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Dec11

10 things you have to know before signing a rental contract in Spain

Categories // relocation

10 things you have to know before signing a rental contract in Spain

Finally! You’ve found your apartment in Madrid. And you are happy. The landlord sends you the rental contract for you to sign. First obstacle: it’s in Spanish. Ok, you can handle this. Just find a translator. No problem!

Second obstacle: you don’t know anything about Spanish rental law. You are not familiar with this subject at all.

This article provides you with answers to the most frequently asked questions about Spanish rental law.

Finally! You’ve found your apartment in Madrid. And you are happy. The landlord sends you the rental contract for you to sign. First obstacle: it’s in Spanish. Ok, you can handle this. Just find a translator. No problem!

Second obstacle: you don’t know anything about Spanish rental law. You are not familiar with this subject at all.

This article provides you with answers to the most frequently asked questions about Spanish rental law*.

1. What is the length of a Spanish rental contract? What happens if I would like to leave within 3 months?

As landlord and tenant, you are free to agree upon the duration of the rental contract.

Most of the time, a period of 1 year is agreed upon. In this case, the rental contract will be renewed annually until a period of 3 years has been reached. After 3 years, the landlord can terminate the rental contract (except if he needs it for his own use before the 3 years are up, in which case see question 10 below).**

The tenant can terminate the rental contract:

  • after 6 months, respecting a notice period of 30 days, regardless of the duration of the contract.
  • if a clause has been inserted in the rental contract stating that the tenant can terminate the contract at any moment, even before 6 months are up.

It can be stipulated in the contract that the tenant has to compensate the landlord if the tenant leaves within the first 6 months. According to the law, this compensation should equal 1 month’s rent for every year the rental contract would have continued. And it is calculated proportionally, for periods of less than a year.

It can be stipulated in the contract that the tenant has to compensate the landlord if the tenant leaves within the first 6 months. According to the law, this compensation should equal 1 month’s rent for every year the rental contract would have continued. And it is calculated proportionally, for periods of less than a year.

2. What is the notice period?

The landlord and tenant are free to agree upon the length of a notice period. The minimum notice period is 30 days. There are some exceptions for specific situations (see below under 9 and 10). As a tenant, it is in your interest to keep the notice period as short as possible.

3. What costs should I consider if I rent a house or apartment?

Water, gas, electricity and internet/telephone costs will be paid by you, of course. Ask the landlord to give you a summary of the (average) costs of water, gas and electricity, as these may vary throughout the year. Gas can be much higher in winter, water can be higher in summer, especially if you have a garden to water or a private pool to fill.

‘Gastos de communidad’, ‘Impuesto de Bienes Inmeubles’ (IBI, property tax charged by the ayuntamiento, town council) will in principle be paid by the landlord. However, Spanish law offers the possibility for this to be agreed upon differently in the rental contract.

Garbage tax should in principle be paid by the tenant, as it is he who makes use of this service.

Please note that the landlord should also pay taxes on the income from the rent. And he must also pay the costs of the obligatory energy certificate.

4. What kind of guarantees can the landlord ask for?

Your landlord will almost certainly ask for a deposit of one month’s rent (2 months if it is not a house but an office for example).

Spanish tenants have the reputation of being bad payers in general, so many Spanish landlords lack trust in the payment of the rent. Although the situation is improving, Spanish landlords still tend to ask for additional guarantees. Here are some examples of what the landlord can ask for:

  • one or more additional payments of rent;
  • a bank guarantee. This is an alternative deposit that the bank pays on behalf of the tenant to the landlord in the case of non-payment of the rental instalments;
  • a written guarantee from the employer, a kind of certificate in which the employer guarantees the payment of the rent to the landlord if the tenant stops paying.

As a tenant you can also suggest that the landlord takes out insurance for non-payment (seguro de impago), for example with DAS or ARAG.

5. I found an apartment through a real estate agent. Who will pay the fee of this agent?

Fair or unfair, in Spain it is common practice for the real estate agent to be paid by the tenant. Please note that the fee usually amounts to one month’s rent excluding 21% VAT. So be aware of this if you are looking for accommodation through a real estate agent.

6. Can the landlord increase the rent?

Yes, that is possible. A decrease is even possible too. A revision of the rent can be carried out after one year of duration of the rental contract. And then it can take place every year after that.

When the contract does not say anything about a revision, the landlord cannot increase the rent.

If, however, there’s a clause in the rental contract to this effect, in principle it will follow the Indice de Garantía de Competividad (ICG). This index measures specific factors to determine the prosperity of citizens and is used within the Eurozone. Of course you can also agree upon another index, as long as this is specified in the contract.

You can find the most recent ICG here: ICG

7. What happens if I forget to pay the rent?

The rent must be paid within the first 7 days of the month.

If the tenant fails to pay by the 7th day of the month, the landlord can claim the rent in legal proceedings. If the amount overdue is less than 2,000 euros, the landlord can go to court to claim it without needing a lawyer. These are short proceedings that take a couple of weeks, after which a legal deed is obtained to execute the claim (executory title). With this title, the landlord can easily claim the overdue payments. Be aware of this.

8. Who will pay for the repairs?

This can be a topic of some discussion. According to the law, the landlord pays for all the necessary repairs except for those related to damage caused by the tenant.

Minor repairs related to normal use of the house should be paid by the tenant. So, what are minor repairs? It is generally accepted that repairs costing between 100 and 150 euros are considered to be minor repairs.

However, it is always a good idea to ask the landlord if he has insurance to cover repairs, as often the insurance company will send someone straight away to fix the damage.

9. The landlord would like to sell his property. Am I protected or do I have to move house?

You are protected if the rental contract has been registered at the Registro de la Propiedad (Property Register). Even if the house is sold, the new landlord has to respect your rental contract.

If the rental contract has not been registered with the Property Register and the buyer did not know about the rental contract, the buyer of the house can terminate the rental contract, giving a 3 month notice period. In this case, the new owner has to compensate the damages you may suffer from leaving your house. If the buyer knows about the existence of the rental contract, he has to respect the rental contract.

. Can the landlord claim his property because he wants to live in it at once?

If the rental contract has been agreed upon for less than 3 years, the landlord can only claim his property after one year for his own use, or for his family (for example if his children need a house or if the landlord gets divorced). The landlord must communicate this 2 months before he needs the property.

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*This article was written taking into account the latest amendments of LAU 4/2013 and 2/2015. Rental contracts signed before 6 June 2013 may be subject to previous legislation.

**There are other reasons for terminating the rental contract, such as not complying with the legal and contractual obligations, but these fall beyond the scope of this article.

© 2015 Lilian Hermans ~ Quilantro

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