Renting a penthouse for six euros a month in Madrid: the heads and tails of old rent

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Old leases, those signed prior to May 9, 1985, are a lifeline for tenants who have occupied these homes for decades. On the opposite side are the owners of these houses, who see how, after continuous subrogations, their most precious asset—and that of their children and even grandchildren—is a “condemnation to a sine die charge,” according to Carmen Gutiérrez, owner of a penthouse in the district of Tetuán (Madrid) of 80 square meters with a terrace of another 22 meters for which he receives an income of 6.56 euros per month. The legislation has made it possible to protect the legal figure of ancient income, almost extinct in the business premises, but not in homes, of which it is estimated that there are still some 126,000 rentals in Spain, concentrated in the large capitals, such as Madrid, Barcelona or Seville. In the absence of centralized records, according to the Living Conditions Survey, updated to 2022 by the INE, the percentage of households with rental prices below market prices is 3%, although the experts consulted think that between 10% and 20% of the current leases are still old rent. “Having an old house for rent is uneconomical, since all the expenses of the community are borne by the owner and many people, in inheritances or legacies that they receive, want to get it off their back,” explains lawyer Alejandro Bancalero, of Bancalero Abogados. . “It's sad that you have to ask for up to three credits to pay bills,” laments Carmen, who in recent years has had to pay 14,000 euros for this concept in a stately property, where her neighbor rents a similar penthouse for 1,800 euros per month. . The Urban Leasing Law (LAU) itself of 1994 states that contracts entered into prior to the 1964 Law have rents that can be classified as “uneconomical”. Although according to the regulations, both supplies and services, such as the IBI and the updating of the rent can be passed on to the tenant directly, «the tenant is in an advantageous situation compared to the landlord,» says Gabriel de Alvear, a lawyer specialized in urban leases: «Although the current LAU establishes certain rights of the landlord regarding impact of the IBI and certain works, practice has shown that the contractual balance between the parties is far from being achieved.” On the other hand, the regulatory complexity of the LAU makes many landlords desist from exercising their rights. “Sometimes,” says De Alvear, “contracts must be interpreted by professionals, the repercussions must be notified to the tenant and he may object, causing a problem whose resolution could require going to court. All this, together with the meager rent, determines that many landlords decide not to pass on expenses to the tenants.” Lawyer Adolfo Calvo is of the same opinion, who has confirmed that many owners choose not to carry out the rent update because they are very small amounts. Carmen has decided not to pass on any costs, not even the works, because she says that the burofax costs her more than what she is going to receive in return. The big and most important difference with rentals after January 1, 1995, which is when The LAU of 1994 comes into force, it lies in the forced extension. Until that date it was mandatory; After that year, the right expires when there are no more subrogations than those established by law, which are normally two.

Right to housing

Why hasn't old rent been eliminated in homes but in premises? “The legislator could have made the old income disappear when the current LAU was published almost 30 years ago, but it would have brought a very important social fracture that no government is willing to assume. Proof of this is that, despite being in force since 1995, successive governments have limited the regulations that originally made up said special law, prolonging the duration of the lease contract, increasing its validity, limiting the increase in rent and bringing «We bring up the spirit of the consolidated text of the LAU of 1964,» says Calvo. The reason for this type of contract is found in the lack of housing, which led, according to De Alvear, to try to grant clear protection to the families so they could get a roof over their heads. Not in vain, with some exceptions, the tenant of this type of rental is an elderly person, with limited economic resources, rooted in the neighborhood, and who pays between 100 and 300 euros for an old apartment. Sell the old rental home with Her tenant is not an option for Carmen either: “I have tried to do it, but the value they give you is in line with the rent you are charging, which in my case is just over six euros,” she says. Bancalero gives as an example the purchase of an 80 square meter apartment in the Atocha area, in Madrid, with an 83-year-old renter, whose value is 420,000 euros, but which was sold for 180,000 euros. “The market price is 30% of its real price. The buyer acquires the property with many more expenses than income and it is an investment option, but for the long-term future,» he emphasizes. For his part, José María Salcedo, a lawyer at Tax Litigation, is fighting in court to have the value of the property does not exceed the capitalization value of the income. “Article 53 of the LAU of '64 protects tenants and allows them, when they have not exercised the right of first refusal and withdrawal, to challenge any transfer that exceeds said capitalization value – at 4.5% if they had occupied the home later. of January 1, 1942-”, he argues. If you have a tenant with an old rent with a contract signed in 1975 who pays 120 euros per month (annual rent 1,440 euros), the value of the property resulting from the capitalization of such rent It would be 32,000 euros. “Therefore, it does not make sense that a reference value of, for example, 120,000 euros be imposed on that property,” believes Salcedo. Follow all the information from Economy and Business on Facebook and xor in our weekly newsletter

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