REPEALED

On January 22, 2019, the Spanish Congress of Deputies repealed Royal Decree-Law 21/2018, dated December 14, concerning urgent measures on housing and rentals, due to insufficient majority in the chamber.

Only contracts signed between December 19, 2018, and January 22, 2019, are subject to the provisions of Royal Decree-Law 21/2018.

Yesterday, December 18, 2018, the Official State Gazette (BOE) published Royal Decree-Law 21/2018 of December 14, which introduced urgent measures regarding housing and rentals.

In this article, we analyze how this affects the regulation of residential leases, establishing new mandatory and tacit extensions, setting limits on additional guarantees at the time of contract signing, regulating real estate management fees, and adding a modification to the eviction procedure.

This Royal Decree attempts to justify itself as an urgent measure to curb rising rental prices, blaming to a large extent the surge of tourist rental apartments in cities such as Madrid, Barcelona, Las Palmas, Balearic Islands, Málaga, and Santa Cruz de Tenerife for price increases.

It is in Title I where the reform of the regulation of residential lease contracts is introduced, modifying Law 29/1994 of November 24 on Urban Leases.

From this reform, the extension of mandatory and tacit renewal periods in urban lease contracts stands out. The mandatory renewal period is set at five years, except when the landlord is a legal entity, for which the period is fixed at seven years. Regarding tacit renewal, it is established that upon contract expiration or any of its renewals, and once the mandatory renewal period has passed, if neither party communicates their intention not to renew, the contract will be automatically extended for three more years.

Additionally, some modifications directly affect the signing of the lease contract. On one hand, the maximum amount of additional guarantees beyond the security deposit that can be demanded from the tenant is set at two months’ rent, whether through deposit or bank guarantee. On the other hand, the law establishes that real estate management and contract formalization fees shall be borne by the landlord, provided the landlord is a legal entity.

To conclude Title I, a technical clarification is made excluding from the scope of the Urban Leases Law the temporary transfer of use related to the activity of so-called tourist-use dwellings, removing the limitation that such rentals must necessarily be marketed through tourist offer channels, and specifically referring to the applicable sectorial tourism regulations.

It is also notable that Title III incorporates a modification to the eviction procedure for housing when vulnerable households are involved, establishing that the eviction process will be suspended until social services adopt the measures they consider appropriate, for a maximum period of one month, or two months if the claimant is a legal entity.

The third final provision establishes that the regulation comes into force the day after its publication in the BOE, therefore taking effect from December 19, 2018.

To regulate contracts signed before December 19, 2018, transitional provision one specifies that such contracts will continue to be governed by the previous applicable legal regime.