Leases: the Rental Contract

The rental contract is subject to Spanish legislation on urban leases, Law 29/1994, of November 24, on Urban Leases (LAU), whose latest modification is Law 12/2023, of May 24, for the right to housing.

What elements of the rental contract are regulated by the LAU?

1. Contract period:
   • Rental contracts can be for a fixed or indefinite duration. The contracts are for 5 years if the landlord is a natural person and 7 years if it is a company. If neither party expresses their intention not to renew it, it is renewed for another 3 years.
2. Deposit
   • The owner can request a deposit equivalent to one month's rent. In the case of furnished homes, it can increase to two monthly payments.
3. Rent:
   • The amount and frequency of rent payment are agreed between the landlord and the tenant. Typically, it is paid monthly.
4. Expenses and Supplies:
   • The contract must clearly specify which expenses and supplies are included in the rent and which are the responsibility of the tenant.
5. Rent Review:
   • There may be clauses that allow the rent to be reviewed during the duration of the contract. These revisions are usually linked to the consumer price index (CPI). As of the entry into force of the Housing Law, it was set at 2% for 2022, 3% for 2023 and 4% for 2024. The government is pending legislating what rate will be set from 2025 to replace the CPI.
6. Home insurance:
   • Although not required by law, it is common for landlords to require tenants to take out home insurance to cover damage to contents and liability.
7. Maintenance:
   • Maintenance and repair responsibilities should be specified in the contract. Typically, the landlord is responsible for major repairs, while the tenant takes care of day-to-day maintenance.
8. Eviction:
   • The landlord has the right to terminate the contract and request the eviction of the tenant in certain circumstances, such as non-payment of rent.
9. Contract Registration:
   • It is mandatory to register the rental contract with the Tax Agency within a period of 30 days from its signature.
10. Causes for Early Termination:
    • The reasons for which either party can terminate the contract before the expiration date must be specified.
11. Inventory and Condition of the Property:
    • A detailed inventory of the condition of the property must be carried out at the beginning of the contract to avoid problems at the end of the lease.

10 facts to take into account in your rental contracts

Termination of the rental contract

In the case of the tenant, they have the right to withdraw from the contract after six months, compensating the owner with one month per unfulfilled year of the contract.

In the case of the owner, you can request the home after the first year if he demonstrates a need for housing for himself or for a direct family member, and provided that the clause has been included in the contract. However, this is complex to prove.

Abusive clauses in your lease contract

It is normal for the property to want to add additional clauses, especially to protect elements of the home or give additional rights. Although it can be done, they cannot eliminate the rights collected by current regulations and are considered null.

Before the sale of the home

In the event of the sale of the home with a tenant, the tenant's right to remain in it during the period of their contract (5 or 7 years) is guaranteed. If you want to sell the home you have to negotiate with your tenant(s).

Bail

Normally a month's deposit is requested, however, it is possible to request 2 more months as an additional guarantee. In addition, the deposit must be deposited in the corresponding agency (see our note, how to manage the rental deposit), otherwise you may incur sanctions.

Rental contract templates

A rental contract can be drawn up freely between the parties, as long as it meets the requirements of current regulations. But it is always useful to have a basic model so as not to miss any important points. The Organization of Consumers and Users itself offers to download this rental contract model for free, with an example of inventory included.

Check out our service comprehensive rental management.

You want to know more? The MITMA (Ministry of Transport and Sustainable Mobility) puts at your disposal a lease contract template.