New Changes for the Old Rental Law!

On the 6th June 2013 the government made modifications to the Urban Rental Law (Act 29/1994 of the 24th November).  These modifications are not retroactive and can only be applied to Rental Contracts signed after that date.

The main changes are as follows:

  • The updating of rental amounts can be agreed by both parties despite the Consumer’s Price Index used up until now for these yearly updates.  These updates do not have to be set out in the contract.
  • The tenants will be able to leave the property at any time giving one month’s notice.  This is a huge difference from what was set out previously and whereby as the tenant, if you left the property before the end of the contract, the owner could claim the outstanding rent until the end of the contractual period.  This is why I have always advised that the contracts be formerly signed off by both parties.
  • The landlord will be able to regain possession of the property for his own use or that of his family giving two months notice.  Previously this had to be written into the contract, at present it no longer does.
  • The eviction process is to be speeded up to give the owner more legal security.  The tenant will have 10 days in which to pay the debt, before the tenant had until the day of eviction to pay the debt.
  • **Non resident owners will also have rights to tax exemptions, up to 60% on their non resident’s tax, which brings this in line with that of the residents, if they rent out their properties; and up to 100% if the owners are members of the EU and their tenants are between the ages of 18 to 30.

Another change is the flexibility in the duration of the contracts, whereby the minimum period of enforcement decreases from five to three years, and the renewals of these contracts from three years to one year.  This means that the law will only protect tenants for a total period of four years, instead of eight, as before.

In the case of properties that are sold whilst being rented, whereas previously the purchasers had to maintain the tenant up to the end of the five year period, with the new changes the potential purchasers are only obliged to keep the tenants on if the contracts are registered (the registration is still not obligatory).

**  Proposed but not yet in force