Bloomberg News

Spain to Change Laws to Boost Real Estate Rentals, Minister Says

May 11, 2012

Spain will adopt measures such us speeding up tenant-eviction procedures to boost the rental market in a country that has an 83 percent home-ownership rate, one of the highest in the world, according to Public Works Minister Ana Pastor.

“We are going to make the rental market more flexible in order to make it more dynamic,” Pastor told reporters today after a weekly cabinet meeting in Madrid.

Spain, which has 25 million homes, 3 million of which are empty, has just 1.8 million rented homes, leading to poor labor mobility. Workers are often discouraged from taking jobs in other places because they can’t find rental accommodation or rent the home they leave behind.

Annual rent increases for tenants, which could only rise in line with inflation, will now be agreed on by the landlord and the tenant. Owners will also be able to retake their property on two-months’ notice if they need the home for themselves, a blood relative, or a partner in the case of divorce, Pastor said.

Tenants had been entitled by law to remain in a property for five years and a further three if they had the tacit agreement of the landlord. That time will be reduced by half, with three years of permanence in the home if the tenant chooses plus another year if the landlord tacitly agrees.

Another element of the reform is aimed at giving landlords greater legal protection and recourse to recover their properties from tenants who stop paying rent.

Until now, landlords had to go to court to evict such tenants in a process that could be long and expensive. Tenants could pay the amount owed at the last minute, the process would be halted, and the tenant would be allowed to remain in the property and to reoffend, forcing the landlord to initiate the process again. From now on, defaulters will only have a 10-day window to pay rent owed.

“Every government from Aznar to Zapatero promised to make the rental market more flexible,” said Jesus Encinar, founder of Spain’s largest property website, which advertises 1.1 million homes for rental and sale across Spain. “The number of people renting will increase, but it won’t be so much because of the government’s measures but because of a change in the mentality of Spaniards who little by little will realize that renting is a viable option.”

-- Editors: Jeff St.Onge, Andrew Blackman

To contact the reporter on this story: Sharon Smyth in Madrid at ssmyth2@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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