Ibiza Property Rentals

You want to rent a dwelling in Spain, or you want to let out the dwelling you own yourself? Then you should know the letting laws and rules.

We can in this Fact Sheet just give what we consider to be the most important points for a foreign tenant or owner. If you want to be informed in more detail, we recommend the more complete Info-File of the Institute, that will also keep you up to date on any changes.

Letting of a dwelling

The law differs between the letting of a dwelling, and other types of letting. A dwelling is normally your main residency. Other types of letting can be the letting of a garage, premises for business activities or cultural purposes, or it can be what we can call 'tourist letting' for shorter periods. However, if a dwelling has a garage, and this is mentioned in the contract, also the garage comes under the category of "dwelling".

The rules for the letting of a dwelling were changed with the new law that took effect from 1st of January 1995. The new law established a set of transition rules for the dwellings let out under previous legislation, and the new rules to be applied for the future.

For an owner, it is very important to know that a letting contract for a dwelling meant to last only for a year, can be prolonged for up to 5 years. This prolongation does not apply to a tourist letting, where the letting period is expressed in days, weeks or months, where the tenant does not bring any furniture or equipment and where he keeps his permanent dwelling somewhere else.

The only kind of dwelling exempt from this law is a "luxury dwelling" with more than 300 m2 or with an annual rent of more than 5 million pesetas. For such lettings the stipulations in the contract are deciding, and only if no contract exists, the stipulations of the law will apply.

The prolongation for 5 years

If a shorter period of letting has been agreed in the contract for a dwelling, but the tenant wants to extend it, he has the right to do so by staying put. If he wants to move out as agreed, he should notify the owner in writing 30 days before the agreed letting period ends. The 5 years starts from the day the tenant took posession of the dwelling.

The owner can refuse the automatic prolongation of a letting contract, if he needs the dwelling himself for permanent residency, and if this has been stated clearly in the letting contract. This only refers to the owner himself, not to his family, unless they live there with him.

Even after the 5 year period, the owner has to communicate in writing to the tenant that the contract will be terminated. If not, the tenant may stay for another year and so on for up to 3 additional years.

If the tenant wants to move before the end of the letting period agreed in the contract, he must communicate this to the owner and pay part of the rent for the remaining time, if this has been agreed in the contract. If the tenant only leaves the dwelling and stops paying, the owner has the right to sue him for damages.

In case of a prolongation of the letting, the rent can be adjusted in accordance with an inflation index published by the Government each year. The owner can only demand the higher rent after he has communicated the increase to the tenant in proper form.

You should also be aware that if you want to sell the dwelling while you have a sitting tenant in it, the tenant has a "derecho de tanteo", the right to buy the dwelling on the same conditions you offer to another buyer.

The lettings contract

As you understand from what you have read so far, it is necessary to make a proper contract for letting or renting of a dwelling, even if the law also allow verbal agreements. That such a verbal agreement exists, can be proved by the tenant living in the dwelling, and by payment receipts.

Be aware that any clauses written into a contract that go against the stipulations of the law, are automatically nul and void. So it does not help an owner to stipulate in the contract that the tenant renounces on his right to the automatic prolongation.

FIPE has fair contract models for letting of dwellings as well as for tourist lettings. You may use these models, or ask a lawyer to assist you. Such a letting contract need not be signed in front of a notary, only if you want it registered in the property register. In some autonomous regions they have special registries for long-term letting contracts.

The rent can be agreed freely between the owner and the tenant. It is normal that a deposit be paid on a letting. For a dwelling the law has established a deposit equivalent to one months rent. In some autonomous regions it is obligatory for the owner to hand over this deposit at a special office of the administration, together with the contract. The rent must be paid within the first 7 natural days of each month, meaning in advance, in the form agreed between the parts.

"Tourist lettings"

A tourist letting is obviously not the letting of a permanent dwelling, and does not come under the law stipulations mentioned above. Instead, several of the autonomous regions have established special laws for tourist lettings. We recommend you find out the exact rules in the region of Spain where you have a property or want to rent an apartment or a house for vacations, to make sure it is done legally. In the following, we refer to the law on tourist letting in the Valencian region, number 30 of 1993, as an example.

According to this law, all owners who rent out apartments or houses for tourist purposes, must be registered with the Dirección General de Turismo in the Valencian government, or any of their local offices. The law contains certain quality requirements for the accommodation and the tourist authorities will make an inspection.

Also, the agencies habitually involved in letting out tourist accommodation must register their activity, and the properties they offer for rent. An owner who offers to rent more than 5 units, is considered an agent and must also register.

If an individual owner let out his apartment or house through an agency, the obligation to register the property for letting purposes rests with the letting agent, not with the owner.

Taxes on letting

If you make a letting contract for a permanent dwelling, and want to have the contract registered, you must first pay the tax called Impuesto de Transmisiones Patrimoniales (ITP). To pay this tax to the tax authorities of the regional government, you must first calculate the total rent for the period of time the contract stipulates. Then there is special scale for the taxes to be paid in accordance with the value of the contract. For an apartment rented out for one year at 300 Euro per month, the tax is only 14,50 Euro.

But in addition to the ITP, the owner must also include the income from the letting on his yearly Income Tax Return (Renta) and is under the legal obligation to make regular tax payments to the Hacienda, depending on the form of letting.

More information:
FIPE has a fair letting contract for long term as well as tourist letting in various languages, and also a more detailed Info-File on Letting & Renting available to our members.