Letting in Spain

If you have one or several properties in Spain that you do not use on a regular basis, letting them may be an interesting option.

Letting a property has important advantages:

• You avoid the deterioration caused by lack of use. A residential property left closed and without maintenance for months can cause problems such as bad smells, damp due to lack of ventilation, broken blinds, unkempt gardens, etc.
• The rent you receive helps cover the maintenance costs, the local taxes and maybe even the monthly mortgage instalments.

However, letting a property may turn into an ordeal if you do not take the necessary precautions. The laws governing property letting in Spain protect the tenant’s rights to a great extent (possibly excessive), and the Spanish legal system is not as quick and effective as would be desirable in deciding on these matters. The Government approved some legislative changes in 2019 in order to increase the protection and security of the tenants. The vast majority of property owners are unaware of the law and the implications (up to and including criminal convictions) of certain actions against a tenant.

Once the tenants are given the keys to a property and take possession of it, they acquire certain rights that will continue to have even if they stop paying the rent or incur in nuisance. The only way to evict a tenant is to hire a solicitor who will represent the owner and file the corresponding lawsuit. The eviction procedure normally takes between 5 and 9 months depending on the workload at the court in question.

During that period, even if the tenant stops paying the rent or behaves in the most appalling way, the owner must not under any circumstances change the locks, enter the property without permission, cancel the utility contracts or attempt a forceful eviction. These actions are considered a crime (illegal coercion and threats) and may therefore result in a criminal conviction for the owner.

It is also important to distinguish between short-term and long-term tenancy agreements. The latter are automatically renewed every year, up to a maximum of five (if the owner is a natural person) or seven (if the owner is a legal person or company), so a good tenant who always pays the rent on time can become a real problem if the owner needs to take possession of the property before the end of the five or seven-year period set out by the law.

There is a common misconception that tenancy agreements for a period of less than 12 months are short-term, whereas those for a period longer than a year are long-term. A tenancy agreement is considered as short-term if the tenant does not intend to use the property as his/her habitual residence, but needs it for temporary reasons (a holiday, attending a course, relocating provisionally for work, etc.). This means that, depending on whether or not the property is the tenant’s habitual residence, a judge may consider that an 18-month tenancy agreement is temporary, but one for a period of 11 months is a long-term agreement.

It is therefore vitally important for the owner’s interests that the tenancy agreement be drawn up by a lawyer.

At Vicente & Otaolaurruchi we recommend the following in order to limit risks to a minimum:

• Do not sign a tenancy agreement unless it has been drawn up by your lawyer specifically for you and your property. This is the only way to be sure that the document provides all the necessary guarantees and that your interests are adequately protected against any eventualities.
• Ask the potential tenants to provide references (letters of recommendation from their bank or their previous landlord, copies of their payslips, etc.). There are many unscrupulous individuals who simply jump from one property to the next: they merely pay the deposit and the first month of rent and then sit tight in the property until they are evicted by a court order. In general, they have no property in their own name, or a salary, or any other assets that can be seized, so the owner seldom recovers the amounts owed.
• For very short-term agreements ask the tenants to pay the rent in full and in advance.
• Take a rental loss protection insurance policy that covers any unpaid rent and any possible damages caused to the property by the tenant.

Finally, as we have already mentioned, the Government approved in 2019 a package of legislative measures that, among others, extends from three to five years or seven (when landlord is a company) the duration of the mandatory extension for the rental contracts of habitual (non-temporary) housing, extends the tacit extension of the contract from one to three years (when the parties have not communicated their intention to not renewing the contract after the mandatory extensions), changes the power to recover the property by the landlord in case they need it for their own use, revisions of the rent must be expressly agreed in the contract, need to be done from year to year and cannot exceed the variation of the CPI,  parties cannot freely agree on additional guarantees to the one month deposit in cash, etc.

Do you still have queries on this subject? Have a look in the FAQs about letting in Spain.