Costa del Sol Property Blog

Many potential buyer’s of property on the Costa del Sol buy with the idea of renting. Either they are intending to have a buy to let, or simply wish to rent the property for the months they are not using it to mitigate some of their costs.

Many buyers though are not familiar with some of the potential pitfalls of renting out their property. Although the laws vary slightly depending on where you are in Spain, below you will find a general guide to rentals on the Costa del Sol.

Rental

First and foremost there are not limitations on how much rent a landlord can ask. Of course someone has to be willing to pay for you property on the Costa. But there is no legal reason to stop you charging what the market will pay.

Once the landlord and tenant have come to an agreement, by law the landlord cannot ask for more than 1 month security deposit, although this law is rarely enforced. Rental must be paid within the first 7 days of each month.

The landlord has the right to update the rent on a yearly basis for the first 5 years in accordance with the IPC (Consumer Price Index). Of course the tenet must be informed in writing.

After the first five years, the contract can be renewed at a new rent, but cannot be 20% higher than the current rent.

It is also worth noting, if the landlord makes improvements on the property the annual rent can also be increased (again no more than 20%). This annual increase is based on the legal interest rate, incremented by 3 points.

Deposits

As previously mentioned the landlord is only entitled to 1 month’s security deposit. This amount can not be increased during the first 5 years, regardless of increases based on the IPC.
Although in most cases the security deposit is held by the landlord, in many cases it is held by an independent third party. The deposit can, for example be held by the agency that rents the property, legal council or by the local housing department.

Landlord and tenant rights

When the property on the Costa del Sol is too be rented the landlord and tenant can write any duration into the contract, but it is worth noting, if the contract if for at least 12 months, the tenant has the right to annually extend for 5 years. Although in theory this is not valid if the landlord states in the contract that the dwelling will be recovered for personal residence on a given date. In most cases a landlord will limit the length of the contract to 11 months to prevent the tenant extending the contract. Although if on completion of the 11 month a new contract is drawn up with the same tenant, it can be viewed legally as a 12 month contract.

The tenant is entitled to terminate the contract before the five years period, by giving a minimum of thirty days notice.

If neither the landlord nor the tenant give notice to terminate the contract one month prior to its end, the contract is automatically renewed by yearly terms up to a maximum of three years.

If both the landlord and tenant agree to a contract for over a 5 year period for the Costa del Sol property, the tenant has the right to end the agree, but most give a minimum of 2 months notice. This is only applicable after the first 5 years of tenancy.

In most cases on the Costa del Sol, most rental agreements ‘holiday rentals’. These are contracts that are under 12 months do not suffer the same legislation as the previous mentioned agreement. The Tenant does not have the right to automatically extend the end of the current contract.

A landlord can evict a tenant and regain his Costa del Sol property on several grounds. These include failure to pay the rent, physical damage, immoral activities within the property and, subletting without permission. In any of these cases, a court order must obtain against the tenant.

I hope this information is of some assistance.

Regards
Andrew Belles