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New law that will affect touristic apartments

The phenomenon of tourist rental of houses unleashed by digital platforms in the last two years will now have new limits within communities of owners. The first one will be political and the second economic.

The Official State Gazette published on Tuesday, December the 18th, the Royal Decree-law 21/2018, of December 14, on urgent measures regarding housing and rent reinforces the powers remarkably to the communities of neighbours and establishes that it will be enough with which three fifths of the owners of the community reject the use of a house like tourist so that it is permission will be denied.

 

In this way, the requirements to operate a home through platforms such as AirBnB or HomeAway become tougher, since up until now unanimity was required in the vote.

 

In addition, those who run touristic flats may be forced to increase their prices substantially to pay the new community expenses.

 

Community expenses up by 20%

The new law establishes that the community of owners may require the owner of a touristic apartment to assume up to 20% of the total expenses regardless of their quota.

 

Although the rule is not retroactive, it will have a large impact on the illegal offer of tourist flats in Coast, where there are a large number of these apartments. In extreme cases places such as Palma in Mallorca has led to the displacement of residents to other neighbourhoods due to tourist saturation and huge increase in letting prices.

 

Now, the communities of owners will need to consult the registers to denounce the tourist flats that do not have permission and, to those already registered, impose a high cost to operate in a building block or urbanization.

 

The Spanish Council of Ministers approved las December a royal decree law of urgent measures for rent by extending the terms of mandatory extensions in contracts to seven years as well as to three years if not agreed; limits to two months rents the guarantees demandable to the tenants or establishes a more protective administrative and judicial mechanism with the tenants in the process of eviction.

 

No limit to the rental prices though

However, it does not enable a legal framework that allows the local authorities to put a ceiling on house rental prices, a measure considered by the left wing political party of Podemos.

 

The royal decree includes a number of measures but, price control has been excluded from this new regulation because of its complexity to be applied and nevertheless they say that will be studied during this new year of 2019.

 

The Spanish Podemos political party was not convinced by the explanation given by the government. "We had agreed otherwise," recalled the other day from Guernica (Vizcaya), to then ask for a rectification and warn that "if the government violates the agreement" they will veto the decree.

The new regulatory framework for housing rental comes after several months of development within the Ministry of Development, which has made a wide range of consultations: from municipalities and autonomous communities to large investment funds that have thousands of homes in their portfolio to rent them after buying them at low prices from banks.

 

Ultimately, this law proposal must have received the approval of the Ministries of Finance and Economy.

It is obvious that this royal decree includes the initial proposals to contemplate measures aimed at limiting the price of rents in stressed areas, since the rental price is being normalize to a large extent of the country and some of the measures that had been proposed to control prices were not the most convenient way to improve the supply of rental housing.

The need to adapt the regulation comes with the escalation of housing rental prices in the last two years. Tax increases such as real estate taxes add to the explosion of formulas such as tourist rental through digital platforms and the fact that the acquisition and rental of a home is, according to the Bank of Spain, the alternative of a most profitable investment. While rental prices have risen in figures of two digits, the evolution of wages has been several times lower.

 

Legal evictions of tenants rocketed in 2018

The constant increase in the prices of apartments for rent is having consequences. The evictions of tenants for not paying the rent have risen by 4.3% during 2017. It breaks a downward trend in the three previous years, according to the data of the General Council of the Judiciary (CGPJ).

Specifically, a total of 35,666 families living on rent were evicted last year. This figure means that six out of ten evictions that took place in Spain in 2017 were related to rent.

At the same time that tenant’s evictions have risen to, those related to mortgages have fallen by 15% in 2017. These have declined progressively since 2013, to stand at 22,330 last years. In total, the legal cases made during 2017 were 60,754, 3.6% less than the previous year.

The communities where there were more evictions in 2017 were: Catalonia, with 13,308 legal cases (21.9% of all those that occurred in Spain), followed by Andalucía (10,437) and the Valencian Community with (8,207).




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