A caution to Landlords, Buyers and LendersCampbell Ferguson / TM Expert
25th May 2021 at 2:59 pm
In March 2019, the Rental Law was changed with effect on new leases from March 6th 2019, which extended its relevance to buyers and lenders.
It does not apply to short term rentals of 3 months or less, or to ‘luxury rentals’ of more than 300 sq m or where the monthly rental exceeds 5.5 times Spain’s minimum wage. (March 2021 = 5,775€ euro).
1. All purchasers of property must recognise and permit occupation of a property by an existing tenant, whether it is rented on a Registered Lease or informally, after the date of the legislation. An 11-month lease doesn’t, and never has, avoided tenant’s occupation privileges.
2. A tenant has a right to occupy a property for 5 years, with that being continued for up to 3 years thereafter, unless the appropriate notice to leave has been issued by the owner.
3. Rents are restricted to a maximum increase annually of the CPI (Retail Price Index)
4. This also applies to companies acquiring a property as security for a loan.
5. The landlord must pay all the lease creation and management costs.
6. A pre-emptive right for a tenant to purchase and additional indexing of rents, have been left to the Autonomous Communities to legislate.
As a result, it is extremely important that buyers and lenders ensure that a property is not tenanted, formally or otherwise, at the time of them acquiring the property or at any time during the period of the loan.