For part 1 in this series visit Renting Your Property - Part 1
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Legal period extension on home rentals. Five years
What is that of the five year extension?
Simple: A protection for home rentals in order to make them extendable in time. I explain: If the renting period is under five years, once the period expires, this will be obligatorily and legally extended for year periods till reaching those 5 years, unless the tenant stated to the landlord (at least 30 days before the annual automatic and legal extension) he does not want to stay in the property for longer. The exception to this general rule is that the owner can set an express mention in the contract regarding his need to use the property for personal use before those 5 years time’s period. Therefore the exception to the continuation of the renting for personal use of the tenant is just the justified need of personal use of the owner.
Once the 5 years are reached, the landlord can cancel or oppose the renovation of the rental contract with a one month’s notice to the tenant. If this previous notice is not formalized, the rental contract is extended for three years unless tenant communicates to landlord a will for not staying. This extension cannot be turned down by the landlord.
If there is no mention of specific time period in the renting contract, this will be of one year.
Rental guarantee deposit
When signing the contract and by legal imperative, the tenant needs to hand over to the landlord a cash rental deposit of one month’s rent in order to guarantee any damage caused in the property by the tenant. The damage needs to be proved as not being the consequence of the habitual use of the house.
This cash will be given back to the tenant once the house is given back in perfect state after the renting period. If damages have been caused, the cost of the repair of these will be deducted from the deposit amount. This deposit cannot be used to pay rental instalments. The deposit can be asked back if not given to the tenant after the letting, interests will be charged. The updating of the deposit amounts and rents can be done after the first five years of renting.
Rent
Rent is freely agreed by parties. Unless a different thing is accepted by the parties, the rent is paid in a monthly basis and must be done within the first 7 days of each month. The landlord can never ask for advanced payments of more than one month.
Rent payment can be done where and how the parties agree. If nothing is stated in the contract regarding this, the payment must be done in cash and at the rented house. A receipt must be given to the tenant, unless the payment can be proved by a different means (i.e. Bank transference receipt).
During the first 5 years of contract, the rent will be updated according to the Consumer Price Index (IPC) published by the National Institute for Statistics. After those first five years, the updating can be done in a different way, but generally this IPC index is used after the first 5-years period.
The updated rent needs to be communicated to the tenant and will be requirable one month after this communication.
Written by
Maria de Castro
Lawyer
Maria de Castro is a Spanish Lawyer and the Director of the Law Firm www.costaluzlawyers.es.
She specializes in advising private foreigners in Spain and making the Spanish adventure a good dream. You can contact her at mldecastro@costaluzlawyers.es