Government has approved new leasing regulations

Фото: HiveBoxx, Unsplash

The draft law will now have to be put to a vote in Parliament. If passed, it will be published and come into force.

The new bill is set to make a big change to the rental market. If passed by Parliament, it will be the biggest change to the current legislation since 2006. However, the resolution of one of the most pressing issues - limiting the size of rents - has had to be postponed.

In general, it is possible to distinguish 5 main aspects that have undergone transformations:

Rules for joint tenancy

When more than one person rents an apartment, the agreement is made with each person separately. Also, if one tenant decides to move out early, he or she must notify the landlord and the other tenants and help find a new tenant.

Written agreements

All future leases must be in a written form. They will also have to contain certain mandatory information, such as the amount of the monthly fee.

The concept of luxury housing

This feature has been completely eliminated. Previously, this designation allowed the maximum rent limit to be circumvented.

Real estate agency commissions

The long awaited change has come. Now commissions to real estate agents are paid equally by the tenant and the owner of the apartment. Previously, the burden of expenses fell entirely on the one looking for housing.

Security Deposit

The threshold for the deposit has been lowered. It is now two times the monthly rent instead of three times. In addition, the law now sets out clear conditions under which the landlord is obliged to return the deposit, as well as sanctions for unreasonable refusal to do so.

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The maximum rent limit will not be reduced

One of the most anticipated changes had to be postponed. The government faced strong opposition to lowering the maximum rent.

According to the opponents of the reform, such a move could significantly reduce the interest of investors in real estate, which will not only fail to solve the housing crisis, but also exacerbate it. In addition, the owners themselves will lose interest in providing rentals if they do not see the benefits.

However, the Cabinet has stated that it will review the current proposals and come back with a new program if possible. So far, the following points have been fixed in the bill:

Rent Ceiling

The bill reads: "It is appropriate to maintain the rule in force since 1955, which limits annual rents to 5% of the capital invested in real estate. However, in view of the practice of the real estate market and the inaccuracies of the current text, as revealed by some recent court decisions, it is appropriate to clarify and strengthen certain provisions relating to the capital invested in rental housing, provided for in particular in section 3(3) and (4) of the 2006 Act, in order to make the rule more transparent for tenants and, therefore, for rental committees and justices of the peace who rule on appeals". So, for example, if the value of an apartment is 1,000,000 euros, the annual rent cannot exceed 50,000 euros.

Furniture

If a landlord decides to rent a property with furniture, he can charge an additional one-off fee as compensation.

Increase limit

Extract from the bill: "The rent agreed before the entry into force of the law may be adjusted to the level resulting from the application of this law only after written notice to the tenant. A tenant occupying a dwelling unit under a lease agreement entered into prior to the effective date of this Act shall have a three-month cooling-off period from the date of the landlord's demand for a rent increase in accordance with the provisions enacted by this Act to terminate the lease agreement. If the tenant terminates the lease, no rent adjustment shall be made. If the tenant does not terminate the lease and the requested rent increase exceeds 10%, the increase shall be made at one-third per year."

There have been some pretty significant steps to make life easier for tenants. Now they are relieved of some of the financial burden of paying real estate agents, guaranteed better protection from arbitrary security, and built a more transparent chain of legal consolidation of their status as tenants.

Time will tell whether this system will prove effective. For now, we have requested additional comments from experts and will add them as soon as we receive a response. Stay tuned for further updates!

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