Tag: timeframe

6 December 2016 – Cinco Días

The u-turn made by Mariano Rajoy’s first Government regarding housing policy was accompanied by several draft legislative changes. In this way, in 2012 the Ministry of Development decided to stop financing the construction of subsidised homes (VPO) for ownership, to focus instead on boosting the rental sector (Spain is one of the countries with the lowest percentage of households living in rental properties in Europe) and the renovation of homes.

To this end, in 2013, it undertook a comprehensive reform of the Urban Leasing Law (LAU), which provided for the speeding up of the periods for processing evictions, amongst other things, with the aim of making it possible for owners to recover their homes sooner once judges order tenants to leave properties due to non-payment.

Nevertheless, in the opinion of some operators in the sector, the results, more than three years later, are quite disappointing given that the processes that culminate in the eviction of delinquent tenants are still taking between eight and nine months on average. That is now the main concern for many landlords.

“In a market in which demand clearly exceeds supply, the most urgent thing is to provide more legal security for the owners of homes that are susceptible to being rented out and to implement new incentives that favour both landlords and tenants who fulfil all their obligations”, said David Caraballa, Commercial Director at the brokerage company Alquiler Seguro.

In this sense, that company is demanding three specific measures: the approval of new incentives for leasing in the form of IPRF exemptions; the regulation of tourist rentals; and the creation of specific courts to handle cases involving non-payments and evictions.

In the case of tax incentives, Alquiler Seguro explains that during the last legislature, not only were incentives increased to encourage more owners to lease their properties, but also the fiscal pressures that they have to bear have increased, given that some of the benefits that they used to enjoy (such as from leasing homes to people younger than 35 years old) have disappeared. In this regard, they consider that it is very important that these exemptions be recovered and that progress be made in this vein so that leasing a home is attractive from a tax point of view, like acquiring a property used to be.

The second aspect that requires urgent reform, in Alquiler Seguro’s opinion, is the tourist rental sector. “There is a legal vacuum and a disparity in the rules between those autonomous regions that have decided to introduce regulations, which means that we have clients who admit that it is more profitable for them to rent their properties to tourists than as regular homes”, explained Caraballo. In this sense, the firm is in favour of emulating actions such as the one carried out in New York, where the minimum period for renting a tourist flat has now been set at one month.

In terms of the third aspect, Sergio Lusilla, Managing Partner at Pluslegal Abogados, says that although the timeframes for resolving evictions have been reduced (before the reform of the LAU such cases could take more than two years), the current average of 8-9 months could be reduced to just three with an increase in human resources dedicated to the activity.

“I think that a term of three months would be reasonable for both parties. On the one hand, the owner would recover his home without having to wait as long to put it up for rent again, and, on the other hand, it would give social services sufficient time to analyse the case of the tenant who is unable to pay the rent and take a decision in that regard”, said Lusilla.

Original story: Cinco Días (by Raquel Díaz Guijarro)

Translation: Carmel Drake