Repsol YPF

From 1 January 2008 onwards, landlords will be able to evict tenants that fail to pay the agreed monthly rent. In order to speed up the eviction of non-paying tenants and avoid flooding the courts, cities like Madrid and Barcelona will have specific courts.

It is not unusual for a landlord to have to go to court in order to evict a non-paying tenant. Evicting a tenant takes an average of 18 months and it is estimated that around 1% of rentals result in a court case due to non-payment. The shortage of properties and the high prices are partly blamed for this situation.

These measures seek to transmit legal certainty to landlords and to satisfy what landlords consider to be an essential requirement for promoting property rental. 

Slow process
In the majority of cases, the defaulting tenant does not usually attend the hearing or respond to the summons, and rulings are consequently almost always in favour of the landlord. Nevertheless, these apparently simple cases are in practice very slow. The Housing Department is trying to speed them up by launching a plan that will benefit over a million young people and families that live from renting. 

Currently, eviction or actions for possession can only be requested in two situations  according to the Civil Procedures Act: non-payment of rent or contract expiry. In order to speed up the eviction process this rule will need to be amended. This would open up the possibility of quick cases for claiming debts and reduce the grace period granted to tenants for settling the debt from two months after the payment due date to one.

One of the government’s initiatives is to create 10 new courts in the most-saturated areas. In any case, an eviction order from a verbal procedure is sufficient for the landlord to make the tenant move out but not to make them pay the outstanding rent. In order to achieve the latter objective they must initiate an ordinary procedure.

Tax deductions
In order to help young people to leave home it will be necessary to pass a new law to introduce tax deductions for tenants, another of the government actions aimed at promoting renting.

Economic benefits and tax relief continue to be weighted towards purchasing rather than renting. The increase in demand and the shortage of rental properties has meant that in recent years monthly rent has risen to almost the same level as mortgage repayments. The new measures promise a tax deduction for tenants whose income is below a certain limit. Initially they appear to be aimed particularly at young people and according to the biggest critics, they are a long way off the financial and tax incentives obtained from purchasing property. 

The first part of the plan is aimed at making it easier to gain independence by assisting access to renting. Firstly, it offers 210 euros per month for four years to people between the ages of 22 and 30 years who are employed or unemployed with a maximum gross income of 22,000 euros per year. Furthermore, it includes a loan of 600 euros for the deposit and the financial cost of a six-month guarantee.

The measures contained in the government plan also include those aimed at encouraging the construction of buildings for rent, such as the application of 4% VAT on new buildings to be used for low income rental housing for 25 years. They also increase the benefits for property companies and investment funds that promote protected rental housing. 

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