Residential Tenancies Act enforced until recently, has been substantially amended by the new law of flexibilization measures and market development for rental housing, to be more precise, under the law 4/213. Changes mainly affect the first articles of the law, creating a new wording of these items after the new reform.

Articles or news that mainly affect the rental housing are the following:

  • Article 4 : concerning the applicable regime
  • Article 5: concerning excluded leases
  • Article 7 to 11: concerning contract length
  • Article13 to 20: concerning the resolution of contract and lease.
  • Article 23 to 25: concerning rights and responsibilities of the parties
  • Article 27: concerning the breach of responsibilities.
  • Article 35 y 36: the resolution of rights and bond.

Contract length

In regards to the duration of the contract, the substantial change lies in extending the minimum prescribed by law, previously located on 5 years and currently in 3 years, subject always that the parties may freely agree on the length.

Lease and security deposit

With the new law, leases are no longer increased annually based on applying CPI, but the parties are free to stipulate the annual increases in the amount they deem appropriate.

As for security deposit, the conclusion of the contract shall require the provision of an allowance equivalent to the rent, and during the first three years of rent, the deposit will not be subject to revision, however, the landlord may demand a deposit increase each time the lease is extended, back to match one or two months of rent regulations.

Termination of contract

According to this modification, the tenant can leave the house after the first 6 months of lease, in order to move the condition is to give notice 30 days before leaving. In addition, the tenant will not be subject to compensation. However, if the law provides that the parties may agree that the tenant compensates the landlord with one month´s rent for each year remaining on the contract.

Tenant Protection before sale.

If the property was alienated and the tenant has previously registered this lease in the property registration office, the new landlord shall be bound to remain in the tenant´s dwelling until the end of the contract. However, if the contract was not entered in the registry, the new landlord may, if it considers its rights, reliably notify the tenant of its new ownership, with a period of three months to allow housing to be free of occupancy.

The reforms

There is a possibility that the parties can reach an agreement to deduct from monthly rent the cost of the work performed by the tenant to improve the property.

Eviction

There is a new procedure that speeds up the eviction procedure called “Express against delinquent tenants”. These are for those contracts entered in the property registry. For those tenants it is given a legal deadline of 10 days from the record that tenant has one month of unpaid rent, if at the end of this period, the tenant does not satisfy the debt or no answer to the request, and it will mean the lease is terminated.

These are the major developments of the new law in the elaboration of lease contracts, some regulatory changes that affect and benefit both the tenant and the landlords, applying the new rights and obligations, subject to freedom of parties to agree on what they consider most appropriate.

In Daemi Zabalza & Asociados we are aware of the need to draft and review a lease as taking into account the client´s position – tenant or landlord- raising accordingly clauses that best suits their rights, and obligations, making it sustainable and accepted by the opposing party. We can also check out a lease and explain if this is convenient or not to you, or if ultimately there are omitted rights and duties that are inherent.