New law affecting tourist apartments
The phenomenon of rental homes for tourists unleashed by digital platforms in the last two years will now have new limits within communities of owners. The first one is political and the second economic.
The Official State Gazette published on Tuesday, December 18, the Royal Decree 21/2018, of December 14 on urgent measures regarding housing and rent, remarkably reinforces the powers of communities of neighbours and establishes that it will be enough with three fifths of the owners of the community to reject the proposed use of a house for tourist accommodation. 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 tourist 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 tourist 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 offers of tourist flats on the Costa, where there are a large number of these apartments. In extreme cases, places such as Palma in Mallorca, it has resulted in the displacement of residents to other neighbourhoods due to tourist saturation and the 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, for those already registered, impose a high charge to operate in a building block or urbanisation.
The Spanish Council of Ministers approved last December a royal decree containing urgent measures for renting by extending the terms of the lease and its extensions in contracts of up to seven years as well as to three years if not registered; limits to two months rent the guarantees demandable to the tenants and establishes a more protective administrative and judicial mechanism for tenants in the eviction process.
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 the complexity of its application. Nevertheless they say that it will be studied during 2019.
The Spanish Podemos political party was not convinced by the explanation given by the government. ‘We had agreed otherwise,’ they noted the other day from Guernica (Vizcaya), and then asked for a rectification and warned 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 rental homes in their portfolio 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 rental prices in stressed areas, since rental prices are being normalised in a large area of the country and some of the measures that had been proposed to control prices were not the most convenient way of improving 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 have added to the explosion of letting methods, such as tourist rentals through digital platforms and the fact that the acquisition and rental of a home is, according to the Bank of Spain, a most profitable investment alternative. 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 rose 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 in rental properties were evicted during that year. This figure means that six out of ten evictions that took place in Spain in 2017 were related to rent.
During this same period, evictions related to mortgages fell by 15% in 2017. These have declined progressively since 2013, and stood at 22,330 in 2017. 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).