Legendary Jazz bar Café Central (Madrid) threatened by closure if they don’t win their case for a further 5 years of rent freeze. One of the lucky Ley Boyer survivors.
Smaller businesses are being forced to close as landlords raise commercial property rents resulting from the 20 year ‘Ley Boyer’ ending on January 1st 2015.
The law introduced in 1994 protected businesses whose lease had begun before 1985, exempting them from rent increases for 20 years (inflation-linked). This gave many family businesses the opportunity to continue operations in an often difficult environment, and avoided large rent increases established by the market that only large corporations could afford.
Thought to affect approximately 200,000 business – mostly shops, bars and workshops – the character and village-like feel of many of Spain’s cities is changing dramatically as businesses face tough rent hikes menaced to reach market value of 5 to 10 times the current rents. Reported increases for example on Calle Serrano, Madrid, have soared from €1,500 a month to €30,000 a month, or the Gran Via 72 year old toy shop Asi had been paying €10,000 and were then asked for €50,000 a month. Impossible to operate under these terms, the doors are closing for many family-run businesses.
Landlords eager to recoup the market rate of their properties’ rents cannot be faulted, while a handful of landlords have negotiated slightly higher but affordable rents to keep the cultural value of the businesses.
Other businesses have discovered loopholes to exploit in the Ley Boyer, or “Ley de Arrendamientos Urbanos de 1994” such as the legendary Cafe Central Jazz bar who have been paying €5,000 a month and should now be paying €12,000 according to market value – however they have found that businesses transferred to a third party between 1984 and 1994 can have an additional 5 years of fixed rent. But the owner does not agree and their sad story will likely finish at the courts.
The end of this protective law ties in nicely with many business owners’ retirement plans but whilst they had 20 years to prepare for the rent hikes, the changing landscape of Spanish cities often characterised by a mix of unique, family-run, charming small businesses, next to chain stores, needs the deep-pocketed stores and restaurant chains to make an effort to maintain a personal feel and not create a city of cookie cutter shop fronts.
