GIPE Newsletter 4 April 2024

HOUSING LEASING:

Raise the rent by 5%

If your tenant’s rental income did not increase last year, you can now apply a 5% increase. This implies adding the 2% that could have risen in 2023 to the 3% planned for this year. The courts allow increases that have not been made in previous years to be accumulated, but the increase cannot be applied retroactively. In other words, you cannot collect now what you did not collect in your day. However, it is possible to update the income to the value it should have had if the corresponding increases had been applied at the time.

To act, remember that the update must be carried out upon completion of each year of the contract, and you must notify the tenant 30 days in advance that you intend to increase the rent (a notation on the previous month’s receipt is enough).

REAL ESTATE INTERMEDIATION:

Avoid “inquiokupación”

When the term of a lease ends or there are non-payments by the tenant and he or she does not leave the home or premises, a situation occurs known as “inquiokupación”. Since there is initially consent or authorization from the owner, the crime of squatting (also known as usurpation of property) is not committed according to the penal code, which is why, for these cases, the term “inquiokupas” has emerged.

To avoid possible “inquiokupación”, keep the following in mind:

1.- Candidate: If you have a candidate to sign the lease contract, suspect his or her suitability if:

He/she does not want to provide the required documentation (payroll, bank statements, employment contract, etc.).

He/she wants to pay several months of rent in advance.

He/she requests to pay in cash, claiming not to have a checking account in his/her name.

2.- Investigation: There are “deception specialists” who act with good manners, deliver documentation quickly and provide references of supposed former landlords. However, don’t get overconfident: always check all the information (call the former landlords, verify the authenticity of the company he/she works for, etc.). If there are any signs of falsification, discard the candidate.

3.- Insurance: The most effective way to protect yourself against squatting is to previously subscribe to insurance. This way:

• The insurance company will pay the landlord the rental income during the legal eviction of the tenant.
• It will evaluate the tenant based on the stability of his/her income or the lack of prior court proceedings for non-payment of rent.
• It will compensate the owner for possible damage to the home once it is free of occupants.

Expand services to “rent to rent”

As a real estate agent, you may consider offering your clients a rental property management service. The “rent to rent” formula allows you to obtain returns by managing rentals without investing in the acquisition of properties. Details are described below:

You can choose between two types of contract with the owner:

• Lease: The usual thing is to sign a property lease contract in which the owner transfers a home so that you can use it under the agreed regime (regular housing, seasonal, room-based, tourist, etc.). The owner authorizes you to assign or sublease the home to third parties in exchange for rent.
• Management: Alternatively, you can sign a “comprehensive housing management contract”. In this case, you agree to provide services to the owner by managing the rental of the property. The rental contract with the user will be directly between the owner and the tenant, and in exchange for management services, you will charge fees.

COMMUNITY OF OWNERS:

This community agreement is not valid

In situations where the community of owners makes an agreement that goes against the law or the statutes, the question arises: is the injured owner obliged to challenge it or can he/she directly consider it null? The answer is that when a law or statute requires the community to act in a certain way, any agreement contrary to that is void. Furthermore, anyone who is harmed by said agreement has no obligation to challenge it; in fact, you can act as if there had been no agreement at all. This means that the affected owner is not obliged to take legal measures to invalidate the agreement, since it is invalid from its origin.

MORTGAGES:

ICO guarantees for the first home

The Government has approved a line of guarantees to facilitate access to a mortgage for a primary residence, guaranteeing 20% of the operation for ten years. These guarantees will be processed through the banks and will have no cost. However, it is important to meet certain requirements:

1.- Applicants:

• Individuals up to 35 years old whose income does not exceed 37,800 euros gross per year.
• Families with dependent minors (in this case, the limit increases by 2,520 euros per year for each child).
• In addition, they must prove that they are residents in Spain continuously and uninterruptedly for the two years prior to the application.

2.- Heritage:

• Those guaranteed cannot have assets greater than 100,000 euros.
• They must not own another home (with exceptions, such as not being able to use it due to separation or divorce).
• The property acquired must be used as the applicant’s habitual residence, and its rental will be limited to justified circumstances (marriage, divorce, job transfer, etc.)