On 24 August 212 the Council of Ministers passed the Bill for the Act on Measures for the Flexibilization and Promotion of the Rental Housing Market, in an endeavor to make the Spanish rental market more competitive.

In accordance with data published by the National Institute of Statistics, the Spanish rental housing market is composed of approximately 1.8 million dwellings, occupied by 17% of the Spanish population as opposed to the 83% who live in homes of their own. The aforementioned disproportion is evidence of the fact that, to date and in spite of the existence of a base of 3 million uninhabited dwellings that could be rented, the rental market does not pose an alternative to home ownership, which is why the aforementioned Bill seeks to streamline the rental housing market in our country as well as reinforce the legal certainty of such sector, improving the regulation of the eviction process in particular.

The main measures adopted for such purpose by the aforementioned Bill, and which entail the introduction of amendments to Urban Leasing Act 29/1994, 2 November, are briefly summarized below:

  • As in the case of non-dwelling leases, priority is given to the will of the parties, so that they may resolve:
    • To apply any improvements or reforms, agreed to be conducted by the lessee, to the payment of the rent.
    • The review of the rent (currently this is done in accordance with the Consumer Price Index).
    • The waiver by the lessee to first refusal rights in contracts with a term of less than five years.
  • The term of the rental contract will be as expressly stipulated between the parties, without prejudice to the establishment of the following reductions:
    • The term of compulsory contract renewal is reduced from the current 5-year period to 3 years and, consequently, the updating of any deposits is adapted to this new 3-year period.
    • The period of tacit contract extension is decreased from the current 3 years to 1 year.
  • The power of the lessee to withdraw from the rental contract is more flexible, and may be done at any time providing that the lessor is notified at least one month in advance. Without prejudice to the foregoing, the parties may stipulate that, in the event of the aforementioned withdrawal, the lessee should compensate the lessor with one month of the rent in force for each year remaining on the contract in force.
  • The power of the owner is recognized to recover the dwelling as his customary residence without the need to expressly envisage this option in the contract, while always providing that, (i) such dwelling is to be used as the customary place of residence for the owner, first-degree relatives or spouse in the event of separation, divorce or annulment and (ii) it is notified to the lessee at least 2 months in advance.

Likewise and together with the aforementioned measures to flexibilize the rental market, the Bill establishes that the buyer of a dwelling with a rental contract would not be obliged to maintain the tenant whose rental contract is not registered.

Lastly, with regard to improving the regulation of the eviction process, the Bill for the Act on Measures for the Flexibilization and Promotion of the Rental Housing market amends Spanish Civil Procedure Code 1/2000, 7 January, so as to expedite and reduce the periods and legal proceedings as follows:

  • When action is brought for eviction, the lessee will be given a period of 10 days in which to settle his debt or set forth the reasons justifying nonpayment.
  • If the lessee fails to appear, pay or duly justify the nonpayment, the Judge will deem the proceeding as terminated and proceed with the eviction.
  • The proceeding will be terminated by Court Order (as opposed to a decree from the Court Clerk).