Important changes in Spain’s Urban Lease Law (LAU)

 In News, Real estate, Uncategorized

On December 18, the Real Decreto Ley 21/2018, of December 14, of urgent measures in the field of housing and rent has been published in the BOE, which incorporates very important changes in the field of housing lease in the Spain’s Ley sobre Propiedad Horizontal (Urban Lease Law).

This Real Decreto Ley has entered into force the day after its publication and has no retroactive effect, so it will not be applicable to lease agreements signed prior to that date.

The most significant modifications are:

  • It returns to the principle of freedom of pact in housing leases of more than 300 sqm or initial rent exceeding 5’4 times the minimum interprofessional salary.
  • The lease of tourist use, in all cases, is definitely excluded from the LAU (Urban Lease Law). The minimum mandatory duration of the contracts is extended at 5 years if the owner is a person and at 7 years if it is a legal entity.
  • The duration of the legal extension is extended to 3 years
  • It is established that in reduced-income contracts (these are those where rent is below that established), the update will be made by applying the IPC while the mandatory term of duration lasts- 5 or 7 years respectively.
  • Expenditure on real estate management and contract formalization will be paid by the landlord when it is a legal entity, except for those services that have been hired directly by the lessee.
  • A maximum of 2 monthly payments is made to supplementary additional guarantees. If the contract lasts more than 5 or 7 years, these guarantees may be extended.
  • An exemption from the payment of the ITP to the tenants is approved.
  • The procedural regulation is modified in the handling of evictions. Social services will intervene in the procedure at the request of the defendant, in the event of a situation of vulnerability, and the procedure can be suspended (1 month if the owner is a person or 2 months if he is a legal person) until social services consider appropriate mesures. After the deadline the procedure will continue its processing.
  • A new right of withdrawal is introduced in favor of the administration in certain cases of joint sale.
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