On Friday, March 15, we participated in the information session co-organized by the Girona Real Estate Agents Association and the College of Property Administrators, regarding the approval of Royal Decree-Law 7/2019, of March 1, on urgent measures in housing and rental matters. This decree came into effect on March 6, introducing the following modifications affecting lease agreements (items in blue were not included in the repealed Royal Decree 1/2018, of December 21):
- Minimum contractual period, extended from 3 to 5 or 7 years. The mandatory renewal period for residential lease agreements is extended from 3 to 5 years (or 7 years if the lessor is a legal entity). Thus, the legal minimum period in which the tenant can remain in the leased property is increased.
- Extension of the tacit renewal period from 1 to 3 years. This is the temporary period for which the contract is extended once the mandatory renewal period has expired. If the lessor or lessee does not express their intention not to renew it, it will be automatically extended for annual periods up to a maximum of three more years.
- Increase to 2 months for the notice period for non-renewal for the tenant, and 4 months for the lessor.
- For the denial of renewal due to the lessor's or family's need for the property, it must be expressly provided for in the lease agreement; otherwise, it will not apply.
- Strengthening the possibility of subrogation in the event of the tenant's death, favoring certain vulnerable profiles such as minors, disabled individuals, or those over 65.
- Unregistered contracts will once again have effects on third parties, meaning that in the case of a sale of a leased property, the tenant will be protected, whether or not the contract is registered in the Property Registry. Previously, if the tenant did not have their lease registered, the lease agreement was terminated in the event of a sale or mortgage foreclosure, according to the reform introduced by Law 4/2013. Now, it will not be necessary to have the contract registered in the Property Registry.
- Implementation of measures to prevent evictions when tenants have low economic capacity, social vulnerability, or family responsibilities in certain cases.
- Rental updates during the contract's term are subject to the CPI.
- It is anticipated that autonomous communities and municipalities will create their own index to "design their own public housing policies and programs," but no legal framework is created to limit increases.
- Limits on additional guarantees to the deposit, up to a maximum of two monthly payments, unless it is a long-term contract.
- Formalization contract expenses: It is established that real estate management and contract formalization expenses will be borne by the lessor, in any case, when the lessor is a legal entity (a company). The exception of expenses incurred by the lessee's direct initiative for real estate management and contract formalization is eliminated.
- A right of first refusal and withdrawal is established in favor of public administrations when the entire property is sold.
- TAXATION: Regarding the fiscal measures established to stimulate supply, the proposal is to enable a 50% tax on the IBI (Property Tax) of vacant housing, grant up to a 95% discount on the IBI for housing subject to a limited price, and eliminate the Property Transfer Tax in habitual residence rentals.
The modifications affecting Law 49/1960, of July 21, on horizontal property, do not apply in Catalonia because:
- The possibility of enabling, by a qualified majority of three-fifths of the owners in neighborhoods, to adopt agreements limiting or conditioning the exercise of tourist rental activity for residential purposes, to favor coexistence in residential buildings. In Catalonia, the favorable vote of four-fifths of owners with the right to vote is still necessary, representing at the same time four-fifths of the shares (Art. 553-25.2.a CCCat in relation to Art. 553-11.2.e CCCat).
- The increase, by a qualified majority of three-fifths, up to a maximum of 20% of the share of common expenses corresponding to a private element used for tourist housing. In Catalonia, with certain differences, Art. 553-45.4 CCCat is applicable.
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The increase, within three years, to 10% of the reserve fund of property communities, establishing the possibility of allocating it to works related to accessibility. In Catalonia, the reserve fund cannot be less than 5% of the community's budget (Art. 553-6.1 CCCat).
