Housing rental contracts’ changes in Spain, mallorca

Just before the end of 2018, the Spanish government approved new regulations, making changes to five different types of legislation, all in order to improve access to housing and enhance the long-term rental market at affordable prices.

Although the actual duration of housing rental contracts is not regulated, the period of mandatory extension has been increased from 3 to 5 years (or 7 years if the landlord is a legal entity), meaning that even if a contract is signed for less than 5 (or 7) years, the tenant has the right to extend the duration until it reaches that term. Also, if a contract reaches its term and none of the parties have communicated that they wish to terminate it, a new period begins in which the tenant has the right to extend the contract for a at least 3 more years (this used to be only 1 year).

As there is usually more demand than offer for permanent housing, this change puts a limit on a landlord’s “power” and protects tenants from some unfair contract conditions. Tenants can, however, request termination of a contract at any time after the first 6 months, as long as there is a 1 month notice and subject to a penalty also defined by the law.

It is important to note that there is nothing preventing a landlord from increasing the rent when a contract is renewed/extended, therefore in spite of giving the tenants some stability in terms of time, in reality this change cannot guarantee nothing more than exactly that: temporal stability.

Another change was the limit put on the initial deposit that can be requested to the tenant: now a maximum of 2 months’ rent in addition to the 1 month legal withholding rent. In some cases, this new rule considerably reduces the initial down payment that must be made by someone who rents an apartment, as some landlords used to request excessive deposits, as high as 6 months’ rent. On the other hand, there might be exceptions to this rule if the contract has a long duration.

Regarding administrative fees and taxes, some measures have been taken also to reduce the economic burden for tenants when signing a new contract: Property Tax reduction on social housing; if the housing rental contract is for stable and permanent use, the tenant will be exempt from paying Property Transfer Tax; and when the lesser is a legal entity, management expenses are now on them.

If the tenant wants to make improvements to the property rented, it is now easier, as an agreement between the owner and the tenant for renovation or improvement works is now possible in the course of the contract, without having to wait – as it has been up to now – for it to end.

On touristic rentals, if before unanimity was needed, now a majority of three fifths of the owners community can limit or prevent the touristic rental activity, in order to promote neighbours’ coexistence in residential buildings.

Finally, these new regulations do not apply to owners renting (whole) properties greater than 300 square meters or with an initial annual rent that exceeds 5.5 times the minimum wage (also annual) – so more than €4.000/pcm.


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