As we explained in last week’s article, the new Property Law came into force in Spain on 26.05.23. In our previous article we analysed its main novelties: rent update cap, concept of large tenants, stressed market areas, changes in IBI surcharges, etc. This week we focus on other equally important aspects: how the law affects eviction processes, minimum information to be provided to buyers/tenants of a property, personal income tax benefits for landlords, etc.
Changes in the Eviction Court Process in Spain.
The new housing law incorporates many changes into the eviction process. The most relevant ones are listed below:
-. From now on, landlords who initiate an eviction court process must inform the court whether or not the property constitutes the tenant/occupant’s habitual residence.
-. Furthermore, the owner must certify whether or not he/she is considered to be a large landlord, by means of a certificate issued by the Land Registry. As of today, more than two weeks after the entry into force of the law, this certification is still not available at the Spanish Land Registry.
-. When the landlord is considered a “large owner”, in addition to the above, he/she must confirm whether or not the tenants/occupants are in a situation of economic vulnerability, by means of a report issued by Social Services.
-. If the tenant/occupant is in a situation of vulnerability and the landlord is considered a large owner, the eviction court process cannot be initiated directly. Prior to this, the owner must try a conciliation or mediation procedure with the occupant/tenant, through the competent administration.
-. In cases of mortgages executions, the requirements listed above will also apply, with small variations.
Protection and transparency measures in purchase and landlord transactions.
Before formalising the purchase or rental of a home, or handing over any amount on account, prospective buyers/tenants will have the right to receive the following information, in an accessible and durable format. Useful and constructed surface area of the property. Age of the building. Energy efficiency certificate. Main actions or renovations carried out in the dwelling. Individual and community services and installations. Certificate of habitability. Etc.
In addition, when renting a property in a stressed market area, the landlord or real estate agent must inform future tenants of the amount of the most recent rent that had been in force in the rental of the last five years.
Tax incentives in the IRPF (Personal Income Tax) for landlords.
The new property law includes a series of tax benefits for landlords who formalise new rental contracts in stressed areas. A reduction of up to 90% of the positive net declared by the landlord when the rent is reduced by more than 5% (compared to the last contract). When renting for the first time in a stressed market area, to people between 18 and 35, the reduction will be 70%. If the property has been renovated in the previous two years, the reduction will be a maximum of 60%. These incentives will enter into force on January 1st, 2024.
The new property law has introduced numerous changes that we have tried to analyse in detail for our readers in the last two articles. If you are going to sign a lease, as a landlord or tenant, at White-Baos Lawyers we are experts in real estate law. Do not hesitate to contact us. We will study your case and offer you expert legal advice.
The information provided in this article is not intended to be legal advice, but merely conveys information relating to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
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