New Royal Decree on Housing & Rental

1st.- Elimination of the need to register the lease contracts in the Property Registry, so that it may produce effects with respect to third parties

It is no longer necessary for the lease contracts to be registered in the Land Registry so that they can have effects with respect to third parties during the period of minimum duration legally foreseen.

Thus, if during the first five or seven years of the contract, depending on the landlord being a natural or legal person, the right of the landlord is resolved by causes established in Law, the tenant may continue in the lease until the five or seven years are fulfilled with no need of the contract being registered in the Land registry.


2nd. – New duration of housing lease agreements and their extensions

5 years of minimum duration plus 3 annual extensions, with the exception of leases arranged by legal entities, in which case their duration will be 7 years minimum plus 3 annual extensions.

The termination of the contract must be communicated within four months in advance in the case of the lessor and two months in the case of the lessee.


3rd.- Denial of the extension due to the need of the lessor physical person

The new wording of Article 9.3 requires again, that the lease contract expressly states the cause of need that can be invoked for reducing the duration of the contract.


4th. – Impossibility to exclude continuation of heirs in tenancy for those tenants that are in a situation of vulnerability or affect minors, persons with disabilities or persons over 65 years of age

The possibility of heirs to continue with the contract and not be excluded during the minimum legal term, now 5 or 7 years. There will be no waiver agreement when the tenant is in a situation of vulnerability or can be seen as affected minors, persons with disabilities or persons over 65 years of age.

5th. – The limitation on the updating of the rent

A third paragraph is introduced in section 1 of article 18 that regulates the updating of rent limiting it to the IPC, applicable to all contracts and not only to reduced rent contracts.

6th. – The pact for raising the rent for improvements

Article 19 regulates the possibility of raising the rent for improvements. The precept is referring to all those cases in which it is the landlord who intends to carry out improvement works, regulating the elevation of the same that those works may bring with it. The repeated works must be agreed by the parties, without affecting the duration of the contract, being necessary that they exceed the duty of conservation that corresponds to the lessor.

7th. – Sumptuary dwellings and lack of definition of the tourist leases

Article 4 re-introduces the exclusion from the regime applicable to leases of housing, those traditionally known as sumptuary, that is, those whose surface is greater than 300 square meters or in which the initial income in annual computation exceeds 5.5 times the minimum interprofessional salary, also in annual computation. The legal regime of the leases of said dwellings will be subject to the will of the parties as was previously done.

In relation to the tourist apartments, the new text only adds a defining criterion of these which is “its marketing or promotion through tourist offer channels” or any other way of marketing or promotion”, which is clearly insufficient.


8th.- The attribution of the expenses of real estate management and formalization of the contract to the lessor legal entity

In this case, the attribution of said expenses referred to in article 20 in the new paragraph that adds to paragraph 1, is only the legal entity lessor, which is not therefore in the case of a natural person.

9th.- The right of preferential acquisition in favor of the Public Administrations

Article 25.7 and grants the rights of pre-emption and retraction with respect to the whole property, to the body designated by the competent Administration, in the case of joint sale of the rented property with the remaining existing or premises owned by the lessor that form part of the same property or, even if there are several owners, sell to the same buyer all the floors and premises of the former.

The objective of this modification is to put some type of control to the sales of real estate to Investment Funds.

10th.- New limits to the bonds and additional guarantees

In accordance with the provisions of the new second paragraph of article 36.5, in the case of rental of houses, the value of this additional guarantee may not exceed two monthly installments of the rent. Therefore, currently, the maximum guarantee period in its totality cannot exceed three months; one month deposit in cash, plus two months of additional guarantee.

11th.- The possibility of using quicker judicial proceedings

The requirement to resort to long ordinary declaratory judgment is eliminated in many cases, and it is established that most issues can be resolved through quicker oral proceedings when that amount does not exceed 6,000, – €.

12th.- The participation of Social Services in eviction proceedings for non-payment and expiration of the term

The participation of Social Services, at the specific request of the executed in a situation of vulnerability is allowed.

13th.- The new reference index system of the house rental price

The Provision provides for the elaboration of said index within eight months by the General State Administration, using data from the information available in the State Agency for Tax Administration, Cadastre, Land Registry, Administrative Registries for deposits and other sources of information; offering annually a list of average values of monthly income in euros per square meter of housing area, aggregated by census sections, neighborhoods, districts, municipalities, provinces and autonomous communities.




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