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The rental decree takes effect on Wednesday and the contracts will be longer

Published on March 07th 2019

The new regulation extends contracts from 3 to 5 years and prevents income increases above the CPI

He new rent decree, approved last Friday by the Council of Ministers, comes into force as of Wednesday, after being published on Tuesday in the Official State Gazette (BOE). Among the main aspects of this regulation is the extension of contracts from 3 to 5 years (or 7 if the lessor is a company) and the impediment to rent increases within the contract above the CPI. This will be the third regulation regulating the current rent in less than three months. As it is a decree, it will have to be validated within a month, and since the Courts are already dissolved, it must be the Permanent Deputation of the Congress who does it. The Socialist Executive has guaranteed (in principle) the necessary votes after gathering the support of Podemos and PDeCAT, which will foreseeably be joined by those of the PNV.

The main novelties of the decree (the duration and the renewal with the IPC) will only be applicable for new contracts that are subscribed as of this March 6. The lease contracts subject to the Urban Leasing Law of 1994, executed prior to the entry into force of the new regulation, will continue to be governed by the provisions of the legal regime applicable to them. However, when the parties agree and it is not contrary to the legal provisions, pre-existing contracts may be adapted to the legal regime established in the new decree.

Regarding the regulation of tourist housing, it has been determined that the communities of owners can by agreement of a majority of 3.5 parties limit or conditional the exercise of tourist rental activity or set certain conditions for its exercise. The objective of this modification of the Horizontal Property Law (LPH), proposed by the Ministry of Industry, Trade and Tourism, is to provide neighbors with instruments to facilitate coexistence and decide on the activities that take place in their community.

Likewise, the regulation includes the possibility of establishing increases of up to 20% in the participation in common expenses by tourist-use dwellings, and requires the availability of the necessary qualifications for the exercise of said activity.

Price reference indices

The regulation includes the elaboration of a state system of indexes of reference to housing, which will be used to monitor the market and serve as a support for fiscal measures. This benchmark index, for which the Government is working eight months, will be updated annually and will be as detailed as possible.

Although the draft of the royal decree did collect a bonus of 80% of the IBI for rental properties of habitual residence whose rent was lower than determined by this price index, the approved norm gives the municipalities and communities the possibility of deciding their housing policy in accordance with its fiscal framework.

The norm does contemplate the elimination of the obligation of the tenant to pass on the IBI in the case of social housing, and offers again to the municipalities the possibility of giving housing for rent limited rent by a legal standard a bonus of 95% of the entire IBI fee.

Extension of tacit extension and evictions

Parallel to the extension of the contract period, the decree establishes that the power to recover the property by the owner (natural person) must be "expressly included in the rental agreement". It also includes the extension of the tacit extension from one to three years and includes as a novelty the extension of the period of notice, which establishes four months for the lessor and two months for the lessee. Thus, the anticipation is increased with which it must be indicated that they do not wish to continue with the contract once the mandatory extension has been completed.

The decree states that lease contracts must always be respected by third-party buyers of the property, especially in the mandatory extension period of five or seven years. According to the Government, this measure is necessary to prevent possible practices of investment funds that acquire leased housing and decide not to assume the terms and conditions of current contracts.

In addition, the text states that the buyer of the house will have to respect the rental contract whether or not it is registered in the Property Registry. Likewise, the text establishes an exception to agree on the waiver of subrogation in long-term lease contracts. Thus, it establishes that in the event of the death of the tenant, in situations of vulnerability, the dwelling leased by the family member with whom he / she was living may be maintained.

Notification of evictions

It also establishes the systematic notification of eviction procedures to social services, so that there will be more time to analyze possible situations of vulnerability. It also introduces as a novelty the rule of the amount in the processing of tenancy procedures. Thus, the tenant will be allowed to resort to the verbal trial procedure in case of claims of amounts that are less than or equal to 6,000 euros. On the other hand, clarifies the obligation to indicate the day and time of the eviction, which will end with the releases with an open date.

The text returns to pick up from the previous royal decree, which last January brought down the Congress, the limitation to two months of rent the bond that can be required to the tenant. It also adds that real estate management expenses and formalization must be borne by the landlord if it is a legal entity or that improvements are made in housing during the contract, if there is agreement between the parties, among other measures.