EDITION: April - june 2012


Texto: Anja Sämann-Gutschick y Armin Gutschick
Home rental in Spain is regulated by the urban rental law called “Ley de Arrendamientos Urbanos”, or LAU for short.

In this article we will discuss some of the points in this legislation that we feel are of particular interest for both landlords or landladies and tenants.

According to article 9.1 of said LAU, the duration of a rental contract can be freely agreed by the signing parties. Should it be less than 5 years, the contract shall be prolonged yearly until the rental reaches at least 5 years in length – except, according to article number 10, if the tenant lets the landlord know at least 30 days before the expiry of the contract that s/he does not wish to renovate it. This obligatory extension is not applicable if, upon signing the contract, it expressly includes a clause that states a need by the landlord to occupy the rented property as a permanent residence for him/herself or their first-degree relatives. If the landlord or his/her relatives do not actually occupy the property, the landlord must, if the tenants so choose, allow them to continue enjoying use of the property, or compensate them for damages (art. 9.2 LAU).

If, once the five years are up, neither side has notified the other of their will to terminate the contract, it will be extended yearly for another 3 years more, except if the tenant informs the landlord at least one month before the termination of each of these yearly extensions of their desire to end the contract (art. 10 LAU). If the rental is longer than 5 years, the tenant can terminate the contract once 5 years have passed. The parties can agree that, if this happens, the tenant will compensate the landlord with one month rental per year left until the end of the contracted time.

The parties can freely establish the rental price (art. 17.1 LAU). During the first five years of the rental contract, the rent can only be increased in the amount corresponding to the rise in the national consumer prices index (IPC in Spain).

The parties can agree that the maintenance costs (taxes, charges and insurances) must be paid by the tenant (art. 20.1 LAU). These costs include, for example, property tax (IBI) and homeowners association fees. The tenant must cover the small repairs that regular use of the property will entail (art. 21.4 LAU).

If a rental property is put on the market for sale, the tenant will have right of first refusal. In this sense, the LAU law includes, amongst others, the following requirements: should the rented property be sold during the first 5 years, the tenant will have the right to remain in the property until those 5 years are up (art. 13.1 LAU). The buyer of a rented property will be have to respect the rights and obligations of the tenant during the first 5 years of the rental contract, even if s/he did not know the property was rented when the sale took place.

A deal by which the tenant gives up their right of first refusal will only be valid in contracts that have a duration of more than 5 years. However, there are some situations in which the tenant will not enjoy this right of first refusal, such as when the whole building is being sold, when different owners all sell the apartments and communal areas of the building to the same buyer (art. 25.7 LAU).

Should a buyer be interested in the purchase of a rented property, it is very advisable that s/he seeks detailed information about the contract clauses and, if necessary, that s/he hires a lawyer.