The demand to rent property in Spain has been growing for years. Among expats with investment properties in Spain this is not news, they have long been tapping into this market for short-term and long-term rentals. But many people with second homes in Spain who are less able to make use of their property as a result of covid-19, are now considering renting out their property to earn some extra income.
The key to bringing their properties to the market is to be able to rent the house successfully and safely, so Finaer, a company specialising in providing tenants, landlords, and real estate companies with guarantees in rental contracts, has drawn up a series of recommendations to take into account before renting your property. For example, they recommend making an inventory of the goods in the flat, determining who will be responsible for paying for the utilities, or establishing specific clauses in the contract if necessary, among other things.
Here, we will summarise 10 practical tips for landlords that will also benefit their tenants, so as to avoid possible problems and misunderstandings during the duration of the rental contract:
The certificate of occupancy, in effect
Before renting a property, it is important to check the condition of the property and make sure that you have the certificate of occupancy, which certifies that the property meets the necessary requirements for renting it. This is a document that you should have obtained in the process of buying your property. In the case of a propert that is being rented, the document is a means of protection for the owner in the event that the tenant decides to terminate the contract unilaterally, leaving the property in an uninhabitable condition.
Make an inventory of assets
The next recommendation is to draw up an inventory of everything that is in the property, from electrical appliances to furniture. These are of course things that the tenant will be able to use during the time he or she lives there. This document, explains Finaer, "will be an annex to the rental contract that will be useful in the case that once it has ended, there is any damage to the furniture that can be claimed. In addition, it is advisable to accompany the document with pictures".
Determining the payment of utilities
Once the property has been rented, the landlord and tenant must decide who will be in charge of the utilities. And there are several alternatives when it comes to paying for the utilities. If the landlord decides to maintain ownership, he must keep the supplies in his name, and he can pay the bills himself and then pass the cost on to his tenant, or maintain ownership, but provide the tenant's account number to the companies. In this case, the landlord would not have to take responsibility for possible non-payments by the tenant. Another option would be to hire a specialised company to take care of the management of possible non-payment of bills.
Determining the payment of property taxes
One of the most frequent doubts that crops up regarding rental properties is who is responsible for the taxes on the property, such as the IBI or the rubbish tax. The reality, Finaer stresses, is that both parties can agree on who is responsible for the payment of these charges, but whatever the decision, it must be reflected in the contract to avoid misunderstandings in the future. It is worth noting that as the landlord you will be required to file for the NRIIT, though whether you were renting or not this would be the case.
Establish prohibition clauses in the contract, if necessary.
If you are renting out your own property, you may have some stipulations on how you want it to be treated by your tenants. For example, you may pprefer that your tenants do not live with animals, a common prohibition clause in rental contracts. Requirements such as these should appear as a condition of the contract. Similarly, Finaer insist that all landlords should incorporate a clause prohibiting subletting so that the tenant cannot re-let the property to a third party.
Payment guarantees
In the event that the tenant needs to have a guarantor to guarantee payment of the rent, it must be specified that the guarantor extends his or her guarantee for the entire period of the rental contract. Otherwise, the landlord will not be able to demand payment of the rent jointly if the contract is extended beyond its original term. In addition, for the landlord's security and peace of mind, it is worth considering a rental default insurance policy in case your tenant becomes a defaulter.
One month's deposit
In long-term contracts, by law, the tenant must provide one month's rent as a deposit. In shorter term agreements, this deposit will be the equivalent of two months rent instead. In addition, there are other mechanisms to guarantee the payment and maintenance of the property, such as the payment of two months as a maximum guarantee added to the rental contract or another number of months' rent, as agreed between the parties.
Direct contact via email
Finaer insists that one of the best ways to facilitate communication between the two parties is to include a contact email within the rental contract. This will facilitate the resolution of any problems and will avoid resorting, for example, to the use of a burofax to communicate the non-renewal of the contract.
Strictly comply with the deadlines of the regulations
The Law on Urban Leases (LAU) is very clear regarding deadlines. For example, the deadlines for compulsory compliance with the contract, the minimum rental period and the deadlines for the tenant to pay the rent.
Deduction for rent
And finally the last of Finaer's tips to bear in mind is the possibility for the landlord to deduct housing expenses when filing their tax return. Currently, the landlord can deduct up to 60% of the rental income, regardless of the age of the tenants. Deductible expenses include improvements that have been made to a property (for example, the purchase of a new household appliance), the property tax (IBI) or the rubbish tax.
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