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PROPERTY

Property in Spain: What landlords need to know about renting out a property 

If you buy a property in Spain for investment purposes or for a long-term retirement plan, you may be thinking about renting it out in the meantime. As a landlord in Spain, there are several things you should be aware of.

Published: 7 July 2021 10:08 CEST
Updated: 26 January 2023 13:59 CET
Property in Spain: What landlords need to know about renting out a property 
Being a landlord in Spain. Image: Anders Nord / Unsplash

Decide whether you want to rent your property out yourself or use a property management company
Your first decision as a landlord is to decide if you want to manage the property yourself or if you want a management company to do it for you. There are pros and cons to both. While management companies are obviously more expensive, if you live outside of Spain or in a different city to your property, then it’s best to get a local company to help you manage it. They will also be aware of all your legal requirements. 

Make sure you’re aware of all the legal obligations if you want to rent your property out to tourists
In this article, we will mainly focus on renting your property out long-term to tenants, as there a whole different set of rules if you want to rent your property out short-term to tourists. In many Spanish regions, you will be required to get a tourist licence for your property in order to do this. Contact your local town hall to see if this is a requirement in your area and how to go about applying for one.

Make sure to ask for a deposit
When renting out long term, you are allowed to ask for one month’s rent as a down payment in case of any damages to the property. Technically you are supposed to give this deposit to a third party for safekeeping such as the Consejería de la Vivienda in your local area.

The initial rental period is five years
In March 2019, the Ley de Arrendamientos Urbanos (LAU) changed the property laws in Spain so that the rental period was extended to five years instead of three, as it was prior to 2013. During this time, only the tenant is allowed to cancel the contract. If your tenant doesn’t give you notice within 30 days of the contract renewal date, it will automatically be renewed for another five years.

If you need the property back for whatever reason, you can only do this after one year
According to the LAU, if you need your property back, for example, to let immediate family live there, then you can only do this after one year of tenancy and must give your tenants two months’ notice.

What you need to know about being a landlord in Spain. Image: Tumisu / Pixabay

You are allowed to evict a tenant who is behind on rent
According to Balcells Group legal firm, if a tenant is behind on rent, you should first try to sort the situation amicably, but if you still aren’t getting paid, you can make an application to evict your tenant for non-payment. A judge will make a decision based on your application and if they rule in your favour, the tenant must leave the property, as well as paying the outstanding amount of rent.

You are only able to change the rental price of your property if previously agreed upon
The LAU states that you are only able to revise the rental price if this has previously been established in the rental contract with the tenant. However, if you have made drastic improvements to the property during this time, which are not just repairs and maintenance, you are allowed to increase the rent after the work has been completed, providing you have informed the tenant in writing. This cannot be an increase of more than 20 percent.

Be aware of tax obligations
Whether you’re a resident or a non-resident in Spain, if you own a property here and rent it out, you are liable to pay tax on the rent you receive. And be aware that if you’re a non-resident and decide not to rent your property out, but only use it yourself for holidays, you will still be liable to pay non-residents tax on the property. If you’re an EU resident or resident of Norway or Iceland, you will pay a tax base rate of 19 percent, all others will pay a tax base rate of 24 percent. Make sure you seek legal advice from a professional to ensure you are paying the correct amount of tax and declaring it accordingly.

Make sure you are registered on the Property Registry
When you buy your house in Spain, you must ensure that you are registered on the Property or Land Registry, which lists you as the owner. This should be done at the moment of purchasing the property, however, if you’re planning on renting it out, you may want to double-check this. This is because in order to avoid rental scams, many tenants will look this up themselves to check that you are the true owner. 

You are responsible for paying the community fees and IBI tax
In Spain, the landlord is automatically responsible for paying any community or building fees, as well as the Impuesto Sobre Bienes Inmuebles, better known as IBI tax. The IBI is due once per year and is a type of council tax, which paid to your local town hall. If however, you agree with your tenant in advance that they will pay these and add them into the contract, then you are able to pass the responsibility on to them. 

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PROPERTY

Q&A: What to do if you buy a property built illegally in Spain

Buying an illegally built property in Spain is fairly common but can have several consequences down the line. Here's what you need to know, how to make it legal, whether you can sell it, and the benefits of doing so.

Published: 25 April 2024 09:35 CEST
Q&A: What to do if you buy a property built illegally in Spain

Unfortunately, over the years, many properties have been built illegally in Spain, not adhering to local rules and regulations. Foreigners who don’t know the legislation can easily fall into the trap of buying one of these properties, only to find out later down the line.

Maybe it’s when they come to sell or perhaps it’s when they want to do works or improvements on the property.

There are several reasons a home could have been built illegally in Spain. Firstly, it could have been built on the wrong type of land. This is it could have been built on suelo rústico, rural land where residential properties are prohibited, also called no urbanizable. 

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It could have also been built too near the coast. This is down to the Ley de Costas or Coastal Law, which was brought into force in December 1989 in order to protect the costas from overdevelopment and high rises spoiling the landscape. 

The law defines different areas of the beach and dictates which is public land, owned by the state and which parts can be owned privately and built on.

If you buy or own a house in one of these non-buildable zones, there are many problems you could face down the line, often sooner rather than later. This is because there are several rules you have to abide by concerning works, reforms and extensions. In some cases, they may not be allowed at all and everything must be approved first by the local government by providing a detailed project.

Because of coastal erosion, this issue is getting worse as some shoreside homes that were once built outside of these areas are finding that they’re now illegal.

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The house may have also had extensions made to it that were built without a license, meaning that the extra parts are illegal.

Q: How do I know if my home is legal or not?

A: Unfortunately it can be difficult to know if your property is legal or not. You could have bought and signed for it with a notary and it could be inscribed on the Property Registry, but this still doesn’t mean it was built to the correct specification and on the right land.

The only way to truly tell is to find out if your home ever had a Licencia de Primera Ocupación or First Occupation license, also referred to as a Cédula de Habitabilidad or Certificate of Habitability. This means that according to the authorities, it is suitable to live in and has the correct licenses.

READ ALSO: How to get Spain’s certificate of liveability for properties

Q: What happens if my property doesn’t have a habitability certificate?

A: If your property has never had a Certificate of Habitability, you must regularise the legal situation. First you’ll need to start a legalisation file (expediente de legalización) and contact the town hall. Depending on the seriousness of the case (ie. where exactly it was built, if there’s any structural danger, whether the entire property is illegal or just an extension) the cost of making an illegal property legal can be considerable. As such, each case must be studied individually with the help of an expert to determine whether it is even feasible or worth the investment.

The next step is to bring in an architect and check whether the property complies with all the building regulations. If it does, you simply need present the expediente de legalización to your local town hall, who will confirm whether or not the property adheres to building regulations and can be made legal.

If it doesn’t, you’ll need to consider whether it will comply with the regulations after some renovations. If that’s the case, you’ll need to draw up a renovations project document (proyecto de reforma) outlining the proposed changes and how they will adhere to building regulations. It must be presented to the town hall along with your expediente de legalización.

According to law firm Acal, the legalisation process can be broken down into steps as follows:

  • Contact the town hall.
  • Begin with the expediente de legalización when the town hall confirm whether or not the property can be made legal.
  • Pay the corresponding fees and taxes (in this case it will be IBI) depending on your municipality and region.
  • If you need to make renovations, obtain the proyecto de reforma and hire an architect.
  • Obtain a building permit from the town hall.
  • Once completed, register the property in the Land Registry.

READ ALSO: What is Spain’s IBI tax and how do I pay it?

Q: Do I really need to make my property legal?

A: Yes, because it will benefit you in the long run. It doesn’t matter what the previous owner told you when you were originally buying the property, owning a property that isn’t fully legal (or legal at all) can create problems and even lead to fines worth up to 20 percent of the property’s value in extreme cases.

By going through the legalisation process and making the relevant renovations, if necessary, you gain a legal property for all purposes and with all the benefits that entails.

You will not have problems setting up, paying, or cancelling electricity, water or gas utility services. You won’t have to undertake reforms and renovation work unofficially, avoiding the eyes of the authorities. Instead you’ll be able to register your property in the Land Registry, which will make things much easier when you decide to sell it or pass it on.

In terms of selling it, perhaps that is the biggest benefit of legalising your illegal property: by registering it properly, you will be able to benefit from its full value when selling it. When a property is illegal, the appraised value will probably be no more than 40-45 percent of its real value at best.

The renovations needed to get your property in shape to meet the building regulations could be costly, but will they cost you half of the total value of your property? 

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