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Further action to implement the rental sector

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The Spanish Government approved in the last Congress of Deputies of this legislature a Royal Decree with urgent measures to implement the rental sector. This new regulation implements with important modifications the existing rule, that both landlord and tenant must get to know. Hermes & Mathew introduces all the useful information to you.

Although most of the measures have been recovered from the previous Royal Decree of mid-December that was not approved in the Congress of Deputies, there are changes that come into force and are important to pay to. Duration of the contracts extension, limitation of the rise in the price of the rental property, Consumer Price Index (CPI), or additional guarantees in addition to the deposit, are some of the novelties incorporated in the new regulation.

Property rental sector – Contracts

Regarding lease agreements, the new Royal Decree includes,

  • Rental contracts duration is expanded from 3 to 5 years (7 years, if the lessor is a legal entity), with an option to be extended from 1 to 3 years, if neither party do not object elapsed the first 5 or 7 years.

However, this is a measure without retroactive effects, and only applies to new leases signed since the new law came into force.

  • In the event that the owner (natural person), would like to recuperate the property during the term of the contract, the new RD establishes that it must be “expressly included in the rental agreement”.
  • Except for long-term contracts, the deposit is limited to 1 month and 2 months of rent, and the additional guarantees to the deposit (such as, – amount in deposit, bank guarantee, personal guarantee -, among other options).
  • The time for notifications is increased by the landlord and the tenant when it is desired to terminate the contract, once the expiration date of the contract or any of its extensions has arrived. In the event that the landlord want to send a notification to the tenant, it should be done at least 4 months in advance. If the tenant is the one who wants to leave the apartment, he or she must notify at least 2 months before the departure.
  • The increase in the price of rental properties will be linked to the Consumer Price Index (CPI) during the lease term.
  • From now on, if the landlord is a legal person, will be charged the costs for real estate management and contract.
  • If a third party buys a rental property, the current contract regardless of whether or not it is registered in the Property Registry, will be respected.
  • In rented dwellings with vulnerable members (disabled persons, minors, people over 65), in case of death of the contract holder, the rent will be subrogated to the rest of the tenants.
  • A state reference index of properties rental price is established. This tool helps to monitor the market that aims to help the Autonomous Communities to set fiscal measures. It will be updated annually and is intended to be as detailed as possible.

Tax measures for rental sector – Properties

In parallel with these measures, the Royal Decree also considers other fiscal measures for renting properties which provide benefits to both the landlord and the tenant. The most outstanding are,

  • Owners of officially protected properties wanting to rent them, – but at a limited price by the City Council or the Autonomous Community -, may obtain a bonus of up to 95% on the Property Tax (IBI).
  • Tenant will not have to keep paying for the Patrimonial Transfer Tax (ITP) when signing a rental contract for a permanent and stable home.

These are, outlining the main features, the most important measures included in the new regulations regulating housing rental market.

Please note that Hermes & Mathew is your reference Real Estate Agency, the most prestigious and professionalism in Barcelona. Our portfolio offers a wide range of apartments for rent and especially properties for sale and tourist flats, in the best areas of the city.