Rental law in Spain and what it means for you
Due to the current economic climate many Spanish property owners are considering renting out their property in Spain in order to generate a little income to cover their ownership expenses and pay for their trips to Spain. In this article we look at what some of the implications of this might be.
The Spanish rental contract
It is advisable to have a written contract stating:
- The identity of the landlord and the tenants
- The address and registration details of the property
- The duration of the rental period
- The rental charge
Duration of the contract
The details should be mutually agreed between parties. It is important, before deciding on the duration of the Spanish rental contract, to be aware of the differences this can make.
- Less than 5 years:
Spanish rental law dictates that after one year has passed annual renewal of the contract is obligatory up to a maximum of 5 years. The contract can only be cancelled in the event that the tenant gives 30 days prior notice of cancellation before the end of each year or that the landlord requires the return of the property for his own use as a permanent home.
- 5 years or more:
If neither party gives 30 days prior notice of cancellation the contract can be extended a further year up to a maximum of 3 years.
- Seasonal contracts:
The Spanish rental law does not recognize these types of contracts but in practice they are accepted for durations of less than 1 year where the tenant is not using the property as a permanent home e.g. for a holiday or an academic term in the case of students. In these cases the duration can be agreed upon by the two parties and the duration extensions mentioned previously do not apply.
It is advisable to attach an inventory of furniture, fixtures and fittings to the contract and if you are considering renting your property you must also be aware that the income derived from renting for non residents is taxable at 24,75 % and must be declared quarterly.
The rental charge
The rental charge is agreed upon between both parties. If no other agreement is reached the rent must be paid in cash during the first seven days of the month and a payment receipt provided.
A deposit is obligatory, is equivalent to a minimum of one month’s rent and is refundable at the end of the contract where there is no damage to property or outstanding bills to pay.
The expenses are divided between expenses for utilities and general costs. The utility expenses are the responsibility of the tenant. The payment of the general costs, such as Council Tax and Community fees, are to be agreed upon between both parties. The good news is that expenses can be deducted from income when it comes to paying rental income tax.
Repairs and building works
According to the law the landlord is responsible for any necessary repairs to the property to keep it habitable but not if the damage has been caused by the tenant. In turn the tenant is responsible to inform the landlord of any damage. If the damage is serious and requires urgent repair the tenant can undertake this and request payment from the landlord. Small, day-to-day repairs are the responsibility of the tenant and, as the law does not define what a small repair is, it is advisable to stipulate a maximum cost in the contract.
Building works to modify the property must be authorized by the landlord, except in the case of making the property suitable for a disabled person. However, the landlord can insist that the property is to be returned to its original state at the end of the contract.
Cancellation of the contract
The non-compliance by either party of the conditions of the rental contract permits cancellation.
Here are a few reasons why the landlord can cancel:
- Failure of the tenant to pay the rent
- Failure to pay the deposit
- Sub-letting to another tenant without permission
- Intentional damage to the property by the tenant
- Building works or modification to the property without permission
- Unreasonable behaviour, dangerous activities etc
- Use of the property for reasons other than as a home
The tenant can cancel when:
- The property is not maintained by the landlord
- If the landlord constantly disturbs the tenant
Considering the complexity of this subject, it is always recommendable to consult with your lawyer before formalising any rental agreement.