as their habitual residence, that of their children, parents or spouse, should be previously expressly included in the contract.

– There will be the possibility of subrogation in the event of the death of the tenant in favor of certain vulnerable profiles such as minors, disabled or over 65s.

– The costs of real estate management and formalization will be borne by the lessor provided it is a legal entity, which was already established in the previous repealed Decree, at the expense of the text that is published in some particular nuance the previous wording.

– In addition, other support measures for the most vulnerable groups are agreed, such as greater coordination with social services to protect the evicted in cases of vulnerability and the obligation to set a date and time for eviction.

Waiting for your usefulness, receive a cordial greeting.

José Manuel Alvarez
Legal Department