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Renting in Spain: What’s the maximum amount a landlord can ask as a deposit?

How much can landlords in Spain require from tenants to pay as a deposit or guarantee when they rent out their property? Are two months of “fianza” deposit legally allowed as is becoming increasingly common?

money deposit rent spain
For many tenants, showing proof they have a stable job means they can negotiate not having to pay a guarantee into the bank. Photo: Ibrahim Boran/Unsplash

Renting a home in Spain can have its challenges for both landlords and tenants. 

Homeowners want a trustworthy long-term tenant that will pay on time and not damage their property, whereas renters need to provide guarantees that they are solvent. 

The solution to this is in the vast majority of cases the payment of a fianza, a deposit paid to the landlord that would cover the cost of any damages caused by the tenant and paid back if there is no need for any repairs at the end of the tenancy. 

Then there’s the aval or garantía adicional, a guarantee which is usually deposited in the bank by the tenant, a sum which is only available to the landlord in the event of non-payment of rent. 

Some landlords will instead prefer to ask tenants for their nómina, proof of a fixed contract with monthly earnings.

All this can represent a fair amount of money for tenants to cough up, as fianzas or avales are usually equal to one or more months’ rent. 

So what does Spanish law say about the maximum amount that landlords can ask from tenants as a deposit?

According to Spain’s Urban Leasing Law, landlords can only request one month’s worth of rent as a deposit (fianza) and in fact must as it is legally required.

Spain’s Consumer Affairs Ministry also clarifies that the maximum amount that can be required as guarantee for rent payment (aval) is two months of rent. 

Landlords can also ask for a maximum of one extra month’s rent payment in advance, usually only requested from prospective tenants to guarantee their intention to move into the property. 

That means that as a maximum amount of rent a landlord can require from a tenant at the start of their contract is four months’ rent: three months of rent (one for fianza, two for aval) and the first month’s rent. 

Although the legal limit already represents a sizable amount of money for tenants, there are reports of landlords asking for up to five, six or more months’ rent in advance in Spain, something which is not legal and such extortionate clauses in rental contracts can be punished in a court of law. 

As for requiring a nómina or declaración de la renta (annual tax declaration) from budding tenants, there is no mention of this in Spain’s Urban Leasing Law and therefore cannot be deemed illegal. 

For many tenants, showing proof they have a stable job means they can negotiate not having to pay an aval as they technically can offer a greater guarantee that they are solvent, although this system is frustrating for Spain’s self-employed. 

Unfortunately, Spanish banks charge interest to the tenants for keeping their aval open, even though it’s money that’s just sitting in an account and can’t be accessed, so once your landlord knows you pay on time it’s advisable to try to negotiate the end of this guarantee.

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PROPERTY

How to turn a bar, office or shop into a residential property in Spain

Commercial properties in Spain can be a lot cheaper than residential ones, but it’s not as straightforward as buying a former restaurant, office or shop and moving in. Here are the steps to follow and what you need to be aware of.

How to turn a bar, office or shop into a residential property in Spain

One of the tricks budget property hunters in Spain have been using in recent years is buying a local (commercial property), oficina (office) or nave (industrial unit) and transforming it into a vivienda (residential property) to live in or let out. 

It’s a trend that’s roughly doubled in big cities such as Madrid and Barcelona in the last five years. 

Buying a commercial property can work out to be 50 percent cheaper than a flat or house in Spain and there can be other advantages such as it being more open plan than Spain’s typical corridor-themed apartments as well having more money to invest in the renovation. 

Is it possible to turn a commercial property into a residential property in Spain?

Yes, in theory it is, but it’s not always possible. The rules relating to a change of property’s usage from commercial to residential or vice versa are determined by each municipality in Spain, so before you rush to buy un local, you have to do your homework first and be aware of some of the most common pitfalls.

It could be that the limit of residential properties per hectare has been surpassed already, or that without some major changes the property doesn’t meet the standards of size, rooms, space, height, layout, ventilation, air extraction or light of the town or city hall. 

It isn’t the most straightforward process and depending on the property and the individual municipal rules in place, it might just not be possible to live in the property or rent it out to others.

Living in a commercial property is illegal and may cause you problems such as not being able to activate water and electricity or register your padrón at the town hall.

Despite all the paperwork needed, flipping a bar or office and turning it into a home usually works out cheaper than buying a residential property in Spain. (Photo by ANDER GILLENEA / AFP)

Don’t be discouraged however, as in many cases it is possible to change the use of a property from commercial to residential and in regions such as Galicia authorities are currently facilitating the process to address the matter of empty abandoned stores and the lack of well-priced accommodation for young homeowners.

What are the steps to follow in Spain to change a property from commercial to residential?

Check the statutes of the community of owners: In order to make any changes within the community of neighbours, permission must be requested in advance. Beforehand, you can ask the comunidad president for a copy of the community statutes to see if the change of use from commercial to residential is mentioned.

READ ALSO: ‘La comunidad’ -What property owners in Spain need to know about homeowners’ associations

Request permission from the town hall: After getting the green light from la comunidad, you have to go to the ayuntamiento (town hall) of the town where the property is to find out if it’s possible to add another residential property to the finca (building). 

Even if this is confirmed, it doesn’t certify that the change of usage from commercial to residential is allowed, for which the town hall will ask you to provide an architect’s proyecto técnico or feasibility report based on municipal urban laws. You will only be allowed to swap from commercial to residential if the project meets the safety and habitability requirements of the Technical Building Code (Código Técnico de la Edificación).

Get the Building Licence: Known as licencia urbanística or permiso de construcción in Spanish, this is an official document required by the town hall for you to carry out a construction or renovation project. In other words, you’ll need this municipal authorisation to begin work on your future residential property, whether it’s major work or minor . 

Get the Certificate of Habitability: Once the renovation work is complete, you’ll need the cédula de habitabilidad to be able to move in or let the property out . The conditions for this are regulated by each regional government and again it’s an architect who must prepare a technical report in order for a town council technician to issue the certificate of habitability.

The certificate we need for the change of use is that of primera ocupación (first residential occupation), which has to include the usable surface area of ​​the home, rooms, address, location, maximum inhabitants etc.

How much does it cost to transform a commercial property into a residential one in Spain?

If for example it’s a 80m2 property with two rooms, the total would be about €50,000, according to property websites Idealista and Habitissimo, with the bulk covering renovation costs (€500/m2= €40,000) and the rest going to cover permits, architecture costs and taxes.

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