I. Introduction
Royal Decree-Law 21/2018 of 14th December on urgent measures regarding housing and rent (“RD”) entered into force on 18th December 2018, but did not pass the validation procedure in the Plenary Session of the Congress of Deputies on 22nd January 2019, as it was repealed by agreement of the chamber.
II. Measures introduced by the repealed regulation.
During the thirty-five days that the new regulation was in force, the measures to reform the legislation on housing lease contracts introduced through various amendments to Law 29/1994, of 24th November on urban leases (“LAU 1994”) as provided for in Heading I of the new Royal Decree were applicable, among which the following should be highlighted:
a) A period of five years was set as the period of compulsory extension, for lessors who were natural persons, and seven years for legal entities.
b) With regard to tacit extension, it was established that, upon expiry of the contract or any of its extensions, and at the end of the mandatory extension period, if there was no communication from one of the parties establishing a will not to renew it, the contract would be extended for a further three years (instead of the annual extension introduced in 2013).
In this way, the deadlines established prior to the liberalising reform operated by Law 4/2013, of 4th June, on measures to make the housing rental market more flexible and the promotion thereof, were recovered.
c) Furthermore, the maximum amount of guarantees in addition to the one-month deposit that could be required of the lessee, either by deposit or bank guarantee, was set at two monthly rentals, except in the case of long-term contracts.
d) It was also established that the expenses of real estate management and the formalisation of the contract would be charged to the lessor, when the latter was a legal entity, except for those services that had been contracted by direct initiative of the lessee.
III. Regulation in force as from 24th January 2019
With the repeal of the RD, housing lease contracts are again governed by the LAU 1994, with the modifications operated by the liberalising reform of 2013, among others.
a) The term of the mandatory extension of the housing rental contract has gone back to three years.
b) The tacit extension when the contract expires – or any of its extensions – without either of the parties notifying the other of their will not to renew it, returns to one year.
c) Additional guarantees to the deposit of one month’s rent that can be demanded by the owner – and agreed by the parties – are again unlimited.
d) The costs of real estate management and the formalisation of the contract are again to be borne by whoever the parties agree upon (which, in practice, are usually the tenants).
IV. Conclusion
Without a doubt, the regulation of housing rentals is an issue that is on the agenda of Spanish politicians, so we must expect a new reform in the short or medium term to balance the legal position of owners and tenants.
Carla Villavicencio
Vilá Abogados
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1st February 2019
