Renting a Property in Spain

We all need somewhere to live. Find out the rules about renting a property in Spain - and how to do it. Whether it is a holiday home, a permanent residence or something that falls between the two, the Spanish system can give you some surprises!

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This guide covers…

This guide is about renting residential property in Spain. It deals with why to rent, where to rent and how to rent; as well as covering the legal formalities and tenants’ rights.

Introduction

The rental market in Spain is huge: about 20% of Spanish families live in rented accommodation and very large numbers of expats prefer to rent than to buy. In addition, of course, Spain has over 75 million tourists per year.

Why to rent

There are three main groups of people who rent property in Spain: expats who are going to be living in Spain for no more that two or three years, people coming to live permanently in Spain and who are deciding exactly where they would like to live and tourists.

Expats

Expats rent for one simple reason. It is usually cheaper to do so.

The expenses of buying and selling property (real estate) in Spain are considerable: say, 12% of the price when you buy and 5% when you sell. That is fine if you are going to be there for a few years but crazy if you are only there for a year or so.

So where is the break-even point?  It is difficult to say as much depends upon where and what you would be renting or buying. See our Guide to Buying Property in Spain and our Guide to Selling Property in Spain to help you make the calculation.

When will property price rises have outweighed the costs of buying and selling? You also need to take account the income you would have made from the money you used to buy the property.

The calculation can be difficult because of the uncertainty of the future property market in Spain. At the moment (Summer 2018) the property market seems to be reviving in some parts of Spain. In some it has already revived. In some areas there seems to be a likelihood of strong medium term growth and in others, at best, the prospect of lack-lustre performance.

If your company is kind enough to pay your expenses of buying and selling your home, the calculation looks very different. In this case, the big question is usually whether you should keep your apartment ‘back home’ or sell it and buy one in Spain. That is, mainly, a question of your future plans. If you intend to return to that apartment, that is one thing. If not, it is another. If you do not intend to return, will you be able to rent out your apartment at a good price and how much per year is it likely to increase in value? Will an apartment in Spain increase in value more?

A big factor in that equation is that, in my experience, many people will be living in a property ‘back home’ that will not rent very well and may be slow to increase in value. For example, older family homes in the suburbs. When they come to Spain as expats they tend to rent or buy apartments – sometimes large ones – in prime city centre locations, which usually have good growth potential.

Of course, its not just about money. You may prefer to own your own property for other reasons. Flexibility is one. If you leave Spain or move somewhere else in the country, you can quit your tenancy very quickly. It could take months to sell your home. Personalisation is another: you may prefer to live surrounded by your own possessions. That can, sometimes, be difficult or expensive to do if you rent a furnished apartment in Spain.

People moving to Spain

The key issue here is whether you are absolutely clear about where you want to live: which town, which area? most people are not. They, perhaps, know that they like the area near Javea on the Costa Blanca but have no idea which village or nearby town or part of Javea they would enjoy best.

In this case renting, typically for a year, gives them the opportunity of exploring at their leisure and picking the perfect spot and the perfect property.

Generally such people sell their property ‘back home’ before they move to Spain. It is easier, avoids the management issues that arise when letting it and gives them a lump of cash so that they can do a deal very quickly if they find and fall in love with a property in Spain.

The cost of renting, even ignoring the income they will earn from the money they have not invested in a house, will be massively less than the cost of buying and selling if they make the wrong initial choice. Say 5% of the value as rent against, say, 12% to buy and another 5% to sell. Add in the fact that they usually rent somewhere smaller than they would buy and it looks like a bit of a no-brainer unless property prices in the area are rising very quickly indeed.

Tourists

Many tourists much prefer renting an apartment or villa to staying in a hotel. It is more spacious, has an area to live and work and a kitchen so that they can prepare at least some of their own meals.

It is also, usually, cheaper than a hotel.

Finding a property to rent in Spain

There are many sources of 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-term 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 studying, most colleges keep a list of available properties.

Word of mouth recommendation is also a powerful tool, particularly if you can travel to Spain before renting.

Property descriptions

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.

Ideally, you don’t want to be above the second floor!

A few words are useful when you are looking a property descriptions:

  • habitaciónes: rooms
  • dormitorios: bedrooms
  • cuartos or banos: bathrooms
  • cocina: kitchen
  • comedor: dining room
  • salón: living room
  • garaje: garage
  • trastero: attic or junk room
  • sótano: basement
  • calefacción: heating
  • reformado / rehabilitado: renovated
  • para reformar: needs renovation
  • con / sin ascensor: with / without elevator
  • amueblado: furnished
  • el alquiler (no) incluye gastos: the rent (doesn’t) includes expenses
  • gastos de comunidad: service charges
  • fianza: deposit
  • duración mínima del contrato: minimum contract length

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

Both are often overstated, so check.

Inspecting the property

There are some things it is always worth checking before you agree to take a property, whichever the country where the property is located:

  • Working heating/air conditioning
  • Working plumbing
  • Working hot water
  • Working lights
  • Electricity installation looks safe
  • Working cooker
  • Working fire/carbon monoxide alarm
  • Condition and comfort of beds
  • Condition of carpets
  • General condition
  • The real travel time to your place of work. This is often different from the travel time stated by the agent (they may be using very optimistic estimates from a quiet time of day).

In addition, there are some special points to check in Spain:

  • Is there an electrical safety certificate?
  • Is there an energy certificate?
  • Your liability to communal expenses – gastos de comunidad?
  • Who is going to be responsible for Spanish property tax – IBI?

Always take photos to show any damage and send copies to the landlord.

Insist on an inventory – or make your own. Get the landlord to sign it.

Make sure you get keys to everything.

Agreeing the rental

This will be agreed with the letting agent.

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

Is the tenancy furnished (most are) or unfurnished? If it is furnished and you want to use your own furniture, will the landlord permit you to remove his furniture, store it and replace it at the end of the tenancy? If he will, you are likely to have to pay a larger deposit.

Insist on a contract in writing. It is your legal right.

The legal formalities

These are simple.

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

You will almost always have to pay a deposit. This is, usually, one month’s rent and it is paid as the same time as the first month’s ‘normal’ rent.

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 to glance at the rental agreement but most people don’t.

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 your 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 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 but accepting one does not deprive you of your rights.

Rental of a permanent home

Any agreements made contrary 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-month´s 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, you 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 long term rental 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 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 six months, they will have to pay five months’ rent to the landlord. The parties may agree alternative compensation for the lost rental.

A landlord can terminate the rental agreement if you:

  • Do not pay your rent
  • Sublet the property without the landlord’s permission
  • Deliberately cause damage to the property
  • Cause serious nuisance to your 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

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 this. 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 pay by bank transfer so there is 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 truck hits the building or a storm damages the roof, it is the landlord.

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. Take photos when you take possession of the property and record any damage. Send both to the landlord. Better still, have the landlord sign them.

Improvements to the property

If a landlord carries out refurbishment works that constitute an 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.

Taxes and community fees

Normally a landlord is responsible for paying IBI tax (local property tax) and any community fees, but it can be agreed otherwise. Check this carefully.

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 at 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 30 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 law suit once the new buyer notifies him of the sale. The tenant will have thirty 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.

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.

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 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 euro.

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.

Conclusion

There is a lot of rental property available in Spain. Just make sure that you check out your proposed rental property thoroughly and that it complies with the relevant law. Don’t agree to tenancies saying they are not for your permanent home unless that is really the case.

Further Information

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

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