Royal Decree-Law 21/2018

On 14 December 2018, the Government approved Royal Decree-Law 21/2018 on urgent housing and rental measures, in an attempt to create a regulatory environment (i) that favours an increase in the supply of rental housing, and also readjusts the legal positions of the landlord and the tenant; and (ii) also favours the demand for rental housing through a series of economic and fiscal incentives that make the rental regime more attractive compared to the purchase regime.

Among the modifications contained in the aforementioned Decree, the most important were the duration of contracts, which established that “the tenant could remain in the dwelling for up to five years, or seven if the lessor was a company”; the deposit, which determined that “only those amounts not exceeding two months’ rent could be required as additional guarantees, except in the case of a long-term contract” and the management costs, “it had been established that these would be paid by the lessor when the lessor was a legal entity”.

Repeal on 23/01/2019

However, the joy for tenants was short-lived, since on 23 January 2019, that is, barely a month after the Royal Decree was passed, Congress repealed it mainly because it was a very incomplete text that hardly satisfied any of the parties (landlord and tenant), thus returning to the previous regime, that is, Law 29/1994, of 24 November, on Urban Leases, with the modifications made by Law 4/2013, of 4 June, on measures to make the housing rental market more flexible and promote it.

Contracts signed between 19/12/2018 and 24/01/2019.

The question is, what happens to those rental contracts that were signed under the repealed RD, between 19 December 2018 and 24 January 2019 (day of publication in the BOE of the repeal agreement)?

The repeal does not have retroactive effects on what was approved by the Council of Ministers so these contracts will be governed by the repealed Royal Decree Law, i.e. the tenant may remain in the property for up to five years, or seven if the lessor was a company; it will be tacitly extended for three years at a time; it will be updated based on the CPI in low rent contracts or the communities of owners must achieve a majority of three-fifths to accept tourist rentals, among others.

At Bufete Salmerón we have handled numerous matters relating to rental contracts, and we have a team of highly qualified lawyers, so if you have any doubts or problems with your rental contract, please do not hesitate to contact us.