Long Term Lets In Spain

Your Legal Guide to  Letting in Spain.

In the current economic climate and the unfavourable GBP/€ exchange rate, more people are considering renting their Spanish property to generate additional income and to make better use of their Spanish asset. While this may be a sensible option for many, there are a number of important legal issues a prospective landlord must be aware of before committing to a long term let.

Overview 

In Spain, landlord and tenant law overwhelmingly favours the tenant. For example, a tenant renting a property as his “sole residence” on a 12 month lease has the right to extend the lease for a further four annual periods. Consequently, the 1 year lease can give rise to a right to remain in the property for five years. It should also be noted that the extent of the protections afforded to a tenant will arise on whether or not he satisfies the “sole residence” test and not the length of the lease itself.

In addition, eviction proceedings can be slow and expensive. Assuming the landlord has the right to evict a tenant, a period of 12 months or more is not uncommon before the proceedings are dealt with. Potential landlords must also bear in mind that the combination of tenant rights and a slow judicial process for eviction (if applicable) may delay or even prevent a sale to a third party in the future.

The rental contract

Always ensure that the rental contract is drawn up by a competent lawyer. The contract will always include the following information:  the parties’ details; property details; agreed rent; when rent is to be paid and to whom; amount of deposit; etc. Typically, the deposit is 1-2 months rent and will be held by the landlord. To assure payment of the rent, the landlord should also include a requirement that the tenant obtain an “aval” or bank guarantee.

A comprehensive inventory should be attached to the contract and signed by the parties with a specific clause within the contract requiring payment by the tenant for any damage (not including normal wear and tear) to the specified items or allowing the landlord to deduct such payment from the deposit.

Due to the “tenant friendly” nature of the law, you should insist on proper references and follow these up.

There are also a number of specific drafting measures which can be taken to help improve the position of landlords. These include reducing the length of the contract, obtaining undertakings from the tenant regarding the length of his intention to stay at the property and confirmation that this is not his sole residence. While the extent and applicability of these and other provisions will differ from case to case, there is no ability to exclude the statutory protections afforded to tenants.

Eviction and non-payment of rent

As noted above, if a tenant refuses to pay the rent, getting them to pay or getting them out can be quite a costly process. In essence, the claim to the court is for both payment of outstanding rent and eviction due to the non-payment. Please note however, if the tenant pays all outstanding amounts owed (including costs), then he will have the right to remain in the property with the applicable legal rights and protections. If payment is not made, the court will order his eviction.

Summary

The best advice is to remember that in return for compliance with the lease, Spanish law will provide a tenant will long term stability and security. Consequently, once the decision to seek a financial return from your property through long term renting is made, it is not a decision that can easily or quickly be changed.