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 Property Rental Rules in Spain

Property Rental Rules in Spain

Rules and guidelines for Property Rental here in Spain - Owners who let their properties on a short or long-term basis in Spain must comply with national rental regulations as set out by the national rental law (Ley 29/1994, de 24 de noviembre, de Arrendamientos Urbanos and Real Decreto-Ley 7/2019, de 1 de marzo).

Before entering into a tenancy agreement as a landlord (arrendador) or tenant (arrendatario) in Spain, make sure you know your rights and obligations as they can differ from those in the UK. Consider seeking professional advice to ensure you are complying with Spanish and local legislation.

GUIDE TO BUYING PROPERTY IN SPAIN

PROPERTY FOR SALE

Energy efficiency certificate

Since 2013, all homeowners in Spain are required by law to have an energy efficiency certificate (Certificado de Eficiencia Energetica) prior to selling or leasing their properties. The certificates provides potential buyers and tenants with an indication of the energy efficiency of the property and its typical energy outgoings.

Rules and guidelines for Property Rentals

Short-term (holiday) lets

If you want to let your property to tourists on a short-term basis, you must ensure that you are doing so in accordance with Spanish law. Most regions in Spain have put legislation in place to regulate holiday rentals in their area by making it compulsory for property owners to obtain a licence prior to letting, and by establishing a ceiling on the number of licences available. Some local authorities have placed a moratorium on the issuing of new licences as a means to control the number of holiday rentals in their city.

Properties can be subject to inspections by the local authorities, and owners who are caught marketing unlicensed, private residential property to tourists without complying with local legislation, can be liable for severe fines.

The classification of tourist apartments (apartamentos turisticos) and holiday homes (viviendas vacacionales) can vary from one region to the next. In some areas, it is subject to the length of stay or whether the property is being rented as a whole or individual rooms. In others, it is determined by the location of the property (i.e. proximity to city centre, beach).

You should seek independent legal advice and check the local laws and requirements (i.e. health & safety measures) at the town hall or the regional government’s tourist department before you buy if you are considering letting your property on a short-term basis.

If you are planning to buy an apartment which is part of a residential block, you should also check the Community of Owners statutes to see if there are any rules that prohibit or restrict holiday letting within the community. The set of legislative measures regarding Spanish rental laws (Real Decreto-ley 7/2019) that came into force in March 2019, provide Communities of Owners with greater powers to prohibit holiday home rentals within their development or block.

Once you have correctly registered your property with the local authorities and obtained the necessary licence, you may wish to consider hiring a Spanish letting agent to assist with finding tenants, drawing up rental contracts and managing the property on your behalf. In some regions, it is obligatory to use a specialist tourist apartment management company for short-term rentals to tourists.

Property Rental Rules in Spain

Long-term lets

Many people looking to buy a second home in Spain choose to rent before they buy. Private tenancy agreements are governed by national rental laws (Ley 29/1994, de 24 de noviembre, de Arrendamientos Urbanos and Real Decreto-Ley 7/2019, de 1 de marzo), which set out and protect the rights and obligations of both the landlord (arrendador) and the tenant (arrendatario).

Before signing a tenancy agreement

Tenants should undertake a thorough inspection of the property before signing a contract.

Its good practice to verify the identity of the person or agency renting out the accommodation to ensure they are the owner. This can be done at the National Property Registry by means of a ‘nota simple’. If someone is acting on behalf of the owner such as an agent, you should ensure they have power of attorney to do so.

Tenancy agreements

Rental agreements must provide the tenant with the full terms and conditions of their tenancy and be formalised in writing. Ensure you fully understand all clauses before signing and if something is not clear, seek legal advice. The written agreement must state the full name and ID number (DNI for Spanish nationals, NIE or passport for foreign nationals) of the landlord and tenant, the property’s full address and the specific terms to which both parties have agreed such as rent amount, payment method etc.

If the property is furnished, this must be specified in the agreement, as should the tenant’s ability to use any other facility such as storage rooms, parking spaces, shared gardens and swimming pools etc.

The consumer watchdog UCO (Organización de Consumidores y Usuarios), offers an sample rental contract here.

Inventory

The landlord should provide the tenant with an inventory that lists any furniture, electrical appliances or other equipment included in the rental agreement and a note of the condition they are in at the time of signing. You should check that all electrical appliances are in working order, and should ensure the inventory is correct. You may wish to take photographs to avoid any future disputes.

It is important to check the water, gas and electrical fittings.

Deposits

The deposit (fianza or señal) must be paid on signing the contract and the landlord should provide a receipt. By law, a landlord in Spain can only request a one-month deposit on long-term lets. Additional assurances such as a bank guarantee (aval bancario) or other guarantees may be requested, however this is separate to the deposit and cannot by law, exceed the total of two months’ rent.

The landlord is obliged by law to place the deposit in the corresponding ‘Agencia Social de la Vivienda’ of the region. This is the equivalent to a government-approved tenancy deposit scheme (TDP) in the UK.

On termination of the contract, the landlord is obliged to return the deposit to the tenant one month from the date the contract is terminated.

 Property Rental Rules in Spain

Letting agencies

Should you choose to rent through a letting agent, fees tend to be the equivalent of one month’s rent plus VAT.

Tenancy length

The length of the tenancy agreement can be freely negotiated between the landlord and the tenant, however if the tenancy agreement does not specify a fixed term mutually agreed by both parties, national rental law conditions will apply (Real Decreto-Ley 7/2019, de 1 de marzo).

Rental contracts tend to be for one year, after which time they may be terminated or renewed. Should the agreement be open-ended or for less than 5 years, the tenant has the right to extend it each year until a maximum of 5 years has been reached (7 if the tenant is a legal entity ‘persona juridica’). After five years, if neither party notifies the other of their wish to terminate the contract, it will automatically be renewed annually for a maximum of three more years

Utilities & other outlays

Contracting utility service providers (i.e. electricity, gas, water etc.) is the responsibility of the tenant unless otherwise established in the terms of the contract.

Landlords must provide tenants with the property’s Certificate of Occupancy (Cédula de habitabilidad) issued by the regional council. This document serves as a guarantee that the property is fit for purpose, and is required when contracting water, gas and electricity services.

Before you finalise a rental agreement, make sure you are clear on the agreed amount and check if the terms of contract include any extra outlays such as community fees (see ‘Community of Owners’ section) or the Impuesto de Bienes Inmuebles (IBI), an annual tax which unless specified in the contract, falls to the property owner to bear.

Rent

Spanish law states that landlords can only apply annual rent increments if this is clearly stipulated in the terms of contract (e.g. fixed annual percentage increase). However, where the increment methodology is not specified, the amount cannot exceed the annual consumer price index rate (Índice de Precios al Consumo - IPC).

If rental increments are not addressed in the contract, no increment can be applied until the contract expires (5 or 7 years).

After this time, the landlord can increase the rent if they make improvements (other than regular maintenance works) to the property one month after completion of the work and only if the tenant has been informed in writing. Any increments due to property improvements are subject to a 20% cap, and the landlord must provide the tenant with details of the costs involved and how the new rent has been calculated.

 Property Rental Rules in Spain

Property maintenance

The landlord is obliged to carry out any works necessary to ensure that the property is habitable and cannot apply rent increments as a result.

Tenants are liable to repair any damage caused to the property that is not naturally occurring (not wear and tear) such as purposeful damage, accidental or through neglect.

Both landlords and tenants should keep a record of any work they do or pay for during your tenancy.

Rules and guidelines for Property Rentals

Safety recommendations

Some safety aspects of Spanish tenancy law differ from those in the UK. The use of smoke and carbon monoxide detectors is highly recommended, however unlike in the UK, it is not a legal requirement in rented properties in Spain.

Unlike in the UK, landlords are not legally obliged to commission annual gas safety checks however service providers are required to undertake a full gas check every 5 years. Many offer maintenance schemes for rentals and some also provide cover in the event the tenant fails to meet payments.

While there is not a legal obligation on landlords to have professional checks carried out on the electrical appliances, there is, however, an obligation to ensure that all electrical equipment is safe to use.

Termination of contract

The tenancy contract can only be terminated after 6 months from the date of signing if the tenant notifies the landlord in writing with at least 30 days’ notice; or if after a year of tenancy, the landlord (persona fisica) needs to claim the property back as his or her main residence, in which case they must give the tenant at least two months’ notice.

Rental agreements can also be dissolved when one party fails to meet their obligations such as meeting rental payments or withholding the deposit. For further information see the national rental law (Ley 29/1994, de 24 de noviembre, de Arrendamientos Urbanos.)

Property Rental Rules in Spain

Rental dispute resolution

Should disputes between a landlord and tenant arise, there are a number of different mechanisms available where either party can seek resolution either through arbitration, mediation or legal action:

  • if the tenancy contract is between an individual and a registered company (persona juridica), tenants can lodge a formal complaint with their local consumer rights administrative body. For further information see here
  • if the contract is between two individuals (particulares) mediation or legal action can be sought. See a list of English speaking lawyers in Spain
  • some regional authorities in Spain have created consumer arbitration and mediation bodies (i.e. Consejos arbitrales). You should check with your regional authority for further information

Letting and income taxes

You must ensure that you declare your rental income to the Spanish tax authorities (Agencia Tributaria) whether you are resident in Spain or not and regardless of the length of the let.

Be aware that non-resident property owners in Spain are required to complete a tax return each year even if they do not rent out their homes.

Taxation is a complex issue, and it is advisable to seek the advice of an accountant or professional tax adviser with comprehensive and up to date knowledge of both the UK and Spanish tax regulations.

 Property Rental Rules in Spain

Equity release schemes

Equity release schemes are schemes which are designed to allow homeowners to release equity from the value of their property as income, a lump sum or a mixture of both. A reverse mortgage (hipoteca inversa) is one form of equity release which allows homeowners to borrow money against the value of their home, which is used as collateral. Reverse mortgages are generally marketed at retired homeowners who are over 65 years old.

If you are considering an equity release scheme, such as a reverse mortgage or lifetime loan, it is advisable to check that the company offering the mortgage is registered with the financial regulator for the securities markets, the Comision Nacional de Mercado de Valores (CNMV) and that they do not have any warnings issued against them.

A list of financial companies which are not authorised to operate in Spain and those subject to an ongoing investigation is available on the CNMV website.

Seek independent legal advice prior to signing any contracts to make sure the information the company has given you is correct, there are no abusive clauses in the contract and you are fully aware of your rights.

Be suspicious of financial companies or agents who try to persuade you into signing a reverse mortgage agreement as a way of avoiding or reducing your tax obligations. If you have any concerns about your tax obligations (for example inheritance tax) you should seek the advice of an experienced professional tax advisor who can advise you independently. Alternatively you may wish to check with the Spanish Tax Office (Agencia Tributaria).

If you are not happy with the scheme you have been sold, the first step is to submit a complaint to the company responsible for your investment. If after 2 months, you are not satisfied with the response or do not receive a response, you are entitled to complain to the CNMV.

Although the CNMV final reports are not binding, they will comment on the conduct of the company or person against whom the complaint has been made. Where the report favours the customer, the company involved is required to notify the CNMV of any action taken to resolve the matter.

If you believe you have been a victim of a fraud involving an equity release scheme you can register a statement with the police and seek independent legal advice on taking action through the courts. Further information for victims of fraud is available on the fraud page.

Property Rental Rules in Spain

Problems with timeshare property

Timeshare ownership is well established in Spain. However, there are also many unscrupulous companies, some of which claim to provide various incentives (including stock market investments and discounts on airfares and accommodation) when exchanging existing time-share ownership or taking out membership of holiday clubs.

You may find it useful to read the timeshare fraud advice from Action Fraud, the UK’s national fraud reporting centre, run by the National Fraud Authority.

Other sources of advice

Guide to Buying Property in Spain. Spanish Property Insight provides information and advice on buying a property in Spain.

The Spanish Ombudsman is responsible for defending the fundamental rights and civil liberties of citizens by monitoring the activity of public authorities. If you have a complaint about any public authority, you can submit a complaint to either the regional or national ombudsman.

If you are facing problems with your property in Spain, there are many residents associations who may be able to provide support and advice as well as put you in touch with others who have had similar experiences.

This information is provided as a general guide and is based upon information provided to the embassy by the relevant local authorities and may be subject to change at any time with little or no notice. Benidorm Seriously, The FCDO and the British embassy will not be liable for any inaccuracies in this information. British nationals wishing to obtain any further information must contact the relevant local authority or seek legal, specialist advice. 

 

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