Legal provisions on renting and letting in Spain are contained in the Law of Urban Lettings (Ley de Arrendamientos Urbanos) of 1994, which applies to rental contracts dated from 1 January 1995 onwards. Contracts settled before that date are governed by several rules, which have been modified by the current law of urban lettings.

As of 1 January 2008, the Spanish government will offer financial assistance to renters between the ages of 22 and 30 years old who are employed and earn less than €22,000 per year. The assistance will be in the form of a grant of €210 a month (for a maximum of four years) and a €600 loan to help pay the deposit on a residence. If more than one person living in one residence is eligible for the grant then the grant will be divided between the eligible participants. 

Also as of 1 January 2008, all renters with annual incomes under €24,000 will be eligible for the same tax rebates as tax payers with mortgages.

Rental Contract

The following provisions must be contained in the rental contract:

• Details of the landlord and tenant
• Description of the property
• The contract term
• Amount of rent and payment terms
• Any other legal provisions that the parties agree

The rental contract may be made before a notary and recorded at the Spanish Property Registry (Registro de la Propiedad).

Both parties agree the term for which the property will be rented. Property may be rented: long- or short-term. The distinction is very important as Spanish law provides fewer rights to short-term tenants.

Short-term rental contracts

Short-term rental contracts (contrato de arrendamiento de temporada) require that the tenant vacate the property when the contract ends. This type of contract is normally used for holiday letting.

The short-term condition must be specified in the contract, the duration of which may be up to 1 year. 

Long-term rental contracts

A long term contract is one which exceeds 1 year in duration.

If the contract does not exceed 5 years' duration then each time it expires it will be renewed automatically for a period of 1 to 5 years, unless the tenant is not willing to renew it. The owner is obliged to accept these renewals, unless it has been previously stated in the contract that they need to recover the property for their own use before running the 5-year period.

After the 5 years' term, the owner may rescind the contract, provided that the tenant has been given 30 days' notice before the end of the contract. If not, the contract will automatically be renewed for 3 years, unless the tenant refuses this renewal.

When a rental contract does not state the duration, it will run for 1 year.

Deposit

On signature of the rental contract, tenants are required to pay the owner a deposit (fianza) equal to 1-month's rent payment, in order to guarantee that the property will be returned to the owner in the same state as before the occupation.

This deposit cannot be used to pay the rent to the owner.

This deposit will be returned when the tenant moves out, assuming that the property is in good condition. The balance of the guarantee in cash will have to be repaid to the renter at the end of the lease. This will be paid within a month of the tenant returning the keys. 

After 5 years of rental, the increase in rent will require an increase in the deposit.

Rent

The amount of rent is agreed between both parties. Normally rent is paid monthly, 7 days before the end of the month. The owner should not ask for more than 1 month's rent to be paid in advance. Payments should be made as stated in the contract.

Tenants should receive a written receipt proving that the rent has been paid, unless it is provable by other means (such as proof of payment through bank transfer). Make sure you get these receipts or any proof of payment as these constitute an implicit contract.

During the first 5 years, rent will be increased or reduced according to the consumer price (inflation) index (Índice de precios al Consumo - IPC). After that period, rent will increase according to what both parties agreed when signing the contract.

Expenses

Although expenses produced for daily use of the property, such as community fees, or real estate tax (IBI), must be paid by the owner, tenants may be required to pay if it has been expressly agreed by both parties in the rental contract.

Tenants must pay gas, electricity and telephone bills, unless otherwise agreed.

Inventory

Tenants may be required to sign an inventory of the property contents (furnishing, fixtures and fittings) and the state of them.

It is important to check this carefully, as every item outlined on the list must be returned when you move out in the same order as listed, otherwise you might lose your deposit.

Repairs

The owner must make all necessary repairs to keep the property in a fit and habitable condition, however they are not responsible for repairing any damage caused by the tenant.

Tenants are responsible for the repairs to damage caused by daily use of the property.

Urgent maintenance repairs may be undertaken by the tenant in order to avoid serious and immediate damage to the property (the owner must be notified in advance) and the tenant will be reimbursed the cost of repair. 

The owner must give the tenant 3-months notice of their intent to undertake repairs affecting health, hygiene and comfort in the property. In this case tenant may renounce the rental contract within 1 month of the notice. If the tenant decides to stay, they may get a reduction in rent in relation to the space that cannot be used because of the repairs.

Subletting

If the owner agrees and gives written consent, the tenant may sublet a portion of the rented property to another person for the same period as their contract. The subletting tenant's rents must be lower than the contracted tenant's rent as stated in the contract. 

Rescinding the Contract

The owner may rescind the rental contract when the tenant:

• Does not pay the rent or deposit
• Rents the property to a third party without the owner's consent.
• Deliberately causes damages to the property
• Undertakes repairs without owner's consent
• Causes serious nuisance to the neighbours

The Tenant may rescind the rental contract when the owner:

• Fails to make the necessary repairs to keep the property in a fit and habitable condition
• Disturbs the tenant's dwelling use

Extract adapted from an article by iAbogado Servicios Jurídicos SL (Madrid, Spain).
Visit www.iAbogado.com for more original content like this.
Copyright © 2005 iAbogado Servicios Jurídicos SL (Madrid, Spain)

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