Current Spanish tenancy law

Tenants do not have to deal with Spanish tenancy law in Ibiza only when the termination of the rental contract is imminent, but already with typical questions such as repair costs, rent increases or the assumption of additional costs.

The Spanish rental law dates from 1994 and was reformed four years ago.

Since June 2013, Spain has introduced a number of changes to its tenancy law, which are intended to make it more flexible and create incentives in the housing market. For example, the minimum term of rental contracts has been reduced from 5 years to 3 years.

No form is prescribed for the tenancy agreement, but for reasons of proof one should insist on a written contract. It is advisable to state in the lease not only the exact address and number of square metres of the property, but also its cadastral reference number.

Tenants cannot avoid paying a deposit. As a rule, a deposit of two months’ rent is required. The deposit cannot be offset against the rent. For example, a tenant cannot stop paying the remaining rent two months before the end of the contract with reference to the deposit paid at the beginning.

Spanish tenancy law does not recognise a tenancy of indefinite duration. This would limit the owner’s right of ownership too much. Unlimited contracts are considered to be concluded for one year; since June 2013, long-term rental contracts have been valid for terms of up to three years. In the case of an implied contract term of three years, where neither the tenant nor the landlord terminates the lease, the tenant has the right to stay for an additional year. According to the law, anyone wishing to terminate in the case of an annual extension must give at least 30 days’ notice. The tenant or landlord is required to provide proof of receipt of the notice of termination. Therefore, it is essential to have the receipt of the notice of termination acknowledged or to send the notice of termination as a so-called “Burofax”, a court-proof registered letter.

In Spain, unlike many places in Northern Europe, no distinction is made between cold and warm rentals. The tenant pays electricity, gas and water depending on consumption. Other costs such as gardener, swimming pool or insurance have to be distinguished from this. The landlord can only pass on the additional costs to the tenant if this has been expressly agreed in the rental agreement. This also applies to the annual property tax (so-called “IBI”), which the landlord in Ibiza is happy to pass on to the tenant.

A further point of discussion is the so-called inflation compensation. The landlord can set an annual adjustment to the inflation rate in the contract. This is based on the most recently published annual index of consumer prices (so-called “IPC”).

Any repairs that may be necessary also create a potential for conflict. In Spain, it is distinguished whether a repair serves the maintenance of the property or the preservation of habitability. In the latter case, the landlord is in the obligation. In practice, however, the regulation is not so clear: if, for example, the boiler breaks down, then tenant and landlord would have to come to an agreement.

Tenants are urgently warned against reducing rent payments due to damage without consultation (keyword rent reduction). According to the Spanish law, the tenant has indeed a claim for damages, but if the tenant reduces the rent independently or even stops the rent payment completely, he runs the risk that the landlord will file an action for eviction and also sue for the outstanding rent.

The landlord can declare own use and terminate the lease prematurely. This only applies if the tenant is given at least two months’ notice and at least one year has passed since the conclusion of the contract.