Leases Contracts following the Reform of the Urban Leasing Law:

How will the Law’s reform affect rental agreements?

The Law of Urban Leases has recently been modified. Contracts that have been or will be concluded as of December 19th, 2018, will be affected by this modification.

In this article, we expose the main developments in terms of rent that will affect both landlords and tenants.

We have already assisted many of our clients at Pérez Parras Economists & Lawyers Firm in Málaga and Nerja with their leases.

What will be the minimum duration of a housing lease?

When the landlord is an individual, the minimum duration will be five years. However, if the lessor is a legal entity, the minimum contract time will be 7 years.

Leases contract

If the landlord is a legal entity, the contract will be for a minimum of 7 years.

And what will happen to the extension of the contract?

After at least 5 or 7 years have elapsed, the contract will be extended for 3 more years:

  • if the expiration date of the contract or of its extensions comes up,
  • and if neither of the parties had notified the other, 30 days beforehand, that they did not want to renew.

The rent will be as stipulated by the parties, it remains a free choice.

The parties who signed the contract may agree on the revision of the rent each year the contract remains in force. If nothing is said about it in the contract, no rent review will be applied. If, on the other hand, the revision of the rent has been agreed in the contract without establishing a benchmark, the revision may not exceed the CPI.

Rental lease agreement

The rent will be the one stipulated by the parties, it is a free choice.

Can the rent be increased because of improvements to the property?

Yes, as long as there is no agreement in the contract and only when five years have elapsed, or seven, if the lessor is a legal entity. The increase will be calculated taking into account the capital invested in the improvement, the legal interest rate at the time of completion of works increased by three points. The increase must not exceed 20% of the rent.

And the expenses of the real estate management?

They will be the responsibility of the lessor when it is a legal entity, unless the services have been contracted directly by the lessee. The contract may establish that the rest of the general expenses, such as taxes, or services corresponding to the dwelling, shall be borne by the lessee.

What’s new in relation to the deposit?

The deposit will be one month’s rent in property rental contracts. It will be two months’ rent in contracts for different housing use. The update of the deposit must be in line be with what the parties agree. Failing that, it will be updated in proportion to the the rent update.

From the office of Pérez Parras Economists and Lawyers, we hope that this information will be useful. Do not hesitate to consult our office of Economists & Lawyers in Malaga and Nerja  if you are a landlord and want to write a rental contract, or if you are a tenant and you would like us to advise you on the contract you are about to sign.