The Myths of 11 months Rental Contracts
There is a myriad of misinformation for those who have ever tried to rent a property in Spain, or offer their property for rental. Spanish rental laws appear relatively complex, but in fact they are very simple to understand if you appreciate the basic premise of the law.
Rental Classification
In essence all Rentals in Spain fall into 2 categories:
- Vacation Rentals – Vacation Rentals are defined as rentals for under 60 consecutive nights and are governed by Decree 28/2016 for Urban properties (Decree 20/2002 for Rural Properties)
- Tenancy (Long Term Rentals) – Anything not covered under the above is considered as a Long Term Rental, which is covered under the Urban Tenancy Act Decree 29/1994 and supplement Act 4/2013.
The Vacation Rental Act is covered in our article on this subject (click here for more), but here we want to clarify the Long Term Act and do away with some of the myths.
What is the definition of Tenancy / Long Term Rental?
It is easier to define what is not “Tenancy”, which is very simple. Any rental agreement for 60 or less consecutive nights is not a Tenancy.
Any longer period, and the rental contract is governed by the Tenancy Act, and the tenant has rights and protections defined within the law.
What is a 11 Month Rental Contract?
Simple answer is “there is no such thing”! No matter how long your contract defines the length of the agreement, the fact remains a tenancy agreement is a tenancy agreement. By definition any tenancy contract grants the tenant certain rights and obligates the Landlord to certain conditions.
For example the Tenancy Law states that the Tenant has a right to renew the rental agreement on the anniversary of the contract, for a further period equal to the original period of the contract, and up to 5 years (was 3 years until 2019 although that can change again!).
There are only 2 exception to this:
- a) The tenant is in breach of the agreement (namely being behind in payment, breach of community rules, or breach of local by-laws).
- b) The tenancy is for “Secondary Residence” (DISTINTO A VIVIENDA) as against “Primary Residence” (VIVIENDA). If the contract is for use of property as a “Secondary Residence” then the tenancy can be terminated at the end of the initial period (or subsequent periods) by either the Landlord or the Tenant giving 30 days notice (as per defined in the contract).
What is a Secondary Residence (DISTINTO A VIVIENDA)?
This is fairly self-explanatory, as it means the tenant has another place or places of Residence, such as another property in Spain or in another country, which is their primary residence. The secondary residence is required for a defined period tied to a specific event, such as short term contract work, students, holiday, etc. but it cannot be used as a permanent and main place of residence.
Landlords must obtain evidence of another Primary Residence, such as a copy of deeds, after which the Tenancy contract can be set to any length agreed between the tenant and the owner, and without the automatic right to renew.
This means, it is the fact of a property being a Secondary Residence, that determines a Tenant’s rights and not the length of the contract. The length of the contract and the renewal of the contract is defined by whether the property is the Primary Residence (VIVIENDA) or the Secondary Residence (DISTINTO A VIVIENDA) and not the other way around.
As a tenant of a Secondary Residence, the tenant does not gain Tenancy Rights granted under the Tenancy law.
What are the Tenant’s Rights under Secondary Residence?
In principal the same as the Primary Residence except the minimum length of tenancy and the automatic right to renewal. The Landlord is still duty-bound to provide the obligations determined under the Tenancy Law.
As a tenant, if the contract is declared as your secondary residence, but is in fact your primary residence, you have nothing to worry about. You can refuse to leave and prove the property is and always has been your Primary Residence. There is little the Landlord can do about it, as long as you are not in beach of contract (behind with rent or breaking the rules of community or conditions of tenancy), or he can prove that your primary residence was elsewhere at the time of signing the contract.
However, if you are the owner/landlord, you should be extremely concerned as you can lose control of your asset for up to 5 years, if the tenant successfully challenges the contract after moving in. There is no legal recourse for you, unless you can provide proof that this property was not the main place of residence. This means documentary proof of ownership of another property, and/or proof that the tenant is in residence due to specific circumstances (temporary job contract, student, extended holiday, etc.).
Summary
If you are letting your property or are renting a property in Spain, you must first establish if the property is the Primary or Secondary Residence.
Primary Residence means minimum contract of 12 months, automatic renewal (up to 5 years), and rent increase protection.
Secondary Residence means the minimum contract can be agreed between the Tenant and the Landlord, and there is no automatic renewal. Rent control does not apply, as the contract is terminated at the end of each period and new contract applies for any extension of the rental agreement.
If you have a property you want to rent to tenants, contact us for sound advice with full property management support