How Spain's govt will be a guarantor for defaults on rental payments

Local Spain

30-01-2025

The latest measure approved by the Spanish government to help combat the housing crisis is to encourage landlords to rent to young people and low-income families by acting as a guarantor in the case of non-payment. Here's how the scheme will work.
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Recently the Spanish government announced a series of 12 housing measures to try and put an end to the country's crippling housing crisis, where soaring rents, housing costs and lack of availability is pricing many out of the market.
Along with limiting some foreigners from buying properties, more regulations for tourist accommodation and giving landlords tax incentives if they lower their rates, they have also promised to act as a guarantor when tenants are unable to pay their rent.
This last measure has already been approved and published on Wednesday January 29th in Spain's Official State Gazette (BOE), meaning it is guaranteed to come into force and won't need a majority in the Spanish parliament to become law.
Inquiokupas or squatters are one of the biggest fears for landlords. They are usually tenants who can no longer afford their monthly rent because of unforeseen circumstances such as losing their jobs, but they stay living in the property without paying, with the landlords unable to kick them out.
It's worth noting some tenants take advantage of Spanish law and just choose to stop paying after a month or two, so they can get free accommodation.
The new aval público (state guarantor) measure has been designed to help landlords feel more comfortable renting to low-income and vulnerable families without them having to worry about losing out on rental income in the case that they stop paying for some reason.
A similar system is already in place in some European countries such as France.
The Spanish government has agreed to provide regions with half a billion euros to finance the new guarantee system.
Both the landlord and the tenant must agree to the guarantee, and it is only available to those renters who meet a series of requirements.
They must be under 35 years of age or be a vulnerable person.
The rental price cannot exceed the state rental reference index.
It will be mandatory to submit a legal contract, and the first month's deposit must be held by the relevant administration.
Both the owner and tenant must sign the commitment to rental guarantee.
By regulation, other groups may be incorporated as potential beneficiaries within a period of six months from when it was published in the BOE.
These rental contracts will only be for habitual and permanent homes, not for temporary accommodation.
If the tenant and landlord meet all the above requirements, the government will guarantee the payment of all unpaid rent until the landlord recovers their home.
It will also cover any damages caused by the tenant and the cost of supplies to carry out repairs.
The main issue with this new measure is the landlords can only request for the amount in lost in rent within a period of six months from the time the owner recovers possession of the home, either through a judicial release resolution or extrajudicial agreement that certifies recovery of the property. This means that if tenants stay in the property for seven months without paying and then it takes several months to recover the home, it could be almost a year before the land gets any money back.
The guarantees will be managed by each region individually with financing from the State.
The money can be used immediately in the five regions that already have similar guarantees in operation, including the Basque Country, Cantabria, the Canary Islands, Extremadura and La Rioja.
The rest of the regions have been given six months to develop a regulation and put it into force, including sorting out all the small details that still have to be agreed upon.
Issues with the new system that still need to be ironed out include a rule on how long tenants can remain in the property without paying or what percentage of the money they have to pay back to the government once their situations change.