Letting out your property in Spain may seem a good way to generate some extra income in these times of financial crisis. And it will be when you manage to avoid the pitfalls of Spanish rental legislation.
12. Always identify the premises with the land registry identification.
The Ley de Arrendamientos Urbanos (LAU) however is not as simple, nor straightforward as it appears at first sight. Herewith a few short remarks that may give you some insight:
1. The law on urban rentals is also applicable on rustic cottages when used for urban purposes, as well as rentals for professional and commercial purposes.
2. Normally the rental periods are expressed in time spans of 1 year. Rentals for 11 months or 2 years do not avoid the applicability of the automatic renewal right of the Lessee up to a maximum of 5 years.
3. The law automatically and obligatory renews the rental timespan up to a period of 5 years,
unless at the time of celebration of the contract the Lessor expressly stipulates, the need for the premises - as his own personal permanent residence - prior to the lapse of 5 years.
4. After completion of the 5 year obligatory renewal period, when the Lessee is not previously and duly notified, the rental agreement will automatically (but now not obligatory) renew for anual periods up to 8 years.
5. The Lessee can always revoke the rental agreement by notifying the Lessor with a previous 30 days. However this is not the case in those rental agreements that were at the start contracted for over 5 year periods, - let´s say for a 9 year period in which case the Lessee will have to indemnify the Lessor for the remaining years.
6. The sale of the house will not end the anual rental agreements (with the obligatory timespan of 5 years) but does allow parties to anually rescind the contract during the following 3 year period.
7. The Lessee has the right of preference on the purchase and sale of the premises - providing paying the purchase price.
8. The rental agreement is subject to a stampfee to be obtained at the Finance Department (Hacienda).
9. An income tax of 21% over the rent is to be paid, every 3 months in those cases where the Lessee exercises a profession or an ecomonic activity, to be presented with the trimestral VA tax declaration. This tax is deducted from the amount that the Lessor receives as it is paid by the Lessie to theHacienda. The same applies when the Lessor is economically active as a private or legal entity.
10. The 21% tax over the rent is to be paid by the Lessor in the anual tax declaration as income over the respective year.
11. Always identify the Lessor and Lessee, with their full names, addresses, tax numbers and passports. And include their addresses for identification purposes following the contract.
14. Always include the obligation for the respective party to pay the rental tax.
15. Always include a clause that the rent is anually subject to a national indicated raise.
And ofcourse, all parties can freely engage and therefore desengage for any contract, when both are willing to do so.
Have an advocate or lawyer, - duly inscribed at the respective Law Society - draw up your rental agreement and not some gestoria or contable.
And remember, if you wish to let out your property for only vacational purposes,- for example 14 days - state so in the contract, excluding that the Lessee will make you of the premises for his permanent residence, as you will need it, as such, for yourself.
© Mevr. mr. drª Marian Aletta Does - 16.04.2012
