Madrid, May 22, 2023.
The new real estate situation is leading to an increase in inquiries and the demand for rental non-payment protection insurance, regarding the recent approval of the New Housing Law in the Council of Ministers which, among other aspects, focuses on the rental of real estate or the limitation of rental prices in 'stressed areas'
The new Housing Law approved on April 27, includes new aspects such as the use of a new reference index that replaces the Consumer Price Index (IPC), the way in which tenants must pay rent and the regulation of the price of new rentals in 'stressed areas'. Also, this new norm prohibits the increase in the rental price with extra expenses and applies new protection measures against evictions. All these new measures have raised doubts among the owners. In this context, experts from Allianz Partners in the field of Rental and Real Estate affirm that the demand for information by the owners has increased: both in relation to the effect that the new regulations will have about their obligations, as well as about their rights as landlords; in addition to proposing tools that allow them to rent with greater security, as is the case of non-payment of rent insurance. Among the most notable changes that affect owners, are the following:Modality of rent payment. On how to pay the rent, the new law establishes that the payment must be made through electronic means. Only in the event that one of the parties lacks a bank account or access to electronic means, it could be done in cash. Rent caps. The new text establishes that the rent increase ceiling will be 3% in 2024. The CPI will no longer be taken into account as a reference. The limit will be established taking into account the type of contract and the property. In addition, the previous rent in force for small owners and the application of the price containment index for large holders will be taken into account. Regulation of the rental price in 'stressed areas'. According to the experts of the leading Insurance and Assistance company, the rental prices of the new contracts in these areas would be regulated and capped. For this, the last rent in force will be taken into account. In other words, if a home was rented for 800 euros per month, in the new contract the price may not exceed 800 euros, plus the current index. Regarding the role of non-payment insurance, Allianz Partners experts explain that the insured solution currently offered on the market serves owners as a protection mechanism against potential non-payment by tenants because it includes in its guarantees the collection of guaranteed rent in the event of non-payment, the claim to the tenant for breach of contract and the wording and the review of legal documents, among others. "As relevant players in the rental protection market, we contribute to a greater supply of rental properties, offering owners the security they demand to rent their properties," says José Luis Tirador, Commercial Director of Allianz Partners Spain. Regarding rental non-payment insurance, Tirador highlights the growth that this product has been registering in a sustained manner in recent months and that could respond, according to the expert, "to the need to the owners to feel calm before eventualities that could arise. This need is especially important for small owners who count on their properties as a way to channel their savings." More about rental default insurance here.
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