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What you need to know about Spain’s new rental laws

This is essential reading for anyone letting out or renting a property in Spain from March 2019.

What you need to know about Spain's new rental laws
Photo: Jocelyn Erskine-Kellie/Flickr

Spain has just brought in a new government decree regulating rentals across the country that offer improved protection for tenants.

The new law was entered into Spain’s State Bulletin on Wednesday after being approved by the cabinet of Pedro Sanchez’s socialist government last week.

The new measures, which come into effect from March 6th, will only apply to new lease agreements and not those that have been signed before that date.

The new set of rental changes which give homeowners greater veto powers against holiday home rentals within their building and offer extra security for tenants by extending the length of their contracts and capping rent hikes.

FIND OUT: Why rising rents across Spain are causing a new crisis

These are the key elements of the new decree.

Longer leases

Average tenancy contracts will go from being three to five years long, or seven years in cases where the landlord is a legal entity – a company rather than an individual landlord. It’s a measure meant to give greater security to the tenant, but the measure, as is the case with all others, isn’t retroactive.

In cases where the rental agreement expires and neither the landlord nor the tenant make their intentions vis-à-vis the property known, the implicit renewal of the tenancy agreement (known as plazo de prórroga tácita in Spanish) will now be of three years rather than one.

Longer terms of notice

After the mandatory renewal period outlined above, landlords are legally obliged to provide four months’ notice to end the contract – up from a previous two months.

Meanwhile tenants must now give two months’ notice instead of one.


Photo: photography33/Depositphotos

Limited rent hikes

The new decree determines that the rent is not to be increased above the consumer price index (CPI) – a measure of inflation – bringing an end to contracts that have annual rent rises written in. 

Price benchmark system

The decree outlines a new state benchmark index for rental prices so that renters can see whether the asking price of any given property is realistic for the area.

The index, which will be created by December 2019, will provide average prices of rentals across Spain based on supply and demand and will serve as a useful tool to determine whether a rental property is good value.


Photo: AFP

Maximum two-month’s deposit

Landlords will be able to ask their tenants one month rent as a deposit, and any additional guarantee will be limited to the equivalent of two months rent, unless the tenancy contract is longer than the now five-years standard length.

Landlords who are legal entities or companies will now also have to cover all agency and contract costs by law (gastos de gestión inmobiliaria y de formalización del contrato).

According to the decree it will now also be easier for the landlord and tenant to reach an agreement to revamp or improve the dwelling before the end of the tenancy contract. 

READ ALSO: Five things nobody tells you about renting a property in Spain

Added protection for tenants

Those who have contracts that have not been officially registered with the Property Registry will be afforded the same legal protection as those that have, according to the decree.  This means that even if the house is sold with a sitting tenant, that lease agreement must be respected.

Evictions

In a nation where evictions have become so rife, the new law finally attempts to limit the damage.

All eviction requests must first be evaluated by social services to determine whether the tenant is considered in a “vulnerable situation”. If deemed to be so, then the tenant will be given a grace period of one month –  or three months if the landlord is a commercial enterprise – in order to find new accommodation.

It also states that the date and time of the eviction must be communicated to the tenant via a judge, effectively bringing an end to the surprise evictions that have become so notorious in Spain.

READ MORE: Meet Madrid's anti-eviction warriors

Protection against holiday rentals

This change  in the law will allow property owners as a collective to decide whether or not to allow short-term holiday rentals in their buildings by calling a vote.

For homestay portals such as Airbnb to be able to operate in any given building, three quarters of the owners that make up a homeowners’/residents’ association will have to approve their entry.

The same ratio will be needed to increase any levees meant to cater for short-term holiday rentals in their building. The measure is again not retroactive so can’t apply to any properties currently being rented out for short stays.

RENTING PROPERTY IN SPAIN – Know your rights as a tenant

Photo: photography33/Depositphotos

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RENTING IN SPAIN

How to rent a property in Spain without a job contract

When looking to rent in Spain, property owners and estate agents often ask for a 'nómina' and work contract - something that can prove tricky if you're self-employed or not working. Here's how to prove your solvency and secure the rental.

How to rent a property in Spain without a job contract

If you’re looking for a house or apartment to rent in Spain, there can be a multitude of different factors to consider.

The price, the size, the location, the neighbourhood, which floor the flat is, on and whether there’s a lift, whether it’s interior or exterior, how many apartments there are per floor, whether to go private or through an estate agents and, of course, the search itself.

When you’re going on visits, you’ll have to contend not only with owner or agent trying to ‘sell you’ the place, but also explaining the terms and conditions (often referred to as las condiciones or requisitos para entrar).

In Spain, the process can be a little complicated. Often landlords ask for two months deposit upfront, and those that go through an intermediary estate agent tend to ask for two months, plus an extra month (plus VAT, or IVA as it is in Spain) that goes to the agent! It certainly adds up. 

Not only that, but very often in Spain you are expected to prove you will be able to pay your rent every month. And it’s not as simple as you might think. 

Most estate agents or landlords think hat the best way to ascertain this is by you providing proof of an employment contract (contrato laboral) and recent payslips (la nómina) that demonstrate you are paid the same amount every month, and that it’s enough to cover the rent and other expenses.

Here’s where things can start to get tricky for self-employed people (known as autónomos in Spain), who number more than 3 million in Spain.

Regardless of whether your monthly autónomo earnings are high pretty much every month, regardless of how consistent they may be, or even if you have regular clients, the irregular and insecure nature of Spain’s work market have ensured that landlords and realtors take a rigid attitude towards the rules.

This is especially true following the turbulent economic times of recent years as we’ve moved from global pandemic to war in Europe to spiralling inflationary pressures on the global economy.

Landlords want to be sure you can pay the rent. Therefore, they may favour a waiter with a nómina of €1,000 a month over an autónomo who can prove monthly earnings double that for the previous six months. Doesn’t seem fair, right? 

READ MORE: Why you should be raising your rates if you’re self-employed in Spain

Well, that’s often how it can be in Spain. Fortunately, if you find yourself in this situation, there are various ways you can convince potential landlords that you are financially solvent enough to rent their property, with or without a fixed contract

The law

Now, it is not unheard of – in Spain nor anywhere else in the world – for an estate agent or landlord to try and squeeze more money out of you, or to add on some extra charges. In most people’s experience, Spanish estate agents and landlords are no better or worse than anyone else, but it’s worth keeping in mind.

It has been known, however, for some in Spain to try and get an extra month’s deposit by telling potential tenants that they need a nómina by law in order to rent a property in Spain, and that they’re doing you a favour by allowing it.

Simply put, this is not true. According to Spanish law, more specifically, La Ley de Arrendamientos Urbanos (Urban Renting Law), although many landlords require some form of financial insurance, there is absolutely nothing to say a nómina is necessary to rent a property in Spain. A deposit is legally required, but a nómina?

Helpful? Certainly. Legally necessary? Definitely not.

That said, if you explain to the property owner that you’re self-employed, some landlords maybe be willing to make other arrangements to ensure the rent.

Here are some options, and other bits of paperwork that could help:

Aval bancario: Like a bank guarantee, some landlords request tenants without nóminas or work contracts to set up an aval bancario.

You must pay in an agreed amount (often worth the value of two or three months of rent, sometimes more) into a bank account that you’re a customer with.

It’s money that you cannot touch for an agreed period of time and which you pay some interest on, and in the event that you do not pay your rent, the landlord will be able to access said funds.

This is not the cheapest way to rent a property, but it may be one of the more effective ways of convincing a landlord to accept you as a tenant.

If you pay your rent diligently every month and prove that you are reliable, after a year you should speak to your landlord to ask them them to cancel the aval in order to not continue paying interest on it and recover your stored money.

Anuncios de particulares: If you’re using the usual rental search engines like Idealista or Fotocasa, the vast majority of rental adverts are from estate agents (inmobiliarias) who ask for all the proper documentation, including contracts and pay slips, and often the extra month’s rent as a fee.

When you’re making your search, keen an eye out for anuncios particulares , which are private ads direct from landlords.

Sometimes if you deal directly with the owner themselves, they are less strict about rules with regards to nóminas and contracts. Maybe you’ll get really lucky and find a landlord that takes a liking to you and who only asks for one month’s deposit.

Seguro de impago de alquiler: A landlord may be more likely to rent to you even if you don’t have a nómina when they have seguro de impago de alquiler, non-payment rental insurance. It protects the landlord for the duration of the contract and covers the rent and any repairs or legal fees.

IRPF: IRPF is Spain’s personal income tax, and providing your most recent income tax return could help put your potential landlord at ease by proving that what you’ve earned over the last year could cover the cost of the rent.

Seguridad Social: Similarly, providing proof of your social security payment can help prove your financial solvency.

Bank statement: a simple bank statement to show account activity – and that you have enough to pay the rent and deposit, of course – might ease the mind of your landlord as it allows them to see your incomings and any debts you might have.

IVA: Showing your VAT (IVA in Spain) returns could be another tool that, when used in conjunction with other ways of proving your solvency, could convince a landlord to rent to an autónomo.

Pensioner documentation: If you’re retired and you’re looking to rent, any official documents which show how much pension money you receive every month, along with bank statement reflecting savings, should suffice to convince a landlord or estate agent that you’re solvent.

READ ALSO: Renting in Spain: Can my landlord put up my rent due to rising inflation?

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