Rental Laws in Spain Valencia, long term vs short term renting

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What Investors Should Know About Rental Laws in Spain

Contents

Types of Rental Contracts in Spain
Long-term rental contract
Understanding Rental Contracts
Long-term rental contract
Renting per room  
Conclusion

Rental laws are designed to protect both landlords and tenants, ensuring a fair and stable rental market. As an investor, understanding these regulations is key to avoiding disputes and maximizing returns.

Types of Rental Contracts in Spain

In Spain, rental contracts are governed by the Ley de Arrendamientos Urbanos (LAU), or Urban Lease Law. The law divides rental agreements into several types based on the purpose of the lease and its duration. Below are the main types of rental contracts in Spain:

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1. Residential Lease (Arrendamiento de Vivienda)

  • Purpose: For renting properties intended as the tenant's primary residence.
  • Key Features:
    • Minimum duration: 5 years if the landlord is an individual and 7 years if the landlord is a legal entity (company).
    • After the initial period, automatic annual renewals for up to 3 additional years, unless the landlord or tenant provides notice.
    • Rent increases are generally tied to the Consumer Price Index (CPI).
    • Tenants have the right to terminate the lease after 6 months with a 30-day notice, though penalties may apply if agreed upon in the contract.
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2. Seasonal Lease (Arrendamiento de Temporada)

  • Purpose: For temporary stays, such as work assignments or short-term projects. Not intended as a primary residence.
  • Key Features:
    • No minimum or maximum duration, but the agreement must specify the term.
    • Tenants do not have the same protections as with residential leases (e.g., no automatic renewals).
    • The contract must clearly state that it is for temporary use to avoid confusion with residential leases.
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3. Commercial Lease (Arrendamiento para Uso Distinto del de Vivienda)

  • Purpose: For renting properties for non-residential purposes, such as businesses, offices, or retail.
  • Key Features:
    • No minimum or maximum duration required by law, though terms are typically negotiated between parties.
    • Rent updates and termination clauses are agreed upon in the contract.
    • The contract does not provide the same level of tenant protection as residential leases.
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4. Tourist Rental (Arrendamiento Turístico)

  • Purpose: Short-term rentals for tourists, often booked through platforms like Airbnb.
  • Key Features:
    • Regulated by regional laws, which may require licenses or compliance with specific standards.
    • Typically for stays of less than 1 month.
    • Subject to taxation and may need to comply with local rules on noise, occupancy, and safety.
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5. Shared Housing or Room Rentals

  • Purpose: Renting individual rooms within a property.
  • Key Features:
    • Governed by specific agreements between the landlord and tenant(s).
    • Often treated as a sublease or private arrangement, unless the entire property is rented.
    • Terms and protections are less standardized than for full-property leases.
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Things to Consider for Rental Contracts in Spain

  • Deposit: Typically, landlords require a one-month deposit for residential leases (two months for commercial leases).
  • Additional Guarantees: Some landlords request additional guarantees, such as a bank guarantee or advance payments.
  • Legal Registration: In some cases, rental contracts must be registered with the regional authorities for legal compliance.
  • Termination Notice: Standard notice periods apply (30 days for tenants, 4 months for landlords in residential leases).

If you need specific advice on rental contracts in Spain, let me know!

Key Regulations

  • Tenant Rights: Spanish law provides robust protections for tenants, particularly under long-term leases. Eviction processes are regulated, and tenants often have the right to renew contracts.
  • Rent Controls: In high-demand areas, rent increases may be capped to prevent housing market inflation. Ensure your property’s rental pricing complies with local guidelines.
  • Licensing Requirements: Short-term rentals require specific licenses, often involving neighborhood approval and adherence to strict building and safety codes.

Taxation

  • Rental income is subject to taxation, with rates varying depending on residency status. Non-resident investors are typically taxed at 19% on rental income. If you're a resident, the tax rates will depend on your total income as well as the type of rental contract. Long-term (more than 6 months) contracts offer certain tax advantages, up to 60%.
  • Spain’s double taxation treaties with various countries can prevent investors from being taxed twice on the same income.

 

Navigating Rental Regulations in Spain

Compliance with Valencia’s rental regulations involves careful planning and execution. Here is a step-by-step guide:

  1. Research Local Laws: Understand the differences between long-term and short-term rental requirements.
  2. Consult Experts: Engage legal and real estate professionals to ensure your property meets all regulations.
  3. Register Contracts: All rental agreements must be registered with the Valencian Community’s housing authority.

Understanding Rental Contracts in Spain

  • Long-Term Contracts (12-Month):
    • Offer stability and legal protections for both parties.
    • Typically include clauses on maintenance responsibilities and renewal terms.
    • Depending on the contract, it renews yearly for up to 5 years.  
    • A long-term contract will provide plenty of rights to tenants, which you may not be aware of. We'll be taking a look at it in more depth at the next section.
  • Short-Term Contracts:
    • Provide flexibility and higher income potential, particularly during peak tourist seasons.
    • A tourist rental license is required, and compliance with local hospitality laws is required.
  • Renting Per Room vs. Entire Units:
    • Renting per room can maximize income but may involve additional operational challenges.
    • Full-unit rentals are simpler to manage but may yield lower overall returns.

 

Tenant rights under a long-term rental contract (arrendamiento de vivienda)

In Spain, tenant rights under a long-term rental contract (arrendamiento de vivienda) are well-defined and designed to protect both parties. Here’s an overview of the key tenant rights:

1. Minimum Contract Duration

  • The minimum duration for long-term rental agreements is 5 years if the landlord is an individual or 7 years if the landlord is a legal entity (e.g., a company).
  • After the initial term, the contract automatically renews annually for up to 3 years unless the tenant or landlord provides notice to terminate.

2. Right to Early Termination

  • Tenants can terminate the contract after 6 months with at least 30 days' notice to the landlord.
  • In some cases, the landlord may impose a penalty equivalent to one month's rent for each remaining year of the contract.

3. Rent Increases

  • Rent can only be increased annually, and the increase must align with the Consumer Price Index (CPI) unless otherwise agreed in the contract.
  • Landlords cannot arbitrarily raise rent outside the agreed terms during the contract period.

4. Deposit and Additional Guarantees

  • Landlords can require a security deposit equivalent to one month’s rent for residential properties. This deposit must be returned at the end of the lease, provided there is no damage or unpaid rent.
  • Additional guarantees (e.g., bank guarantees or extra deposits) are allowed but cannot exceed two months' rent unless otherwise agreed.

5. Habitability and Maintenance

  • Tenants have the right to live in a property that is habitable and in good condition.
  • Landlords are responsible for major repairs and maintenance to keep the property livable (e.g., structural issues, plumbing, or heating repairs).
  • Tenants are typically responsible for minor maintenance and routine wear and tear.

6. Subletting or Room Rentals

  • Tenants can only sublet the property or rent out rooms with the landlord’s explicit written consent.

7. Protection Against Arbitrary Eviction

  • Landlords can only terminate the lease during the contract period for specific reasons, such as:
    • Non-payment of rent.
    • Unauthorized subletting.
    • Damage caused to the property.
  • Even in these cases, eviction requires a court order and cannot be carried out without legal proceedings.

8. Preemption Rights

  • If the landlord decides to sell the property, tenants may have a right of first refusal to buy the property under the same terms as the buyer.

9. Privacy Rights

  • Tenants have the right to privacy in their rented home. Landlords cannot enter the property without the tenant’s permission, except in emergencies.

10. Termination by the Landlord

  • The landlord can terminate the contract only under specific conditions, such as:
    • Needing the property for personal or family use (with prior notice of at least 2 months).
    • Violations of the contract by the tenant (e.g., non-payment of rent or illegal activities).

Understanding these rights is crucial for tenants and landlords alike to ensure compliance with Spanish rental laws and avoid disputes. If you're considering entering into a rental agreement, consulting a legal expert familiar with Spanish property laws is highly recommended.

 

Renting a property per room (habitaciones en alquiler) in Spain, tenant's and owner's rights

In Spain, renting a property per room (habitaciones en alquiler) is governed by specific rules that differ from those for renting an entire property. These arrangements often fall outside the scope of the Urban Leasing Law (Ley de Arrendamientos Urbanos - LAU) and are instead subject to the Civil Code unless the room rental forms part of a primary residence lease.

Here’s a breakdown of tenant and owner rights and obligations under room rental agreements:

Tenant Rights when renting per room

  1. Right to Written Agreement

    • Tenants have the right to a written contract specifying key terms such as rent amount, payment schedule, duration, and any specific house rules.
    • The contract should clearly indicate whether the rental is governed by the LAU or the Civil Code.

  2. Right to Privacy

    • Tenants have exclusive use of their rented room and shared use of common spaces (e.g., kitchen, bathroom, living room) as defined in the contract.
    • Landlords cannot enter the rented room without the tenant's permission unless in emergencies or with prior notice for inspections.

  3. Maintenance and Habitability

    • The landlord is responsible for ensuring the property and the rented room are habitable and meet safety standards.
    • Tenants have the right to request repairs for significant issues affecting habitability.

  4. Security Deposit

    • A security deposit is typically required (usually one month’s rent). It must be returned at the end of the lease if there is no damage or unpaid rent.
    • For room rentals, additional guarantees may also be included in the contract.

  5. Notice Period for Termination

    • Tenants can terminate the agreement with sufficient notice, as outlined in the contract (typically 30 days for room rentals under the Civil Code).

  6. Shared Expenses Transparency

    • If utility costs (water, electricity, internet) are shared among tenants, these charges must be transparently calculated and communicated.

Owner Rights when renting per room

  1. Right to Set Terms in the Contract

    • The owner can define specific rules, such as quiet hours, cleaning responsibilities, and restrictions on guest stays, provided these are reasonable and agreed upon in writing.

  2. Rental Payments

    • The landlord has the right to timely rent payments as stipulated in the contract.
    • Late payments may result in penalties or contract termination, depending on the agreed terms.

  3. Termination Rights

    • The landlord can terminate the agreement if the tenant breaches contract terms, such as causing damage, subletting without permission, or not paying rent.
    • Proper notice must be provided, and in some cases, legal proceedings may be required for eviction.

  4. Access to Common Areas

    • While tenants have exclusive use of their rented room, landlords can access shared areas of the property, provided they respect the tenants' privacy and terms outlined in the contract.

  5. Right to Establish Occupancy Limits

    • Landlords can set the maximum number of tenants per room or per property to ensure compliance with local regulations and maintain livability.

Key Differences from Whole Property Rentals

  • Application of the LAU:

    • Room rentals typically do not fall under the LAU unless the rental includes a shared lease for the entire property and qualifies as a permanent residence.
    • Most room rentals are regulated under the Civil Code, offering more flexibility but fewer tenant protections.

  • Shared Responsibilities:

    • Tenants and the owner often share responsibility for maintaining common areas, and specific duties should be outlined in the contract.

  • Shorter Contracts:

    • Room rental agreements are often shorter-term (e.g., monthly), with more flexibility for both parties to terminate with notice.

Best Practices for Room Rentals

  1. Clear Contracts:

    • Ensure the rental agreement explicitly defines the rights and responsibilities of both parties.

  2. House Rules:

    • Establish house rules for shared spaces, noise levels, and guest policies to avoid conflicts.

  3. Legal Compliance:

    • Ensure the room rental complies with local occupancy and safety regulations, particularly for properties rented to multiple tenants.

  4. Transparency in Costs:

    • Clearly outline how utility and shared expenses are divided to prevent disputes. 

Conclusion

The most suitable renting model will depend on the features of your property. Mainly, its location, but also the available m2 / number of rooms will play a factor in deciding. If you have the possibility to rent your property per room, especially to students, it may be a flexible way, as it's easier to terminate the contracts compared to long-term rentals. However, if the property is more suitable to rent long term, it can also be a good model, but you need to make sure to protect yourself against possible unplanned circumstances where the tenants may be protected by the law, and it can be difficult to terminate the contract.