The decree with the extension of rents: a blessing for the tense zones?

MadridThe countdown to the vote on the decree with housing measures approved by the Spanish government to face the economic impact of the war in the Middle East has triggered a call from social groups and left-wing parties to tenants to demand "now" the extraordinary extension of up to two years of the terms and conditions of the contract in case it ends before December 31, 2027. This is one of the flagship measures of the decree which, pending the result of the vote in Congress, is in force (the temporal limit for it to be voted on is 30 business days from its publication in the "Official State Gazette).

But beyond the measure in its general terms, the decree can become a godsend for tenants living in a declared stressed area, and which in the case of Catalonia are already 140 municipalities.

The state housing law meant a reinforcement of article 10.3 of the urban leases law (LAU) with the introduction of the right to an extraordinary extension of three years of the contract in stressed areas. This extension means preserving the essential terms and conditions of the contract intact once it ends. But since the state housing law came into force in 2023, there has been a clash between some owners and tenants when the former interpret that the measure can only be applied to contracts signed after the entry into force of the rule. That is, signed from 2023 onwards and which, therefore, end in 2028 or 2030 depending on whether they last five or seven years (it depends on the owner's profile). On the other hand, some law firms, as is the case of Col·lectiu Ronda, say that the right exists from when the rent is signed: this means that the extension of the state law affects contracts in stressed areas signed before the entry into force of the rule and which, therefore, end before 2028.

Now, with the extraordinary decree for the war on the table, what offices like this interpret is that the legislator, that is, the Spanish government, is right. "The extraordinary extension regulated in this article is incompatible with that provided for in article 10.3 of the Urban Leases Law, which, in any case, will apply preferentially," is inferred from the decree for the war. "If the legislator were to interpret that only contracts signed from 2023 onwards can be covered by the extension of the state housing law, there could be no incompatibility at any time because these [contracts] end in 2028 [...]. Therefore, article 10.3 [the three-year extension] can be applied to previously signed contracts," indicates Paula Cardona, lawyer for the Col·lectiu Ronda.

This is also how the Sindicat de Llogateres interprets it, who in any case encourage Catalan tenants in tense areas to request both extensions: both the one from the state housing law and the extraordinary two-year extension included in the decree. "Primarily, the three-year one and, in case it is not valid for some reason, let the two-year one apply," they point out from the Union. "It gives us room in the tense areas, because one or the other will have to be applied," indicates Cardona.

Judicial journey

But behind the extraordinary two-year extension there is uncertainty because the decree could lapse once it is voted on in Congress. For starters, Junts has already said they do not look favorably upon the text and the PP and Vox will vote against it, meaning the Spanish government does not have the votes secured for it to pass. Therefore, what happens if the two-year extension is requested, as housing rights organizations have encouraged, but the decree lapses? Here, different legal voices consulted by the ARA acknowledge that a clash between landlords and tenants could be triggered, ending up in court.

What has pushed organizations and parties to request the two-year extension of the decree, even though it could lapse, is that they understand that the rule affects all contracts in force until December 31, 2027, and not just those that end during the decree's validity. "By requesting the extension now, its effects will be deployed even if Congress ultimately does not validate the decree," indicated the Center for Social Studies and Advice CAES. "It is understood that the right to an extension arises when I request it, even if the contract ends later," adds Cardona. The loophole they are clinging to is that the decree published in the BOE states that the request for an extension of up to two years for the contract "must be mandatorily accepted by the tenant".

But there are other legal voices that amend this interpretation and believe that, if the war decree lapses, even if the extraordinary extension has been requested, it will not apply if the contract ends when the rule is no longer in force. "Legally, it is not valid. You can notify your intention to continue with the contract under the terms and conditions, but it is not relevant when you notify it, but when the extension can be applied. If the contract expires later and the decree no longer exists because it has lapsed, the extension cannot be applied," states the lawyer expert in real estate law, Alejandro Fuentes-Lojo, in a conversation with the ARA. "Its effects are limited to the time the rule is in force," reiterates the lawyer. This means that only tenants whose contract expires during these days when the text is in force before the vote in Congress can benefit from it.

However, whoever is right can ultimately be decided by a judge. "There will surely be lawsuits about this," anticipates Fuentes-Lojo. "Many tenants may decide to go to court with a rule that is not clear. In the end, conflict is generated," believes the lawyer, who already anticipates that the "victim" will be the tenant when told that "it is not applicable." "Yes, there are rulings [on extraordinary extensions] that allow interpretation that the moment of the request already generates the right to the [extraordinary] extension," points out Cardona. In this regard, CAES has assured that the Supreme Court has interpreted that the effects of past extensions are effective beyond the will of the owner or the validation in Congress.