The Urban Leasing Law (LAU) regulates the legal aspects of real estate law in Spain and Fuerteventura. Over time, it has undergone modifications that have changed important issues such as the duration of lease contracts or rent increases. Here is a summary of the most relevant points for residential leases, including the novelties introduced in 2023:
Duration of the lease contract:
The duration of a lease agreement is freely agreed upon by the parties.
If it is less than five years (or seven years if the lessor is a legal entity), upon the expiry of the contract, it will be automatically extended for annual periods until the lease reaches a minimum duration of five years (or seven years if the lessor is a legal entity).
However, there is an exception: the tenant can terminate the contract by giving 30 days’ notice before the end of the term or any of the extensions.
In 2023, a novelty was added to article 10 of the LAU: when the mandatory period or the tacit extension of a lease contract for housing under this law ends, the tenant can request an additional extension of up to one year. During this extra year, the current conditions of the contract remain in force. To request this extension, the tenant must demonstrate that they are in a situation of economic and social vulnerability with a recent report from municipal or regional social services.
New developments in rental prices 2023:
The semi-annual update of the value is based on the “Own Home Index.”
Rentals in dollars or other foreign currencies are prohibited.
The minimum contract period remains three years.
In summary, the Urban Leasing Law is crucial for real estate leases in Spain, and these modifications seek to protect both lessors and tenants, establishing clear and equitable rules.
In 2024, the housing law will enter its second year of enforcement, and new changes will be implemented affecting both tenants and landlords.
Below, I present the main updates of the housing law in 2024:
Cap on rent increases:
In 2024, the maximum limit for rent increases will be 3%.
This cap will apply to all lease agreements, both in tense and non-tense areas.
The goal is to curb the rise in rental market prices that has occurred in recent years, thus benefiting tenants, who will be able to save money on their monthly rent.
Tense areas:
Areas with high rental demand are considered tense areas.
The law aims to regulate prices in these areas to prevent imbalances and ensure access to housing.
Limitation of prices referenced to major landlords:
Limits are set on rental prices based on the type of landlord.
Major landlords (owners with many properties) will have additional restrictions on the prices they can set.
Reduction of the number of properties to be considered a ‘major landlord’:
The minimum number of properties a landlord must have to be considered a major landlord is adjusted.
Limits on the reference price index for new properties:
Limits are set on the reference price index for newly constructed properties.
Elimination of the CPI as a reference index:
The Consumer Price Index (CPI) will no longer be used as a reference for rent price updates.
New measures to protect vulnerable tenants:
Additional measures will be implemented to protect tenants in situations of economic and social vulnerability.
Obligation for the owner to cover real estate expenses and fees:
Expenses related to contract formalization and real estate fees will be the responsibility of the landlord.
Increase in the percentage of land reserved for protected housing:
More land will be allocated for the construction of protected housing.
In summary, these modifications seek to balance the rights and responsibilities of tenants and landlords, as well as ensure adequate access to housing for all citizens. If you have further questions or need specific legal advice, I recommend consulting with a lawyer specialized in real estate law.
