Iberian Rental Housing Systems – Legal changes in Portugal and Spain after the crisis

Maria-Olinda GarciaFaculty of Law – Coimbra University, Portugal

ogarcia@fd.uc.pt

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TENLAW: Tenancy Law and Housing Policy in Multi-level Europe2012-2015

This project has received funding from the European Union's Seventh Framework Programme

for research, technological development and demonstration

under grant agreement no 290694

http://www.tenlaw.uni-bremen.de/

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Portuguese and Spanish private rental housing Laws

• Housing is not under the EU Treaty

• Importance of national laws:– For foreign investors– For foreign workers

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Portugal and Spainhousing characteristics in common:

(Censos 2011)

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Portugal Spain

Owner-occupied dwellings

78% 80%

Rented 17% 15%

Vacant 12% 13%

Brief Historical Background

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Portugal Spain

Tenants very protected:- Rents frozen- Landlords did not have the right to terminate the contracts

Until 1990 Until 1985

Short-term rental agreements allowed

After 1990, minimal duration 5 years

- Between 1985 and 1994, minimal duration: 3 years- After 1994, minimal duration: 5 years

Old and new legal frameworks co-exist

yes yes

Urban Lease Acts after the crisis

PortugalAct n.31/2012

SpainAct n.4/2013

Duration of the contract There is no minimal duration

Minimal duration : 3 years

Landlord’s rights to terminate the contract

If the tenant does not pay the rent for 2 months;- No need to go to court to terminate the contract

After 1 month delay:- Court order (but not a judicial decision)

Eviction process faster Extra judicial process Faster judicial decision

Registration of the contract ---------------- If the contract is not registered, when the dwelling is sold the rental agreement ends.

Tenant pays a penalty to terminate the contract before the agreed time

T. cannot terminate the contract before 1/3 of the agreed time has elapsed

T. cannot terminate the contract before 6 months have elapsed

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Consequences of the new legislation

• - Rising supply of dwellings for rent

• - Uncertainty about current and future effects of the new rules :

• - lack of official data• - inconsistent information:• - increasing number of people interested in buying

a dwelling• - value of rents not going down •

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(Eurostat 2013)

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Will the new legislations be decisive in increasing the percentage of rented dwellings?

• - From a tenant’s perspective:

• - both systems do not combine correctly stability and flexibility

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