SHORT & LONG TERM RENTALS

If letting property on a long-term basis, ‘arrienda de vivienda’, landlords need be aware that tenants have an automatic right to extend the contract yearly for the minimum period of five years after the initial termination of the contract. Further, it should be noted that the legal process to secure the eviction of a sitting tenant can be rather tortuous and should a tenant fall behind with the rent for up to six months, it could be argued that the law favours the tenant. If letting property on a short-term let, ‘arrienda de temporada’, one’s tenants do not acquire such a right to automatic extension, although one need be aware that the legal process to evict an overstaying tenant can take up to six months and even then there is no guarantee that one will receive all what is owed.

It is advisable to have any rental agreement in contractual form. The contract can be in any language but should the matter go to court, it will need to be formally translated into Spanish. If, for whatever reason, there is no rental contract and the agreement is premised on cash transactions, receipts should be issued for each month that payment is made. If payments are made by transfer or cheque, parties should retain all the relevant paperwork so as to demonstrate the existence of an agreement.

Necessarily, a landlord can ask that a deposit, typically one month’s rent, be paid as a guarantee against damages. Disputes often arise at the end of the contract as to what constitutes damage and what constitutes reasonable wear and tear. Accordingly, one is best advised to pay the deposit to the agent or other appointed third party on the express understanding that the third party will retain the same throughout the contract so that first, any such disputes may be resolved in an objective manner by the third party and second, the landlord does not have free reign [sic] as to whether to withhold the deposit or not. In the event that the deposit has been paid to the landlord direct and an issue arises as to its return, unfortunately one may require the intervention of a lawyer.

If you are resident and let your Spanish property, you need pay income tax on the rental income and include such in your annual income tax return as filed in June-July. Unlike resident landlords, who enjoy a 50% reduction on tax due on rental income in addition to other significant allowances, non-resident landlords pay a flat 24% and do not enjoy any deductions. Further, whereas residents need only file one annual income tax return, non-resident landlords should file a fresh return (form 210) within 30 days of every payment although the Tax office will agree to quarterly returns, if suggested.

Finally, some of you may wish to note that those who rent property to residents ought to be aware that tenants are now obliged to provide their landlord’s fiscal details in their annual tax returns. Accordingly, the authorities are now fully able to follow the money trail and take the appropriate measures if need be.

Myles Jackson is a bi-lingual practicing English lawyer who lives in Granada and works with the Spanish law firm, Recursos y Gestión Quatro SL. Call Myles on 958 958 077 or write to him at mylesjackson@granadalaw.com.