Letting (Renting Out) Your Property in Spain

Whether you are a professional landlord or somebody who lets their home when they are not using it, there is quite a lot to learn about letting property in Spain. It can be very expensive if you get it wrong. This guide looks at the essentials.

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This guide covers…

This guide is about letting (renting out) residential property in Spain. It deals with the legal formalities and the rights of landlords and tenants.

Introduction

Many people want to let (rent out) their property in Spain. For some, it is how they earn their living. For others it is to generate some income from their property whilst they are away – whether working abroad or on holiday. Other people have a house or apartment that they have been unable to sell during the last few years, when the property market in Spain has been difficult and sluggish.

This guide is aimed at all of these people. We cover long-term lets, short-term lets and the letting of holiday homes.

In this guide we use the words “let” and “rental” interchangeably.

See also our Guide to Renting Property in Spain, which looks at this issue from the point of view of tenants.

Finding a tenant

Marketing your property to let

There are many ways of marketing property to rent in Spain. A quick internet search will find dozens. Some will operate nationally, some regionally and some very locally. That doesn’t usually matter.

For long-terms rentals, some companies with national coverage are:

There are many more!

Most estate agents (Agentes de la Propiedad) also deal with rental properties.

If you are near a university, most colleges keep a list of available properties.

Which will work best for you?

This depends.

The first question is whether you want to – or are able to do – any part of the work yourself. If you live near the property you want to rent out and have time on your hands you might want to do this to save a bit of money.

  • An estate agent can do all the work involved in finding a tenant, including showing the property. They will, typically, charge a fee of one month’s rent. They may also charge the tenant one month’s rent for introducing them to the property. Some agents merely find a tenant. Others (the majority) offer a fuller package including producing a contract and inventory and taking up references from the tenant.
  • An on-line agent may do nothing more than put the tenant in touch with you – leaving you to do all the work – or they might offer the same level of service as an estate agent. For example, a service such as tucasa.com is free for non-professional landlords but they will only advertise your property and (you hope) introduce a prospective tenant to you.

The second question is whether you speak fluent Spanish. If not, you will need to use an agency where somebody (and preferably several people) speak your language and the language of the people you think are most likely to want to rent the property. There are some places particularly favoured by Russians or Swedes, so it make sense to be ready for them!

In most cases our experience is that using the services of a good local estate agent – who advertises online – is the better option for most foreigners who are letting property in Spain. Not only will they take a lot of work off you but they will make sure that everything is done property in accordance with Spanish law.

Property descriptions

A good and accurate description of your property, a map showing its location and lots of nice photographs are vital if you want to let your property quickly. Check some of the online sites to see what professional agents are saying about their properties.

The description should be available in Spanish, in English and in any other language commonly used in the area (e.g. Russian).

Remember, if you are an American, that the Ground Floor (Floor 0 or la planta baja or el (piso) bajo) is what you would call the first floor. The floor above ground level is the first floor (el primer piso or 1.piso or la primera planta or 1.planta). Then come the second, third etc floors: segunda planta, tercera planta etc or segundo piso, tercer piso etc.

Properties are described be reference to their size:

Una casa de 70 m² construidos, 60 m² útiles: a house of 70 m2 gross area and 60 m2 of net area.

The construidos is the total size of the construction within the perimeter of the house. It includes the area of the walls and any lift shafts, ventilation ducts, services spaces etc. It will also often include the area of any terraces.

The utiles are the areas you can walk in: i.e. the areas with a ceiling over 1.5 metres, excluding the thickness of walls but including closets etc.

Preparing for the tenant’s inspection of the property

There are some things it is always worth checking before you agree to show a tenant around your property:

  • Working heating / air conditioning
  • Working plumbing
  • Working hot water
  • Working lights
  • Electricity installation safety
  • Working cooker
  • Working fire/carbon monoxide alarm
  • Condition and comfort of beds
  • Condition of carpets
  • General condition
  • Are all the keys present and do they work
  • Electrical safety certificate
  • Energy certificate
  • Registration with tourist authorities, if you are doing a holiday home let.

In addition, you will need to prepare a detailed inventory of the contents of the property and a detailed statement as to the condition of the building.  Use photographs as part of both.

You will need to decide:

  • How long you want to make the initial duration of the tenancy (see below)
  • Will it be furnished or unfurnished?
  • If the tenant wants to use their own furniture, will you you permit them to put your into storage (or do it yourself)?  On what terms?
  • Who will be liable for communal expenses – gastos de comunidad
  • Who is going to be responsible for Spanish property tax – IBI

Agreeing the terms of the letting

These will be agreed between the tenant and the letting agent, if you are using one.

They will agree the rent, the amount of any deposit, the amount of notice you will each have to give and receive and the proposed initial length of the contract.

Insist on a contract in writing.

The legal formalities

These are simple.

There should be a written contract, signed by you and the tenant. It should be in Spanish.

Make sure you also get a signed inventory.

The tenant will have to pay a deposit. This is, usually, the equivalent of two months’ rent and it is paid as the same time as the first month’s ‘normal’ rent.

It should be paid into an escrow account and held there until the tenant leave. Different regions of Spain have slightly different practices as to this. The agent will know what to do.

It is in your interests that all rent payments should be by bank transfer and not in cash. That way you can prove they have been made.

It is a good idea to get your lawyer or a fully qualified estate agent to prepare the rental agreement. You may well use it several times at it is well worth getting it right in order to protect your position.

Landlord & tenants’ rights in Spain

Your rights are governed by the Ley de Arrendamiento Urbano (LAU 29/1994) – Law about Urban Lettings of 1994, as amended quite significantly by Ley 4/2013, de medidas de flexibilización y fomento del mercado del alquiler de viviendas – Law about the promotion and flexibility of the property rental market.

It is complicated. The following is only a brief summary of its key points.

The LAU deals with both long-term and short-term rentals.

People talk a lot about long-term and short-term rentals. In fact, the terms long-term and short-term are misleading. The most important factor, under Spanish law, is not the expressed length of the tenancy but whether this is a rental of a property as the tenant’s permanent home.

Rentals of permanent homes are very regulated and tenants are very protected. Rentals of property for use other than as a permanent home have a much greater degree of flexibility and less protection.

Many landlords have tried to pass off permanent home tenancies as non-permanent home rentals. It does not work. It doesn’t matter whether your rental agreement says it is a short or a long-term agreement. The court will decide which category it fits into, based on its interpretation of the facts of your case.

In particular, many tenancies in Spain are offered for a period of 11 months. This seems to be in a mistaken belief that a tenancy for less than one year falls outside the protection of these laws. That is not true. There is nothing wrong with a tenancy lasting an initial 11 months if that suits the parties but agreeing one does not deprive the tenant of his rights.

Rental of a permanent home

Any agreements made contrary to the law will be null and void.

Deposit

By law, the deposit can be freely agreed between the landlord and the tenant. It is usually two months’ rental. Normally, this deposit should be paid into an escrow account to ensure the tenants recover their deposit (less any damages) at the end of their tenancy.

In addition, the tenant will have to pay some rent in advance. This is usually one month’s rent. The landlord cannot legally ask for more.

Duration of lease

For tenancy agreements signed after the 5th of June 2013, if no other period is specified it is understood that the rental will be for one year. It can be stated in the lease to be a shorter or a longer period. What matters is not the duration of a rental but the purpose of the tenancy. If the property is used as a permanent dwelling then it is regarded as a rental protected by the law, irrespective of whether a rental lasts three years, or three months.

Cancellation of lease

A tenant can legally opt out of the tenancy providing more than six months have elapsed since the contract came into force. To do this he must give his landlord at least 30 days’ notice. If this comes brings the contract to an end within the rental contract period, the tenant must pay for any months that they have not stayed at the property. For example, if the contract is 11 months and the tenant wishes to end the contract after 6 months, they will have to pay 5 months rent to the landlord. The parties may agree alternative compensation for the lost rental.

A landlord can terminate the rental agreement if the tenant:

  • Does not pay your rent
  • Sublets the property without the landlord’s permission
  • Deliberately causes damage to the property
  • Causes serious nuisance to their neighbours

A tenant can terminate the contract if:

  • The landlord does not attempt to make necessary repairs to ensure that the property is habitable
  • The landlord causes unnecessary disturbance to the tenants while they are living in the property

Things you cannot do as a landlord

Take justice into your own hands.

If your tenants do not pay their rent or are in some other way a complete disaster, you cannot evict them without their consent or going to court. You may end up in a Spanish jail for unlawful entry (trespassing). Fortunately, new laws have been enacted to help speed-up the eviction procedure but it still takes six to nine months.

Enter the property without consent to check its condition.

You forbidden from entering the property without the prior written permission of their tenant. This applies regardless of whether they are paying their rent.

Shut off the the water or electricity or change the locks

This is considered a serious criminal offence, even if the tenant has not paid his rent.

Renewal of lease

Landlords are, in most cases, legally obliged to renew the rental, one year at a time, for up to three years if the tenant wishes to do so. Tenants must give their landlords at least 30 days’ notice of their wish to renew.

Rent

There is freedom to negotiate both the amount of the rent and its terms of payment. If nothing else is agreed, it will be paid monthly. A landlord cannot request more than one month´s payment in advance.

A landlord must give his tenant an invoice for each month´s rent – but it is better to also make sure that it is paid by bank transfer so that there is easy proof of payment.

The rent will be updated yearly, usually by reference to the Spanish Consumer Price Index.

Maintenance & renovation of the property and its equipment

It is the landlord’s responsibility to pay for these expenses.

Damage to the property

If damage is due to normal wear and tear, e.g. a broken window, leaking tap or faulty shower, then it is the tenant who must pay for it.

Otherwise, e.g. if a storm damages the roof or a truck hits the building – it is the landlord. you will want to make sure that you have adequate insurance.

It is presumed that all household goods and kitchen appliances are handed over in perfect working order at the start of a rental. The onus to prove otherwise falls on a tenant.

As already mentioned, make sure a detailed inventory and condition report is prepared and include photographs in it. Have this signed by the tenant.

Improvements to the property

If a landlord carries out refurbishment works that constitute a genuine improvement to the property, e.g. he installs a fancy new kitchen, he is entitled to increase the rental.

Utility expenses

As a general rule, all expenses such as gas, water, electricity etc. are paid by a tenant. This should be stated in your contract.

Taxes and community fees

Normally a landlord is responsible for paying IBI (local property tax) and any community fees (gastos de comunidad), but it can be agreed otherwise. Make sure your contract is clear.

Pre-emption rights

Tenants have a series of rights that landlords must respect when it comes to selling the property. These rights can be enforced by a court.

i)  Tanteo (pre-emption right): a landlord who wishes to sell a property occupied by a tenant is legally bound to notify his tenant of the sales price and other key sales conditions. The tenant has up to thirty days to notify his landlord whether he wants to exercise his right to buy the property on those terms.

ii)  Retracto (buy-back right): if the landlord failed to notify the tenant of his intention to sell the property, the tenant can file a court case once the new buyer notifies him of the sale. The tenant will have t30 days to do this. The tenant will need to come up with the money to buy the property in that period and lodge it with the court. You, the landlord, will then face a large claim from the person you sold the property to.

Rental of a property that is NOT a permanent home

There are various types of such contracts, including arrendamientos por temporada (seasonal contracts) and rental contracts for commercial property etc. Private holiday lets (see below) are specifically excluded from regulation by this law.

In these types of contracts, the parties have almost total freedom to agree the clauses they think convenient.

Seasonal contracts are relevant to many expats. They well have a main home elsewhere and – especially in the case of academics – may only want to live in this apartment for (say) the academic year.

These are likely to be seasonal contracts.

Spanish law says:

Article 2: Renting a dwelling

Any rental the main purpose of which is to be the permanent home of the tenant shall be considered the rental of a dwelling

Article 3:  Rental other than as a dwelling

  1. Any rental the main purpose of which is not that set out in Article 2 shall be considered to be a rental other than as a dwelling

  2. In particular, the rental of urban property by season, whether for the summer or any other, shall be considered to be a rental other than as a dwelling

Deposit

The law states there will be a minimum of a two-month deposit. The parties are free to increase the amount.

Private holiday lets.

In most parts of Spain these are subject to local regulation. I use as an example of the law in Andalusia, which includes the Costa del Sol.

These are regulated by the Junta de Andalucía‘s law decreto 28/2016, de 2 de febrero, de las viviendas con fines turísticos or holiday homes law.

There is an obligation to register your property as a holiday home with the regional tourist registry. There are requirements for registration including possession of an official licence to occupy the building as a dwelling and an energy efficiency certificate.

The fines for non-compliance are very tough; many thousands of euros.

Definition of a holiday rental

The decree is rather vague on this point but:

  • The property must be built on land classified as ‘residential’ (in other words, properties on rural land are excluded)
  • The property must be rented out to tourists regularly on a short-term basis (days, weeks, or months).
  • There must be a system for booking the property.
  • The property will be regarded to be rented out as a holiday home if the landlord advertises it using companies who intermediate between landlord and tenant in exchange for a commission or other payment: travel agencies, real estate agencies, holiday rental websites such as Airbnb and HomeAway etc.

Property excluded from the law

The following properties are excluded from being regulated by this decree:

  • Properties which are lent to family or friends free of charge
  • Properties let to the same individual for a continuous period exceeding two months. These will be regarded as a standard rental agreement subject to the law set out above
  • Rural properties, located in what is legally classified as rural land, are expressly excluded as they are subject to their own legislation
  • Landlords, or property management companies, that own or rent three or more properties, personally or through corporate structures, each located within a radius of 1 km from a reception office in the same unit. for example, three apartments in the same block or three units in an apart-hotel.  They will be subject to the much more restrictive law 194/2010 concerning apartamentos Turísticos, which treats these properties like a hotel.

Ongoing property management

As well as finding a tenant, as a landlord you will have a number of things to do on an ongoing basis. These will include

  • Collecting the rent, paying your bills,
  • Filing your taxes,
  • Arranging repairs
  • Cleaning (and making good) the property at the end of the tenancy.

You can either attend to these things yourself or you can engage a property management company. Many estate agents offer this service but there are also dedicated property management companies. Of course, there are good property management companies and there are rogues. Choose a good one by seeking recommendations and checking the company carefully. See our Guide to Property Management for much more on this topic.

For normal tenancies, lasting from several months to a year or two, you can expect to pay 7-15% of your rental income for a complete service. For short-term holiday lets it can be a lot more because the process of meeting and greeting the tenants and cleaning is so time-consuming. As is so often the case, the cheapest is not usually the best.

Good property management companies will usually save you more than they cost.

Insurance

If you are going to let out a property in Spain you will need proper insurance.

Your ordinary home owners policy will not do. Such policies generally only cover a property when it is occupied by you or during short absences.

The exact type of insurance you will need will depend upon the type of property and the type of rental but some of the issues that you will need to think about are:

  • You will want a policy that covers you if the property is damaged by theft or robbery by people other than your tenant.
  • You will want a policy that covers you for accidental damage such as from a storm.
  • You may want a policy that covers you for theft by your tenant.
  • You may want a policy – though there are few of these – that covers you if your tenant does not pay the rent.
  • You will also need to include public liability within the policy, to cover yourself in the event that your tenant or one of their guests has an accident.
  • If you are hiring gardeners, cleaners, maintenance people, etc then it’s also a good idea to include employee liability in the policy, which will protect you against legal action by them.

Conclusion

There are lots of people looking for rental property in Spain. After the crisis of 2007-2012 more and more Spanish people are renting property and the government considers that this is likely to go from about 17% of the population to 30%, so this market is growing. Tourist numbers are up and the number of expats living in Spain is either stable or rising.

Just make sure that you prepare your proposed rental property thoroughly and that it complies with the relevant law – and always check your tenants by taking references.

Further Information

Please contact the author if you would like any further information. See the sidebar for their contact details.

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