A few days ago, on December 14th “Real Decreto-ley 20/2018” was published in the BOE, which have introduced some changes in both “Ley de Arrendamientos Urbanos” and “Ley de Propiedad Horizontal”. Mainly regarding to contracts length, guarantee or bond, etc. In addition, related to tourist apartments and their regulation inside of homeowner associations. Therefore, if you are a landlord, tenant or a rental manager, this article will be useful.
In the following, we are going to highlight the main articles that have been modified in the laws mentioned above, which came into force on December 19th:
1.- Transitional regime.
The rental contracts are signed before this royal decree-law came into force. It will be a subject of the same legal regime, although both sides could agree to something different.
2.- Length of the rental contracts.
The legal period increased from 3 to 5 years where the tenant could stay in the rented house, unless the landlord is a legal entity. In that case, the period can expand up to 7 years.
Also, the period of tacit extension -after the 1-year compulsory extension expires-, it will expand from 1 to 3 years.
3.-Real Estate management costs and contract award procedure.
The landlord will be in charge of the management costs if he is a legal entity (a company, a business, etc). Unless these expenses are due to a service demanded by the tenant.
4.-Limits on the extra guarantee to the bond.
The additional guarantee to the bond has been limited up to 2 monthly rents, unless it is a long-term contract (more than 5-7 years depending on the tenant circumstances).
5.- Tourism apartments.
It has been specified in the rule the exclusion from the Law of Urban Rents enforcement to the properties of tourism use, letting its area of application to the industry regulation.
In the same way, regarding with the tourism apartments as well, the “Ley de Propiedad Horizontal” has been reformed, opening the possibility that the agreements for limiting or conditioning this activity is adopted in the same homeowner´s associations forum, a qualified majority must always exist (with at least three fifths of the votes).
CHANGES IN TAXATION
1.-The exception of the“Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados (AJD)” is when you enter into a property rental contract, with the condition that is going to be your permanent home.
2.-Modification in the regulation of the “Impuesto sobre Bienes Inmuebles (IBI)” is eliminating the obligation of payment for this tax by the tenant in social rentals. In addition, the Councils could establish a bonification up to 95% in the quote of IBI, for properties that are fixed to a limited rent price.
Also, other measures have been included in this royal decree-law, among them I would like to highlight the following:
-Encouraging to make reconstructions by removing physical barriers in buildings for improving their accessibility.
-Modification of the judicial procedures of dispossession, together with the social services they can get an alternative accommodation for evicted.
As a conclusion, we see that this range of measures launched by the Government, theoretically making it easier to access the rental contracts to certain group of people -as youngsters-, and in this way balancing the position between landlords and tenants. However, they seem to have a questionable effectiveness regarding to getting more guarantees for landlords; who are exposed to different risks when it comes to renting; so, in majority of cases they prefer not to rent, or just selling the house. They do not seem to achieve stopping the existing “bubble” on the renting prices in certain cities like Madrid or Barcelona.