Government’s agreement to end abusive increases in housing rental prices

The Spanish government has reached an agreement with one of the main opposition parties to properly regulatethe real estate market in order to end the abusive increases ofrental prices in certain areasof the country.

With the support of “Podemos” political party, the government is planningchanges to rental agreements related tothe minimum lease terms, lease extensions, guarantees/ deposits andthe rent review. For instance: when tenants are individuals, compulsory lease term goes up from 3 to 5 years and automatic rent renewal, that used to be 1 year, increases to 3 years. If the tenant is a legal entity, compulsory lease term will be 7 years and automatic renewal also 3 years.

It was established that the maximuminitial deposit or guarantee should be 2 months worth of rent and that the owner’s right of retrieving the property before the end of the legal rental period needs to be specified in the contract.

The 2019 government’s budget agreement includes various decisions that are relevant for the regulation of the real estate sector:

  • Enabling municipal councils to elaborate a benchmark rental price index (which will besubject to periodic review).
  • Allowing municipal councils to temporarily and exceptionally declare an urban area “stressed” in case the rental pricesare abusive and preventaccess to these dwellings.
  • The development of a 4 year plan to increase the number of rental dwellings at affordable pricesto a total of 20,000.
  • Giving powerto homeowner associations to forbid or limit touristic rentals.
  • Proposes the development of an action plan from the SAREB  – government-owned companythatis responsible for managing assets proceeding from the restructuring of the banking system – that promotes the use of properties managed by the SAREB as social housing with affordable rental prices, by agreements with the Autonomous Communities and Municipal.

These decisions are meant to produce an increase to 2019’s budget, in terms of Housing, of 630 million euros (38% more than in 2018) and with the intention to keep adding up during the following years: 700 million in 2020 and 1,000 millions in 2021.

In Ripoll & Mateu Solicitors Mallorca, we offer our clients a comprehensive service in everything required for the sale of a property.





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