Agency commission fees : What does the new Housing Act state ?

Published in the Spanish Official Journal (BOE) last Friday, Spain’s new housing law has come into force: from now on, charging the customer for commission fees will be illegal… 

But of course, agencies have found a way around this…

The new reform of the property rental system has brought about some major changes and – among other things – redefines exactly the issue of property management, i.e. the agency commission fees. The new text precisely prohibits the tenant from paying the estate agent’s fees for acting as an intermediary in the letting of a property. Up until now, the Urban Tenancies Act (LAU) did not specify who should pay the agency´s fees, and most agencies charged the tenants, as well as the landlords whenever possible. However, the new law puts an end to this modus operandi, requiring the landlord to bear this cost. Specifically, the text reads as follows: “The lessor handles the costs of property management and of formalizing the contract”.

Interviewed about the application of this reform, several agencies have already explained that they will simply change the description of their services on their invoices so that tenants can continue to pay, without breaking the new law. In fact, the subtleties of language are possible. It is true that in some cities where the property market is extremely tight, prospective tenants will do anything to get a particular property and get their application through.

Tenants may therefore continue to pay one of the first expenses they face when renting a flat, as this commission generally amounts to one month’s rent + 21% VAT (IVA).

In addition to this commission, there are often several other monthly payments that must be paid in advance, such as the deposit, the additional guarantee and the first month’s rent. Even after its publication in the BOE, although technically in force, the new Housing Act may not be ultimately applied. 

Pedro Sanchez’s government’s aim in passing this law was to facilitate access to rental accommodation and to make it more affordable : to regulate rental prices in heavily populated areas and impose tax penalties on the bigger landlords.

That said, this new law has little chance of surviving its revision by the Constitutional Council, let alone the recent political changes. Even before the municipal and even more so the regional elections, won by the Right-wing party, the application of this law was far from certain. Some issues were left to the regional governments to deal with, so as not to encroach on their powers, housing being one of the areas that depends on the autonomous communities. These will now be predominantly governed by the right-wing party which is clearly against this law.

The review by the Constitutional Court in the coming weeks, the victory of the Right in a large majority of regions and the announcement of early general elections scheduled for 23 July will all seriously compromise the effective application of this new law.