Whether you are looking into renting or letting a property in Spain, this guide for expat provides you the different steps you need to consider during this process.
We will see there the rights and duties of both landlord and tenant updated with the latest law (March 2019).
1. Tenancy agreement
In Spain, the owner and the tenant must agree on a tenancy agreement (contrato de arrendamiento) before the starting date of the rental. This usually include at least the following points:
- Identity of the owner
- Identity of the tenant
- Description of the property
- Lease term
- Initial rent price
- Any other legal provision accepted by both parties
2. Duration of the tenancy agreement and renewal
In Spain, the duration of the tenancy agreement is to be agreed between the landlord and the tenant.
If this is less than 5 years (or 7 years in the case of legal entities), the contract is automatically extended each year until the term defined in the lease is reached. If no lease term is mentioned in the agreement, then a renewable one-year contract will be in effect.
If the tenant wants to stop the annual renewal of the contract, he must give at least a 30 days’ notice before the end date. If it is the landlord who wants to break the contract, he must inform the tenant at least 2 months in advance.
3. Extension of the contract after 5 years
Once the duration of the lease has reached 5 years (or 7 years in the case of a legal person), it is automatically extended for 3 additional years with new contracts renewed annually.
In this particular case, the notice to not extend the contract is 4 months for the owner and 2 months for the tenant.
4. Rent price
In Spain, the initial rental price is to be agreed between the landlord and the tenant at the start of the rental. Unless agreed otherwise, the rent must be paid during the first week of each month.
The landlord shall provide a receipt to the tenant justifying that the rent has been paid, especially if it is paid with cash.
During the term of the lease, the rent price can be updated once a year when the contract is renewed and follows a rate set by the state (IPC).
Please note that the owner cannot require the advance payment of more than one rent.
When signing the rental contract, the tenant must pay a deposit of one month’s rent before moving in. If the property is not used for a living (a restaurant, a shop, etc), the deposit is the equivalent to 2 months’ rent.
It is important to note that the deposit is only intended to repair any damage caused by the tenant and not to pay overdue rents.
At the end of the lease term and following an inventory of the property, the landlord must return the deposit to the tenant within a month. Damages caused by the tenant during the rental (if any) will be deducted from the original deposit.
In Spain, some expenses are the responsibility of the lessor and others are the responsibility of the tenant. This should be made clear in the tenancy agreement.
Unless otherwise specified in the contract, the lessor is responsible for the overhead costs of the building (community fees) and for the taxes (IBI).
The tenant is responsible for all utilities costs specific to the property : water, gas, electricity, insurance, etc.
7. Ending your tenancy
In Spain, the tenant has the right to end his tenancy agreement early if:
- You have spent more than 6 months in the property; regardless of the duration of the contract.
- You advise your landlord at least 30 days in advance.
In the rental contract, the parties may stipulate that in the event of withdrawal, the tenant should compensate the landlord for the amount equivalent to a monthly rental payment for each remaining year of the agreed term of contract. For terms under one year, the proportional amount of compensation shall be payable.
However, if this clause has not been agreed in the contract, the tenant doesn’t need to compensate the landlord.
8. Termination of the contract
A- By the landlord
The owner has the right to terminate the rental agreement in the following situations:
- The tenant does not pay his rent.
- The tenant has not paid the deposit.
- The rent is sublet or used by someone else without the owner’s agreement.
- Illegal or dangerous activities are taking place in the property.
- Causes serious nuisance to the neighbours.
B- By the tenant
The tenant can terminate the contract in the following situations:
- The landlord does not carry out the necessary repairs of the property.
- The landlord disturb the tenant’s dwelling use.
9. Maintenance and repairs
The landlord must undertake all the repairs needed to maintain the property in habitable conditions unless the deterioration has been caused by the tenant.
Maintenance and improvement works in the property can’t be undertaken by the tenant without the consent of the landlord. In some cases, both parties can agree to a price reduction in exchange for these improvement works.
Small wear and tear repairs are usually paid directly by the tenant.
10. Priority acquisition right
In Spain, if the landlord wants to sell its property that is currently rented, the tenant is entitled to a right of priority acquisition which means that he could buy the property in priority to any other purchaser.
The landlord must then inform the tenant of his intention to sell the property, who will have 30 days to reply. If this offer is not made by the landlord or is made at a higher price than the offered one, the tenant has the right within one month to have the sale annulled and purchase the property for the price declared in the sale’s document.
Do you still have questions or you would like some help for renting or letting a property in Valencia ? Contact us at [email protected] and we will be more than happy to help you 🙂