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Renting Property in Spain

Real Estate Abroad
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Renting Property in Spain

Renting Spanish real estate is an excellent option for those who want to live in the country to understand if it suits them for permanent residency or property acquisition, and for those who already own property and want to earn from it.

Types of Spanish Real Estate Rentals

Short-term rental is a great choice if you plan on spending an extended vacation in Spain. However, similar to hotels, rental prices significantly increase during the summer season and tourist influx. Therefore, starting your housing search early increases the chances of finding optimal conditions.

The duration of short-term rentals is usually calculated in weeks, although daily rental offers are not uncommon. Renting property for more than a month often comes with a good discount. It's important to note that, in short-term rentals, a deposit ranging from €300 to €500 for furniture and inventory is typically required, refundable on the last day of the rental period. Additionally, the number of occupants should not exceed the number of sleeping places specified in the rental agreement.

Long-term rental is suitable if you plan to rent property in Spain for more than a year. The monthly cost of long-term rentals can be similar to a week's cost during short-term summer rentals. The rental period is specified in the contract and typically lasts for one year, automatically extending to the next year until reaching a three-year term. Besides the rental cost, a security deposit equivalent to 1-2 months' rent is usually required, refundable at the end of the rental period. In some cases, a bank guarantee (aval) may be necessary, equaling 4-6 months' rent and blocked in your account as compensation to the landlord if you fail to meet the rental conditions specified in the contract.

Whether short-term or long-term renting, pay attention to the city's infrastructure where the property is located. Even in highly touristic cities, besides restaurants, there are small shops and various service establishments, albeit slightly pricier compared to local-oriented venues.

Renting Out Your Property in Spain

If you already own property and decide to rent it out during your absence, there are two main ways to do it: independently or through a Property Management Company.

Renting out independently saves on agency fees but entails finding tenants and handling their queries yourself. Renting through a specialized company often involves minimal involvement, with the service cost ranging from 10% to 15% of the rental value. Such services can be provided by independent companies, complex management companies where your property is located, or even by developers.

If you opt for renting through a Property Management Company, your actions will typically involve signing a contract with the chosen company. Note that contracts can be standard or a guaranteed rental contract, usually lasting for 3 years or more and beneficial if you plan to cover mortgage payments with rental income.

If you choose to rent out your property independently, aside from finding tenants, you must consider the following:

In Spain, renting out property, similar to leasing, is governed by the Urban Leases Law (LAU). According to this law, it is advisable to have a written rental agreement, including details of both parties, a comprehensive description of the property, payment terms, identification of utility payers and minor repair expenses, subletting conditions, a detailed list of appliances, furniture, inventory, and their condition. This law also regulates notarial formalities and property registration.

You will be required to pay income tax on rental income - Non-Resident Income Tax (IRNR). The tax rate is 24% without deductions for non-residents owning property in Spain, whether rented out or not. This tax is mandatory for all non-residents with property in Spain.

Key Aspects of Real Estate Rental in Spain

Both for renting a property and for leasing out your own property in Spain, there are several nuances that are typically documented in the lease agreement. Here are the main ones that should be taken into account:

Spanish legislation significantly differs from Russian law, so it is highly recommended to seek assistance from a lawyer familiar with the Spanish real estate market when drafting and reviewing a lease agreement.

To avoid disputes, if the property is rented out with furniture and inventory, an inventory of all items is often prepared, sometimes even accompanied by photographs of particularly important elements of the property and interior.

When drafting or reviewing a lease agreement, always include financial matters such as:

  • Monthly rent amount
  • Possibility and procedure of rent indexation
  • Who will be responsible for paying utility and service charges, minor repairs, and cosmetic repairs, etc.

Rent payment is usually made through a deposit in a bank, or in cash to the property owner, but in the latter case, a receipt confirming the receipt of funds is required.

In addition to general recommendations, it is necessary to consider some important aspects of renting regulated by the Spanish Urban Lease Law (LAU):

Parties entering into a lease agreement independently choose the term of the contract, but it should be noted that if not specified otherwise, the contract is automatically renewed for the next term for up to three years.

If the tenant does not wish to renew the contract, they must notify the landlord at least 30 days before the end of the established term. In turn, the landlord must notify their intention not to renew the contract two months before the term expires.

Early termination of the lease agreement is possible after six months from the start of the lease term. The notice of termination must be received at least two months before termination.

As mentioned above, it is essential to document possible conditions for changing the rent in the contract. According to the law, the possibility and amount of rent change are agreed upon by the parties, but in most cases, it is linked to the Consumer Price Index (IPC), which is the inflation rate.

Selling a property leased out is only possible with the tenant's consent. If the lease agreement is registered in the property registry, the obligations for its fulfillment will transfer to the new property owner. If the agreement is not registered, the tenant must vacate the property within three months after being notified of the property's sale.

It is also worth noting that the LAU, along with regulating court cases of rent non-payment, establishes the creation of a registry of non-payers, where landlords can obtain information on whether a potential tenant has had issues with rent payment in the past.

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