Shorter rental contracts enhance supply

rental reforms in Spain
More protection for tenants and landlords

Secretary of State for Infrastructure, Transport and Housing, Rafael Catalá, has said that reducing the maximum duration of rental contracts will bring more properties to the market.

Catala noted that the amendments to the law on Urban Leases (LAU) and the civil procedure that were presented to government last week will make the market more “flexible” for both parties.

“The new law sets the same rules, but we have to govern the agreement between the parties in rents, in pricing or completion conditions for both parties,” argued Catala.

The minister also stressed that the reforms would also help landlords in the case of default making it easier to evict non-paying tenants as currently this can be “slow and sometimes frustrating for the owner.”

Under the reforms defaulting tenants will be notified of a ten-day period within which the outstanding balance must be paid. If it is not paid with no valid reason then the court will issue an eviction order immediately.

Under the previous law there was no simple way for a landlord to retake possession of their property without the agreement of the tenant. If the tenant was up-to-date with payments and refused to leave then there was little option left for the landlord for a period of five years. This was due to the “prorroga forzosa”, or forced renewal, which meant that on the anniversary of the contract it would automatically renew for five years, leaving the landlord with few options.

Under the reforms this will be reduced to three years. Landlords will also benefit from a new clause that says that if the property owner “needs” the property for his own or his families use they can remove the tenant by giving them notice of at least two months.

However, there is also good news for tenants who may now cancel their rental contract at any time provided they give notice of at least one month.

According to Secretary of State, there are 1.8 million rental properties in Spain out of a total of 25 million owned homes, “while in the rest of Europe the proportion is reversed, with between 65% and 70% of buildings rented, and only 35% to 40% owned. ”

“This has to do with the culture of Spanish citizens,” admitted the minister, but also that the law has “failed to guarantee security,” he concluded.

It is hoped that the reforms will encourage more property owners to rent their properties knowing that their property and their right to cancel are protected by law.

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