The Spanish rental law was altered again on 6th March 2019. This brings back many of the first changes from December 2018 that were over-ruled in January 2019.
The main changes are as follows. Long term rental contracts are now for a period of 5 years if the owner is a person. If the owner is an entity or company, then the contract must be for 7 years. The tenant has the right to terminate the contract after 6 months, but there is usually a penalty involved to do so. However, after 12 months the tenant has the right to cancel the contract without penalty.
At the end of the 5 or 7 year period of a contract, if neither party give notice, the contract will automatically renew for another 3 years. (This is a change from the previous one year automatic renewal.)
The additional guarantees that tenants can be asked to give, on top of the one month deposit, are limited to the equivalent of 2 months’ rent.
The estate agent’s fee is payable by the new tenant. If the owner of the flat is a company then the estate agent’s fee should be paid by the owner.
The ITP (transfer tax) that tenants had to pay on signing a new rental contract has been removed.
Updated: 18 March 2019.
Changes to the rental law (Ley de Arrendamientos Urbanos) in Spain in December 2018 help towards making rentals more stable for the tenant. The main changes are as follows.
The term for a standard long term rental contract has increased from three years to five years. This is the obligatory period for the landlord, and rent cannot be increased during that term (during a rental contract the rent can only increase in line with inflation, those figures are taken from the IPC (Indice Nacional General de Precios al Consumo)). After 12 months, the tenant can give notice to leave the property without penalty. A tenant can leave after six months, but there is usually a clause stating there is a penalty to do so.
On the renewal date of a rental contract, if neither party gives notice, the contract will automatically renew for three years. Previously this renewal term was one year.
The deposit amount when renting has always been the equivalent of one month’s rent. However, additional guarantees are usually asked for and historically these have been anything from one month up to six months. Additional guarantees are now limited to the equivalent of two months’ rent. They also have to be money deposits and not bank guarantees.
There are different new rules concerning properties that are owned by a legal entity, such as a company. In those cases, the rental term has to be seven years. The renewal if neither party gives notice is also three years.
A huge help to tenants is that where owners are a legal entity, those owners have to pay the agency fee rather than the tenant having to do so. This makes much more sense and I wish this rule applied to all rentals.
ITP (Impuesto sobre Transmisiones Patrimoniales) – a tax tenants were meant to pay on signing every new rental contract has been made exempt. In reality, most tenants didn’t know they had to pay it, and in many cases it went unpaid.
There are other changes to the Spanish rental law, mainly to help support people in assisted housing and those people under threat of eviction.
Hi. If my rental flat changes ownership, do I need a new contract with the new owner?
Hi Sheila, as far as I understand there is no requirement for a new contract because the new owner of a property must honour any existing rental contract on that property.
If we are two people on the contract but we don’t get along anymore is it possible for me to quit the contract and get the deposit back?
You need to speak with the agent or owner and the other contract holder. A new contract would have to be agreed, so it also depends how far into your contract you are. If you’re past the minimum term then that’s possible. Whilst the current rental contract is in place with your name on it, you remain responsible to pay the rent.
I have signed the contact on October 26 this year of 2020. Do I have to submit the modelo 600 form? Is it obligatory? If we are exempt from paying taxes, do we have to submit the modulo 600 form?
The ITP is charged at 0% on long term rentals, but you do still have to complete the form and file it with the tax office. If there was an estate agent involved with your rental, they will often help you with this process, so I would ask them.
Hi, could you tell me which provision of the new Law indicates that “If the owner of the flat is a company then the estate agent’s fee should be paid by the owner.”? I am about the rent from an company but I was requested the estate agent fee (and I paid it already).
Hi Maria, it’s an update to the rental law on 1st March 2019 (La reforma de la Ley de Arrendamientos Urbanos (LAU) mediante el Real Decreto-Ley 7/2019, de 1 de marzo.). Which says that if the owner of a rental property is a legal entity (a company), then they should pay the estate agent’s fee. (Y, por otro lado, se establece por Ley que los gastos de gestión inmobiliaria y de formalización del contrato serán a cargo del arrendador, cuando este sea persona jurídica.)
If you’ve signed a reservation document summarising the terms and conditions of your rental, which includes you paying the agency fee, then it could be difficult to renegotiate that. Which estate agent are you dealing with?