Rental Agreements

Different Types of Rental Agreements

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Different Types of Rental Agreements

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If you are thinking of renting out your property, these are the three most common rental agreements: for (main) residence, intended for use other than that of residence (seasonal), and tourism.

While the first type is characterised by meeting the tenant’s need for an indefinite period, in terms of the fact that the residence will become their main residence over a long term.

Seasonal rentals aren’t aimed for the property to become the tenant’s permanent home, but temporary accommodation (for work, study, leisure /tourism purposes). The duration is, therefore, a condition, furthermore, we must take into account that the occupancy is occasional.

A third type of rental agreement is the tourist one. It differs from the previous ones in the way that it was excluded from the Law of Urban Rentals (LAU). Meaning that the legislation fails to regulate this type of rental, and each autonomous community must do so, having to comply with the standards in the sectoral legislation.

On the other hand, for the rental to be considered as that of a “tourist” one, it must relate to the entire furnished property to be used immediately, through marketing and regular advertising in channels for tourism.

These details are what differentiates this kind of rental from seasonal rentals, which is not offered as a tourist apartment or provided with immediacy or regularity.

Additionally, to advertise your property as a tourist apartment, if the sectoral regulations determine, like in the Autonomous Community of Valencia, you must previously apply for a favourable urban compatibility certificate from your Town Hall, in order to have access to the register of tourist apartments at the Territorial Service of Tourism, where you will be issued with a license number, which must be included in any property advertisement.

Referring to long-term and seasonal contracts, as they are subject to the national regulations (LAU), contracts must include mandatory minimum requirements, such as the demand for a deposit, which for the use of a (main) residence will be a payment of one month, and for those intended for use other than that of residence (seasonal) will be two months.

Regarding the deposit for the use of the main residence (long term), you should know that the landlord/owner is obliged to declare the rental agreement and keep safe the deposit, which at the end of the contract, the tenant can claim back.

Lastly, there have recently been regulatory developments due to a modification of the LAU, implying that the new long term contracts are made more attractive for tenants, extending the mandatory renewal period from 3 years to 5 years. More information regarding the new regulations which will influence the new contracts can be found below.

New Decree on urgent measures affecting the contracts that are to be signed from Wednesday, 19 December 2018

Following the publication of the new Royal Decree-Law 21/2018 of 14 December on urgent measures concerning housing and rentals, certain points referring to rentals by private owners or companies have been changed, as well as the eviction process and the inclusion of social housing in financial investments.

Long-term rentals

With regard to long-term rentals, those who are signing with the aim of the property becoming their main residence should know that since the entry into force of this new decree, rental contracts, despite being fixed by annuality, will have the following guarantee in favour of the tenant, who is covered by law:

  • For new contracts, concluded now: despite being agreed for the period of one year, the mere permanence of the tenant in the property will be understood as wanting to remain in the property for another year, and so on up to a period of 5 years.
  • The same will happen, but for a period of 7 years, in case the property is owned by a business.

Once these terms have elapsed, if the landlord does not give prior notice of a minimum period of 30 days, there will be a tacit contract renewal, meaning an extension for another 3 years.

Subsequently, the contract may continue to be extended tacitly, yearly, as long as there is no notice of termination by the homeowner.

The only way of refusing the compulsory extension of 5/7 years initially, and the subsequent 3 years of tacit renewal, is if, after the first year of the rental agreement, the owner requires the property for his or his family’s use, in the first degree of kinship. This must be communicated to the tenant in writing.

Tourist accommodations

In relation to tourist accommodations, these must be marketed through tourism channels only, and with the appropriate description according to the established tourism regulations applicable. In addition, it includes an improvement to the horizontal property regime that allows the owners’ communities to limit or condition the exercise of said activity.

Eviction procedures

Lastly, with the eviction procedures, a new measure is introduced, meaning that when vulnerable households are affected, the process is suspended, until the measures deemed appropriate by social services are adopted.

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