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Oops! Accidentally revoking your Spanish will …

Raymundo Larraín Nesbitt, August, 1. 2019

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1st of August 2019

 

It is customary that when a solicitor drafts a will in the United Kingdom they add in a provision along the lines of “this new will revokes any other prior wills.”  

This little line automatically revokes any prior Spanish will making it null and void. The legal implication of this is that to distribute the Spanish estate, as there is no longer a valid Spanish will, the family is now stupidly forced to go through a Grant of Probate in the UK; which normally exceeds one year, attracting in its wake penalties and delay interests from the tax office in Spain. All of which could have been easily avoided…

So, when you happen to make a new will in your home country, or elsewhere, please ensure your solicitor or lawyer adds in a provision safeguarding the validity of any previous existing wills made in Spain.

This little word of advice will save your family at a time of bereavement considerable aggravation, stress, money, hassle, extra fees and disbursements, tax penalties on submitting taxes late, delay interests, sworn translations, additional non-required Apostille seals etc

We all have our 'blond' moments, from time to time; just try and avoid this 'oops'.

You are welcome.

  

I've seen things you people wouldn't believe. Attack ships on fire off the shoulder of Orion. I watched C-beams glitter in the dark near the Tannhäuser Gate. All those moments will be lost in time, like tears in rain. Time to die.” – Rutger Hauer (as Roy Batty in Blade Runner)

Rutger Oelsen Hauer (1944 - 2019). Ducth actor, writer and environmentalist. Likely the best Dutch actor ever, he was certainly one of the top in the world. With such 80's classics under his belt as Blade Runner and Ladyhawke, he earned his place. He sadly past away on the 19th July 2019 in Netherlands.

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in inheritance, conveyancing, taxation and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

Legal services available from Larraín Nesbitt Lawyers

 

Inheritance-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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Reminder - Q2 2019 Non-Resident income tax filing

Raymundo Larraín Nesbitt, July, 1. 2019

Marbella-based Larraín Nesbitt Lawyers has over 16 years' taxation & conveyancing experience at your service. We offer a wide range of 40 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

Just a gentle reminder that all non-residents, who own property in Spain and rent it out (whether long or short-term i.e. holiday home), must file their Q2 2019 quarterly tax return in July. You are now being taxed on your rental income for the previous three months: April, May and June.

For 2019, the non-resident tax calendar is as follows:

  • Q1 January – March. Filed on the first 15 days of April.
  • Q2 April – June. Filed on the first 15 days of July.
  • Q3 July – September. Filed on the first 15 days of October.
  • Q4 October – December. Filed on the first 15 days of January 2020.

 

Our cut-off date to accept filing Q2 2019 non-resident tax returns is Friday the 12th of July 2019. Please do not wait until the last moment to submit your quarterly tax return. We file this tax online all over Spain within 24 working hours.

We can offer you this tax service for a very competitive fee: 100 euros plus VAT.

The quoted fee is per property and per tax quarter, it includes up to two joint owners i.e. husband & wife.

Our fees are tax-deductible from the tax to pay.

The highlight of this tax service is that we reduce your rental income tax by 70%, or more, on applying for landlord tax relief on all your property-related expenses.

Contact us and pay less taxes in Spain. If you overpay taxes it is only because you want to.

 

Q2 2019 tax submission period

From the 1st of July until the 20th of July 2019.

Related tax service

Holiday Rental Accounting Service (HRAS)

Related taxation articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

 

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Spain’s New Mortgage Act

Raymundo Larraín Nesbitt, June, 21. 2019

Lawyer Raymundo Larraín briefly reviews Spain’s new Mortgage Act which came into force on the 16th of June 2019.

Marbella-based Larraín Nesbitt Lawyers has over 16 years' taxation & conveyancing experience at your service. We offer a wide range of 40 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of June 2019

So, you fancy buying a property in Spain with your partner and take out a loan? Well, you should read this post first.

The last time I wrote on this subject was last November, New Mortgage Law to be passed, and then again in May this year, Spain’s New Mortgage Law spells longer bank repossession evictions for struggling borrowers.

Spain’s new Mortgage Act brings a slew of changes that effectively change the game as we know it – moving the goal posts. For once, I am glad to report that the goal posts are actually being moved (for the most part) in benefit of consumers/borrowers, to the detriment of lenders.

The positive raft of changes comes about instigated by EU Authorities, as Spain is effectively transposing a EU Directive from 2014, which seems to have taken for ever BTW.

Whilst all the below-listed changes may sound great on paper, in practice the well-meaning intentions of EU lawmakers may create serious issues to the point of jeopardizing some property deals. The over-protective nature of some of the new requirements will likely translate into some buyers getting cold feet and pulling out, as waiting times and entry barriers have been effectively erected on lending.

As this is just a blog post, I am not going to go into detail on the new changes. I will simply collate the most important ones in bullet points for ease of comprehension.

All changes effective as from 17th June 2019.

 

  • Floor clauses (collar clauses) will be completely removed in all mortgage loans. For more reference: European Court of Justice Slams Floor Clauses (‘Cláusulas Suelo’). Floor clauses (cláusulas suelo, in Spanish) was one of the abusive mortgage loan clauses I denounced back in 2009 in my article (point one): 10 Common Abusive Clauses in Spanish Mortgage Loans.
  • Repossession procedures will now only take place when a borrower falls in arrears 12 quotas or 3% of the capital for the first half of the loan. However, if the default occurs on the second half of the loan, a lender may not start a repossession before 15 quotas are unpaid (approximately 15 months) or else 7%.  In other words, as these quotas are normally repaid on a monthly basis, lenders will now have to wait at least a full year before they are able to instigate a repossession procedure against a borrower. Up until recently lenders had to wait 3 months before they could repossess. Moreover, this 3-month rule was a recent change in itself, as lenders post-crash could execute a repossession with only one quota in arrears, which was simply bonkers.  I denounced this abusive mortgage clause back in 2009 in my article (point nine): 10 Common Abusive Clauses in Spanish Mortgage Loans.
  • A borrower must now visit a notary twice. Yes, you read right. The first time without a lender where the borrower will be given the opportunity to ask the Notary anything on their particular mortgage loan terms (all you ever wanted to ask on mortgage loans but were afraid to ask). The second visit will be with the lender to sign the Mortgage deed. Notaries will be ‘forced’ to pass a test to borrowers to see if they have fully comprehended the clauses of their own loan contracts (sic)!
  • The borrower will be handed over a copy of the mortgage contract at least 10 days ahead of signing at a Notary the Mortgage deed.
  • Changes to who pays for what on taking on a mortgage loan:

Borrower pays for:

    • Properties’ appraisal, tasación in Spanish (on average between 400 to 700 euros). Borrower is free to choose the valuer.

Lender pays for:

    • Stamp Duty (AJD) on the full mortgage loan amount.
    • Gestoría fees.
    • Notary fees.
    • Land Registry fees.

 

       Lenders to pay now for Stamp Duty on the mortgage loan (as we’d reported previously). Only this change all unto itself  translates into borrowers saving thousands of euros with this new law. Will lenders slyly pass on the increased costs to borrowers with more draconian mortgage terms? Likely. We shall have to wait and see.

  • Lenders may no longer tack on a mortgage loan ancillary non-requested linked financial services and products i.e. home insurance, life covers, pension plans, credit cards etc. This was one of the abusive mortgage clauses I denounced in my 2009 article (point 6): 10 Common Abusive Clauses in Spanish Mortgage Loans.
  • Early mortgage redemption penalties are now capped, being significantly reduced. In plain English, you can now repay your loan ahead of time without your bank imposing a huge penalty on you. Remember that lenders’ core business is to lend money and charge interests on it; if you repay a loan much sooner than agreed, your lender loses a lot of money over time. Which is why they impose these early redemption penalties, which are now capped.

 

Conclusion

The plethora of novelties are mostly positive for borrowers, bolstering their consumer rights.

However, while I’m always up for empowering consumer (borrowers’) rights, excessive over protectionism may create serious practical issues. If anything, Authorities should make it easier for potential buyers, not introduce uncalled for obstacles and additional red tape. Buyers already have to jump through enough hoops as it is.

For example, forcing borrowers to pass a test on their own mortgage clauses (!) is simply a bridge too far (read daft). It may be fine for chums like Juan Lopez, who is Spanish resident, and has no qualms in popping over to his Notary twice. But what about non-residents like Mrs Édith Piaf, who is a busy French career woman? How do I explain to my Paris-based client that she needs to book flights to Spain to visit a Notary twice? Does this seasoned professional really need to pass a test to gauge her contractual comprehension skills? I mean, really? Does this happen in any other country in the world? Talk about Spain being different.

What about the lost in translation shenanigans? Spanish notaries seldom speak any other language other than Spanish. Is he going to test her in French if her command of Spanish is non-existent? Will a translator be needed to step in to bridge the gap? Will her lawyer need to polish up on his language skills? What about other challenging languages? Is this an extra to pay now? Is a translator seriously expected to comprehend complex legal and financial mortgage loan clauses worded in archaic technical jargon and translate it seamlessly into Russian, Finnish, Dutch etc? Mortgage deeds in Spain are on average a 70-page plus document abounding in nuances, technicalities and mathematical formulas. That’s a whole lot to understand, translate and convey in one session. Who is going to pay for all this extra time and effort?

Sometimes excessive hand holding backfires leading to absurd new problems. Hopefully common sense will prevail.

We seem to have gone from one extreme to the other; from just “sign on the dotted line,” to testing borrowers on their mortgage knowledge. Striking the right balance is always a challenge.

 

 “Virtue is the happy medium between two extremes.” Aristotle

 

Spain’s new mortgage law came into force on 16th of June 2019. It will greatly alleviate struggling family’s finances greatly bolstering consumer & lender rights.

 

We offer the most competitive fees in the market.

Conveyancing – Buying

We are specialized in conveyancing

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Mortgage-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved

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Spanish Income Tax (IRPF) - 2019

Raymundo Larraín Nesbitt, June, 10. 2019

Marbella-based Larraín Nesbitt Lawyers has over 16 years' taxation & conveyancing experience at your service. We offer a wide range of 40 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
10th of June 2019

Spanish tax residents need to file once a year IRPF tax (Income tax). Spanish residents pay tax in Spain on their worlwide income and assets. For 2019, our cut-off date to accept filing IRPF tax returns is Friday the 21st of June 2019. Please do not wait until the last moment to submit your tax return. We file this tax online all over Spain within 24 working hours.

We can offer you this tax service starting at a very competitive fee. Contact us for a quote (couples have a discount).

We can submit your tax form starting from early April through to the end of June. We strongly advice you to file your tax return as soon as possible and not to wait until the last week of June. If you are leasing properties in Spain (short or long-term), we can reduce your rental income tax by 70%, or more.

You are Spanish tax resident if:

  • You spend more than 183 days in a calendar year in Spanish territory.
  • Your centre of financial interests is located in Spain.
  • Your spouse and/or underage children live in Spain.

 

2019 tax submission period

From the 1st of April until the 28th of June 2019.

Related tax service

Spanish Resident Income Tax (IRPF)

Related article

Tax advantages on becoming resident in Spain – 8th March 2018

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Our most illustrious plagiarist (to date)

Raymundo Larraín Nesbitt, May, 31. 2019

Marbella-based Larraín Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience, offering you 40 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
1st of June 2019

 

Normally I’d grow irritated on catching a plagio.

But this weeks’, erm let us politely call it ‘loosely inspired’ text, managed to pull off a smile from me when I saw who it was: the Spanish Tax Office!

I must admit I feel flattered.

With well over 270 tax & legal articles published since 2004 in several hundred websites, magazines and newspapers, we’ve caught over 1,300 individuals and companies plagiarizing us over the years. Every week we catch an average of two. Every article and blog post we write is painstakingly registered for copyright before it’s published (such as this one); any discussion over authorship rights ends before it even begins.

Spot the differences

 

Our tax blog published originally on the 21st June 2018: Holiday lettings: with or without VAT?

However, if you offer any of the following services listed below, your rental may be regarded by the Spanish Tax Office as assimilated to offering hotel accommodation:

  • Concierge service.
  • Daily changing of bed linen.
  • Daily changing of bath towels.
  • Daily cleaning of property/room.
  • Room service (food and beverage), catering.
  • Bed & Breakfast.
  • Other ancillary hotel services such as: daily press, laundry cleaning, luggage storage service, accommodation booking (holiday reservation).
  • Other.”

 

 

Spanish Tax Office’s website: PRIVATE HOLIDAY HOME RENTALS

https://www.agenciatributaria.es/AEAT.internet/en_gb/Inicio/_componentes_/_Le_interesa_conocer/Historico/La_tributacion_de_los_alquileres_turisticos.shtml

In other words, accommodation services, in contrast to property rental, normally include the rendering of services such as concierge and permanent and continuous customer service in a space allocated for this purpose, daily cleaning of property/room and accommodation, daily changing of bed linen and bath towels as well as other services (laundry, luggage storage service, daily press, accommodation booking (holiday reservation), etc.) …”

In particular, as well as the aforementioned ancillary services in the hotel industry, services such as daily cleaning of the property/room and the daily changing of bed linen and bath towels in the property are also included.”

 

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60% landlord tax break on gross income rental earnings - challenged in Brussels

Raymundo Larraín Nesbitt, May, 21. 2019

Marbella-based Larraín Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience, offering you 40 legal and corporate services. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain.

You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of May 2019

 

                                                                                                                                                             Photo: Cala Gat at Rajada, Mallorca

 

Despite the misleading heading, this is actually good news for us all.

Up until now, only Spanish-resident landlords could benefit from a 60% reduction on gross income earnings derived from long-term lets (does not apply to short-term lets or holiday homes). This allowance is only applied to landlords which are (tax) resident in Spain and the property must be the permanent abode of the tenant. Currently, the Spanish Tax Office bars tax advisors from applying this tax break to fellow EU nationals.

However, this is currently being challenged at Brussels on grounds of discriminating fellow EU member state nationals as it infringes one of the main covenants of the founding Treaty of Rome from 1957, freedom of movement, which happens to be at the very core of the fabric on what constitutes the Union.

It is simply amazing how almost 15 years on I am still writing tax articles on grounds of fiscal discrimination towards fellow EU member nationals. Here’s one from June 2005, published in Essential Magazine Marbella, where I am discussing yet another similar fiscal discrimination challenged in Brussels which Spain also lost at the time.

In all likelihood (and in my personal opinion only, so take it with a pinch of salt), in compliance with the ECJ’s landmark ruling from 3rd September 2014, the Kingdom of Spain is bound to lose this court case - and rightfully so!

All this is good and well, but how does it affect me, my pocket?

It means that when Spain foreseeably loses this court case, as is widely expected, and in coherence with previous ECJ rulings, all EU non-resident landlords (albeit resident in the Union i.e. the United Kingdom) will be able to take advantage from this ‘new’ tax allowance for the first time ever. Meaning landlords, whether resident in Spain or in the rest of the EU, will now be in equal footing, benefitting from the same 60% tax break Spanish landlords have already been enjoying for years.

In plain English, after Spain loses at Brussels, all EU landlords on long-term lets will stand to pay significantly less taxes on the rental income they derive from renting out immovable property located in Spain. Providing your tax advisor does actually claim this tax relief, granted. It will not be applied automatically on your tax return…

This new tax change will translate into all EU-based landlords to benefit from a huge discount on their long-term rental income tax bill. Once more, kudos to our Brussels overlords.

Short-term EU-based landlords (read holiday homes) had already been benefitting over the last 4 years from reduced taxation on being allowed to greatly mitigate their tax bills on renting out. On average, our law firm reduces our client’s tax bills by 70%, or more. More on this, in our taxation article: Save 70% on your landlord tax bill – 8th March 2019.

Bottom line, both long and short-term EU landlords alike can both expect a great mitigation on their Spanish tax bills in the near future.

Lower taxation is always good and necessary for the economy. It incentivizes and fosters foreign investments in Spain, chiefly on property purchases with a view to buy-to-let. Which in turn leads to job creation, greater disposable household income, increased wealth and political stability. And our spendthrift politicians get to spend more of our hard-earned taxpayer's money in whatever it is they spend it on.

Blog post dedicated to M. Jo Declercq.

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on 952 19 22 88 or by completing our contact form to book an appointment.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Rental-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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Spain’s New Mortgage Law spells longer bank repossession evictions for struggling borrowers

Raymundo Larraín Nesbitt, May, 11. 2019

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
11th of May 2019

 

The last time I wrote on this subject was last November, New Mortgage Law to be passed, in which I wrote Congress was on the verge of approving the long-awaited EU Directive on Mortgage Law. Spain has had to wait for over 3 years to transpose this EU Regulation and only under threats of steep fines has it finally been approved.

As I mentioned back then, the most significant impact it will have is to push back the timeframe of bank-led repossession periods, from the current 3 months to 12 months, or more.

Back in 2009, when I wrote my article on Spanish Mortgage Loans: Beware of Abusive Clauses, I included as point nine the abusive and one-sided power lenders had to foreclose on a mortgage loan on defaulting only ONE instalment (that is, one month in arrears). I will self-restrain myself to avoid using harsh language, but it was totally bonkers. As I wrote at the time, there were a myriad legitimate reasons on why a borrower could miss out on repaying only one mortgage instalment.

After the property bubble imploded in 2008, and hundreds of thousands of bank repossessions were executed in Spain leaving bereft hundreds of thousands of young families,  the goal posts were mercifully moved to a 3-month repossession waiting time. Any lender would now need to wait 3 months of unpaid arrears before they were allowed to call in a bank loan.

Fast-forward to the 21st of February 2019, when Spain’s Congress finally approved the new EU Directive which forces lenders, amongst many other changes, to wait for 12 months before being allowed to instigate a full-blown repossession procedure on an unserviced mortgage loan.

It is most disappointing – once again – that the European Union has had to step in decisively to look after Spanish consumers and borrowers and quash abuses from our unbridled financial sector (which we bailed out during the last bank meltdown, btw). If only some of our political class had backbone, this intervention would be unrequired.

On a completely unrelated note, I guess those multi-million pound loans from the banking sector to ALL Spanish political parties (which are never repaid and are always condoned) must have some sort of consideration in exchange.

Gosh, I wish I could just walk into a bank any morning and ask for a 60 million euro loan (offering no collateral) and then have my lender kindly condoning me the debt after a couple of years for no apparent reason, bless their warm hearts. But I guess you’d need to stoop down and become a career politician for that to work out. Too high a price, I guess.

Spain’s new mortgage law comes into force next 16th of June 2019. It will greatly alleviate struggling family’s finances, greatly bolstering consumer & lender rights.

 

We offer the most competitive fees in the market.

Conveyancing – Buying

We are specialized in conveyancing

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

Legal services available from Larraín Nesbitt Lawyers

 

Mortgage-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No lap dog politician, or banker, was harmed on writing this article. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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Brexit and Living in Spain Guide (UK Government)

Raymundo Larraín Nesbitt, May, 1. 2019

Credit photo: WWII poster, UK Gov.

Unless you have been living under a rock over the last 3 years, you will know the UK has voted to leave the Union in what is popularly dubbed as 'Brexit.'

Regardless on which side of the fence you are on, leaver or remainer, the fact is that Brexit will have a serious impact in our life’s. Specifically, on all those fellow expatriates who have taken Spain as their home and live here all year round.

It is specifically the expat community based in Spain who should pay close attention to all the changes that are continuously being negotiated that impact our life’s: healthcare, pensions, taxation, migration, passports, pets etc.

If you live in Spain all year round, we strongly advise you apply for Spanish residency. If you do not register yourself as a member of the Union before the UK breaks away, you will be stripped off a series of rights and entitlements to which you would otherwise have been entitled. You may also be regarded as an illegal alien in EU territory by the Authorities, which may even lead to your deportation to your country of origin.

For this reason, our law firm encourages all expats to keep tabs on the following webpage, run by the UK government, which is updated regularly on all Brexit changes:

 

 

 

Brexit-related articles

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Termination of long-term lease agreements and ‘silent renewal’

Raymundo Larraín Nesbitt, April, 21. 2019

Landlord, are you leasing long term in Spain? Read this unless you fancy locking yourself into a 8 or 10-year contract.

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of April 2019

Spain has recently amended its rental laws in March 2019, in most cases to the detriment of landlords, creating serious legal obligations landlords should be acutely aware of. One of the issues that is important to understand is what happens to a long-term lease when it is over.

Most landlords wrongly assume that when the mandatory five years are up (or seven, for legal persons) the lease agreement is automatically terminated - crass mistake. If nothing is done, an automatic extension to long-term leases operates by law (known as ‘silent renewal’ in English legal jargon or prórroga tácita, in Spanish). The idea behind it is to protect and bolster furthermore tenant rights.

Silent renewal periods

For all long-term rental contracts signed on or after the 6th of March 2019:

  • Physical landlords: adds an extra 3 years to the lease. Making a long-term tenancy’s total duration 8 years.
  • Legal landlords (i.e. companies): adds an extra 3 years to the lease. Making a long-term tenancy’s total duration 10 years.

 

Example: a contract signed on the 9th of March 2019 by a private landlord. If by 2024 the landlord takes no action, the contract will be automatically extended for a further 3 years until the 8th of March 2027.

Long term tenancies (contract duration, in years)

I'll throw in a little chart to make everyone's life easier (please excuse my appalling chart abilities).

 

Landlord

No silent renewal

  With silent renewal

Physical person

5

8

Legal entity

7

10

     
     
     

How do you avoid this legal extension?

A lawyer needs to draft a formal notice of termination and serve it to your tenant by recorded delivery within a specified time limit. This must be done giving a 2-month notice if a landlord is a physical person and with a 4-month notice if the landlord is a legal person (i.e. a company).

I’m trying to sell on the property, how would this affect me?

It affects you. Under the new changes to our rental laws, any buyer acquiring a property needs to respect the whole duration of a pre-existing lease agreement until it ends. This means a buyer may have to wait several years before he is able to attain vacant possession. Needless to say, most buyers do not have the patience to put up with this, putting a damper on any house deal.

For this reason alone, it is strongly advised landlords take legal counsel before signing any lease agreement in Spain. There are many different types of rental agreements, and some will lock you into an 8 or 10-year contract if you are not mindful.

That said, there are always legal ways to circumvent such pesky matters. Talk to a lawyer, we can pre-empt such matters, so they do not jeopardize your house sale.

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on 952 19 22 88 or by completing our contact form to book an appointment.

Article originally published at IdealistaTermination of long-term lease agreements and ‘silent renewal’

Legal services Larraín Nesbitt Lawyers can offer you

 

Rental-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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Community of owners may now ban holiday lettings

Raymundo Larraín Nesbitt, April, 11. 2019

Buy to let in Spain? This blog post sheds some light on the new changes brought to holiday lettings in 2019.

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Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer - Abogado
11th of April 2019

 

As we reported back in March (Spain's new rental laws in 2019), a new law was approved which brought a raft of changes. In today’s blog post I will focus on the two changes which affect holiday lettings. Community of Owners have been greatly empowered to rule on them going forward. All changes effective as from 6th of March 2019.

 

  1. Community of owners may now ban holiday lettings outright

Spain’s Horizontal Act has now been amended allowing Community of Owners to vote by a simple majority of 3/5 (or 60%) to ban outright holiday rentals within a community.

I had already pointed out in a blog post in 2017 that this step was necessary, as the Horizontal Property Act at the time required unanimity to ban them, which logically was never going to happen because landlords would vote against it because of their vested interest.

This change has no retroactive effects.

  1. Community of owners may now increase the community fees of all those owners who market their properties as holiday lets through holiday platforms

Spain’s Horizontal Act has been amended allowing Community of Owners to increase the communal quota assigned to a landlord of the overall community budget.

In plain English, communities of owners may now vote to increase the community quota of a property owner who uses his property/ies as holiday lettings. They can vote to increase it by as much as 20%.

This change has no retroactive effects.

 

 

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Holiday lettings-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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