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16/01/2019

NEW RENTAL LAW

The Government has adopted a new concerning housing and renting which, together with other regulations, amends the Urban Leasing Law (LAU). Dating back to 1994, this law has undergone a series of reforms over the years, adapting to today’s social and economic needs.

The new reform aims to strengthen the tenant’s rights in order to be able to cope with the price increase and the lack of affordable housing at affordable prices.

MAXIMUM DURATION

The law, in Article 9, regulates the minimum period for the lease. Although the lease terms are freely agreed upon by the parties, ie the tenant and the landlord, the Act stipulates a minimum period. In this way, if the contract is agreed for a period lower than the legal minimum, the tenant may require that it be extended to this minimum period.

The new regulation changes this minimum period and extends it from 3 years to 5 years, or 7 years if the landlord is a company. Therefore, the minimum period that the tenant can stay in the house is extended to 5 (or 7) years.

EXTENSION OF THE CONTRACT

Article 10, on the extension of the contract after expiration, is also subject to change. Until now, if the tenant or landlord did NOT notified that they would change or renew the contract by it’s expiry date, the extension was automatically extended by 1 year. From now on, this extension period will be 3 years.

DEPOSITUM

To put an end to the abuse of the tenants, the government changed one of the most important articles of the Urban Leasing Law; Article 36. It stated that in addition to the deposit (a guaranteed amount normally equivalent to 1 months rent), the rule stipulated that the landlord and tenant could agree on other forms of guarantee in order that the tenant complied with his obligations on the top of the deposit. This in practice led to abuse of the tenant, where they were asked to pay extra deposit and other expenses / guarantees, which resulted in an additional burden on the tenant.

The new law approved the limitations of these additional guarantees (in practice the deposit) to a maximum of 2 months rent, except for for long-term contracts, thereby limiting the financial burden the tenant must bear.