News in the Urban Leasing Law

This Blog by Mercury Abogados in Marbella focuses on the main changes and/or novelties introduced in the Spanish Urban Leasing Law through the Royal Decree Law 7/2019, on urgent measures regarding renting and properties.

One of the most relevant changed that has been introduced in the law has been the extension of the term of the contracts. On the one hand, when the landlord/landlady is a natural person, the mandatory extension period in favor of the tenant is 5 years. On the other hand, when the landlord/landlady is a legal entity, the mandatory extension period is 7 years. Therefore, the term of the contract is closely linked to the landlord / landlady / lessor (If it it a landlord/landlady or a legal entity), thus being able to be 5 or 7 years.

With regards to the previous paragraph, when the expiration date of the contract or any of its extensions, and none of the parties had notified the other, at least 4 months before that date in the case of the landlord/landlady and at least 2 months in advance in the case of the tenant, his/her your willingness not to renew it, the contract will be extended for annual terms up to a maximum of 3 years, unless the tenant declares the landlord 1 month in advance of the date termination of any of the annuities, his/her willingness not to renew the contract.

For the update of the rents, normally we are to the variations that undergoes the CPI (consumer price index) IPC in Spanish.However, now there is also the possibility of the parties agreeing to take other rent update formulas, as long as they do not exceed the variation experienced by the CPI for the period in question.

Other  news in the Urban Leasing Law

The lessor may also require the tenant to provide additional guarantees in addition to the deposit, and the value of this additional guarantee may not exceed two monthly rent payments.

On the other hand, the Law establishes that the costs of real estate management and the formalization of the contract will be charged to the lessor, when it is a legal entity.

In relation to the improvement work carried out by the lessor, after 5 or 7 years of the contract, depending on whether the lessor is an individual or a legal entity, unless otherwise agreed, the lessor may increase the annual rent by the amount resulting from applying to the capital invested in the improvement the legal interest rate of the money at the time of completion of the work increased by three points, without exceeding the 20% increase in rent in force at that time.

  Finally, it should be taken into consideration that this law is not retroactive, therefore, it will be applicable to those contracts that are signed form of 6th March, 2019.

Please do not hesitate to contact our Law Firm in Marbella if you have any questions regarding property leasing or when buying or selling a property, our team of experts lawyers in real estate law in Marbella will be happy to advise you and carry out all the formalities and procedures to assist you in the rent, purchase or sale of your property.