Renting a property in Spain if you don’t have a contract job can be very challenging.
This can apply to new arrivals without a job yet, pensioners and even self-employed workers with high earnings every month.
This is because in the eyes of many landlords in Spain, only a job contract offers a proper guarantee of monthly earnings, and thus the money necessary to pay the rent.
Therefore, it’s not unusual for landlords or estate agencies to prefer to rent out to a civil servant who earns €1,500 than to an entrepreneur earning on average €2,500 a month.
As unfair as this may seem, it’s the status quo in Spain, a knock-on effect of the unstable nature of the country’s job market and fair share of untrustworthy tenants who stop paying.
READ ALSO: How to rent a property in Spain without a job contract
So when paying one or two months’ worth of rent as a deposit doesn’t cut it, what are your choices?
Often, caseros (landlords) will ask you to take out an aval bancario para el alquiler, a rental bank guarantee.
What is an aval in Spain?
In a nutshell, an aval is an agreement which states that if the tenant stops paying rent, the landlord can go to the tenant’s bank and get the money from there for the rent.
This type of non-payment insurance sees the tenant deposit a pre-agreed amount of money into a separate account, a sum of money which they cannot access for a certain period of time, and which they have to pay interest on for keeping there.
Usually, landlords ask for this to be the equivalent of six months of rent, although you may be able to negotiate three months.
The conditions of a bank guarantee for rent vary depending on the bank. They will take into account your financial history, the rental contract, your employment situation etc.
READ ALSO: Stricter requirements and screenings - Why it's getting harder to rent in Spain
The steps for applying for an aval in Spain
Go to your local bank account branch.
The bank will ask you for information relating to your financial situation and employment.
Once the bank guarantee for rent has been accepted, the bank will inform you of the conditions of the contract and ask you to deposit the agreed amount of money in the ‘untouchable’ account until the end of the guarantee.
Your bank will have to inform you of the interest and charges associated with the rent guarantee contract.
Once the conditions have been accepted, the contract must be signed.
Lastly you will have to hand the bank guarantee to your landlord.
How much will I pay in interest with an aval in Spain?
As usual with Spanish banks, there are several extra costs when it comes to taking out a bank guarantee.
These include management fees (gastos de gestión), formalisation fees (gastos de formalización) and a trimestral interest fee.
Each of these is usually a percentage of between 0.5 and 2 percent of the amount deposited in the untouchable account.
So for example, if the place you want to rent is €1,000 a month and you have to deposit €6,000, after the initial charges you will probably have to pay between €30 and €120 in interest every three months.
How long does an aval last in Spain?
It can either be indefinite or have a predetermined length.
As an aval is essentially an agreement between tenant and landlord with the bank as an intermediary/guarantor, it’s important to try to reach some form of consensus with the property owner beforehand.
For the most part, landlords will argue that the bank guarantee should continue for as long as you carry on renting their property.
However, you could try to convince them that if after a year you have paid the rent religiously, you will have proven that you can be trusted and that you shouldn’t have to continue to pay interest to keep the aval going.
Whatever the agreement, make sure the bank guarantee’s length, amount and payment conditions are included in the rental contract.
What else do I need to know about taking out an aval in Spain?
The bank guarantee has to be taken by the prospective tenant to a notary in Spain for the bank to formalise the arrangement (check with your bank when this should happen).
Logically, if you stop paying your rent, then your landlord will be able to access the owed amount from the bank (not the full amount, unless that’s what is owed). The bank will also reach out to the tenant for them to reimburse the amount.
There are different types of aval which stipulate the modus operandi for the bank guarantee money to be requested, which may involve the landlord first contacting the tenant and/or the bank.
In order to cancel a bank guarantee in Spain, you will be asked to hand your bank the original aval document that you gave to your landlord and a letter from them authorising the cancellation.
READ ALSO: The pros and cons of signing a temporary rental contract in Spain
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