Wednesday, April 28, 2010

Crazy renter laws and empty flats

For many in Spain, it has become more difficult to rent (despite lots of available flats), mainly due to the increasing paranoia of landlords in Spain. Many places will now ask for 6 months of rent as a deposit, which is pretty much impossible for most people.

The reason behind this is the somewhat bizarre renter's rights laws that allow landlords to get into Kafkaesque situations where the renter has disappeared, is not paying rent, but is unable to evict because they cannot serve papers to the tenant. Taking the law into your own hands can result in jail time for the landlord, so is not recommended.

I have heard from other people that actual defaults on rents are relatively rare, but the horror stories of the times when things go wrong are so bad, that owners would rather be willing to give up months of rent with an empty apartment, than potentially risk this happening to them.

It seems to me like there would be a business opportunity in creating a company that guarantees tenant rent by taking a lien on some property (such as a car, or parents property, etc), which would only be exercised in case of default. This would improve the life of the renter, since they wouldn't have large amounts of money tied up in useless (and non-interest earning) deposits, and the landlord could rent out places more quickly.

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