Tenants’ guide to long-term rentals

If you rent a property in Spain as your permanent residence or are thinking of moving to the country to live full-time but do not (yet) want to buy, this practical guide can help with renting your next home

For many people who already live in or are planning to move to Spain in the future, buying a property may not currently be an option. Perhaps you do not have sufficient savings to put down a deposit, maybe, for work-related reasons, you’re not in the market to take out a mortgage, or it could be that you would like to try living in an area such as the Costa del Sol for a time, without committing to an investment in real estate at first. Whatever your circumstances, this guide aims to answer most of the typical questions tenants tend to ask.

  1. What legislation applies to long-term tenancies in Spain?
    The long-term rental market is regulated by the Ley de Arrendamientos Urbanos 29/1994 (often called the LAU), but this has been regularly updated. The most recent revision, in March 2019 (Royal Decree 7/2019), made numerous modifications to the law, primarily to protect tenants’ rights. All the information found in this article takes into account the latest changes.

  2. How long do long-term rental contracts last?
    In theory, for as long as the contract stipulates but, in practice, usually a year. However, whenever the duration is less than 5 years (or 7 years, if the landlord is a company), once the initial term is completed, the contract is renewed automatically for additional one-year periods up to a total of 5/7 years, unless you notify the landlord of your decision not to extend it, subject to 30 days’ written notice before the expiry date of the existing term.

  3. How do I terminate a contract and give notice?
    Once the 5/7-year term is completed, annual renewals up to a maximum of 3 more years are also obligatory for landlords, unless they give you 4 months’ written notice of non-renewal prior to the expiry of the original period. As a tenant, you only have to provide 2 months’ written notice if you intend not to renew.

    Tenants can terminate contracts after 6 months, subject to one month’s written notice, unless otherwise agreed. Both parties may decide that, in such a case, the tenant should compensate the landlord with the equivalent of one month’s rent for every year of the contract not fulfilled, including pro rata compensation for the first year, but you are under no obligation to accept this.

    Finally, if the landlord or their direct family need the property for personal use, they may be able to terminate the contract after a minimum of 12 months, as long as this is expressly stipulated in the contract.

  4. What are the mandatory and tacit renewal periods?
    Mandatory renewal means landlords are obliged to renew contracts annually up to a minimum of 5/7 years, whereas tacit renewal means that if neither party terminates the contract after the mandatory period expires, as long as you continue to pay rent, you can occupy the property for up to 3 more years.

  5. What should I expect to pay in monthly rent?
    That depends on the property in question, the area in which you intend to rent and the owner’s expectations, but rent is freely negotiable in Spain, so you may be able to make an offer below the asking price if you find a property you like and the landlord is willing. To determine what you’re able to pay per month, the general rule of thumb is a maximum of a third your monthly household income, so it makes sense to compare what you earn or receive with typical market rates for the kind of place you hope to rent. You can either do this online or, at Terra Meridiana, we can help search for properties on the Costa del Sol to suit every budget.

  6. Can the amount I pay in rent increase during the contract?
    Only if it was so agreed in the contract. Otherwise, rent cannot be raised during the entire duration. In any case, annual increases cannot exceed the rate of inflation determined by the Consumer Price Index (IPC in Spanish), taking into account the most recent monthly rate officially published. For reference, the annual rate of IPC in Spain was 0.8% in 2019.

  7. So, my rent cannot go up for as long as the contract lasts?
    Not necessarily. As long as you and your landlord agree on the extra amount, any improvements made to the property during the first five (or seven) years of mandatory renewal can lead to an increase in the rent you pay under your current contract. And if you accept a landlord carries out improvement work during the three years of tacit renewal, private landlords are able to raise the rent you pay every month by up to 20% in some cases.

  8. How much should I pay as a deposit and what other financial guarantees may I need to provide?
    The amount you may be asked to pay depends on who your landlord is, but the equivalent of one month’s rent is compulsory in any case. In the case of companies, the maximum deposit is one month of rent, plus up to an additional two months’ in bank guarantees. Private landlords can demand extra assurances, including extended bank guarantees. In these cases, the total amount you have to pay is open to negotiation, so only agree to terms you’re comfortable with.

  9. What happens if the property is sold during my tenancy?
    Under Spanish law, buyers are required to respect existing rental agreements, independent of whether the contract has been registered with the Land Registry or not. However, if buyers are not aware of the contract, they are only required to respect it up to the mandatory minimum duration (5/7 years) and can then terminate the agreement, compensating tenants with the equivalent of one month of rent for every year (up to a total of 3) that the contract could have included.

  10. Who pays any fees to estate agents?
    Landlords are legally obliged to cover the cost of any commissions or other fees owing to estate agents and other intermediaries.

  11. Is there anything else I need to know?
    As a prospective tenant, you will need to compile a dossier of personal information to give to a landlord or agent if you find a property you’re interested in renting. This typically includes copies (you will also need to show the original, if you sign a contract) of your photo ID (DNI for Spanish nationals, passport or NIE for foreign residents) and some financial details that demonstrate your earnings or solvency (such as your last three pay slips, the previous year’s tax declaration or bank statements that show you have sufficient funds).

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Tenants' guide to long-term rentals in Costa del Sol

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