The 7/2019 Royal Decree amends, among others, the Law on Urban Rentals.
The most significant changes are the following:
- The minimum term of a contract has been extended fromthree to five years for individuals and seven for companies; consequently, if the agreed term is less than the aforementioned periods, the tenant will be entitled to extend it for annual terms until it reaches the five or seven year term.
- The automatic renewal has also been extended from one to three years once the minimum five or seven years period has elapsed. In order to avoid this automatic extension, landlords must give a four months’ notice to end the contract and tenants must do so in two months’ notice.
- Purchasers will take over the rights and obligations during the first five or seven years of the contract even if it is not registered in the Land Registry and also when it meets the requirements of Article 34 of the Mortgage Law.
- Additional guarantees to the deposit (one month for residential rentals) may not exceed the equivalent to two months’ rent.
- Rental of properties which are bigger than 300 m2 or in which the annual rent exceeds 5.5 times the annual minimum wage, will be governed by what the parties agree to.