From 6 March 2019 different rules apply to residential rentals in Spain. By residential rental, we mean rental contracts where the tenant establishes their permanent residence or domicile in the rented property. In short: if you rent to Spanish residents.
This article will briefly discuss the main points of house rental in Spain.
Duration
Unless otherwise agreed, the duration period is set at 1 year. However, if the duration period is less than 5 years, the tenant has the right to ask for an extension of the duration period, this up to 5 years. This means that as an owner- natural person, you must allow the tenant to continue renting for another 5 years. However, after the mandatory extension expires, a tacit extension of up to 3 years is possible.
There is one exception to the mandatory renewal. After the first year, the owner-natural person can decide to stay in the property himself or assign it to a family member. A two-month notice will then apply. This exception should be explicitly included in the rental agreement.
If you rent through a company, the mandatory renewal is 7 years with a 3-year tacit extension.
Rental amount
The rental amount is freely negotiable. Payment of rent must be made within the first 7 days of the month.
There is also an annual indexation based on the Spanish consumer index.
Deposit
The deposit is one month's rent. This cannot be increased even if you agree on a different amount.
Monthly costs
Monthly charges such as gas, water and electricity are for the tenant. Basically, IBI and common charges are for the landlord unless otherwise agreed.
Read more about the cost of a property in Spain.
Renovation works
However, if the landlord starts major improvement works, he is allowed to increase the rent. Minor renovation works are also the landlord's responsibility. The tenant is entitled to compensation if the renovation works take longer than 20 days.
Sale of the property
In case of sale, the tenant will be able to continue to occupy the property until the lease expires. In the past, the tenant still had a right of first refusal.
Registration tax
The registration tax payable upon signing the lease was removed.
Breach of contract
In a number of cases, the contract can be broken by the landlord. Consider non-payment, intentional damage, change of domicile or destination, operation of an illegal activity, etc. However, this is done through legal proceedings before a Spanish court.
Decision
Renting to Spanish residents as a foreigner is not without risk. Indeed, due to the mandatory extension of the lease term, you will not be able to evict the tenant just like that. In addition, Spanish courts will have jurisdiction to follow up on any disputes. The costs of proceedings in Spain can then be high.
Therefore, it is more interesting to opt for ordinary rent. This is a rental regime where the tenant does not establish his domicile in the rental property. In other words, the tenant does not intend to reside permanently in the rental property. Think expats, (Erasmus) students, winter visitors, etc.
Read more about common rentals in Spain.
