In Mallorca, as in the whole of Spain, all essential rental regulations are summarised in the Ley de Arrendamientos Urbanos (LAU) rental law. This law has been in force since 1995 and replaced older laws, which focused particularly strongly on the rights of tenants, with the consequence that due to the legal situation the renting of own properties was highly unattractive for many Spaniards. The result was a negligible share of rental apartments in the real estate market. By comparison, this figure was 17% in 2013, compared with 83% for condominiums. The European average is 30% of rental apartments. The Spanish market did not necessarily lack objects, only incentives and a corresponding legal framework for landlords, so that many preferred to leave their apartments vacant rather than rent them out on unfavourable terms.
The Rental Act of 1995 and in particular some new provisions of June 2013 are intended to ensure greater flexibility for both parties and a balanced protection of their rights. The expected effect: Liberalisation of the Spanish housing market.
Anyone who wants to rent a property in Mallorca could benefit from this, because the new law wants to motivate more private owners to rent out and the situation on the market could improve as a result. But attention: The regulations of the LAU are not applicable to all types of housing and tenancies. Excluded are commercial tenancies as well as luxury living spaces and short-term rentals, for example within the scope of holiday rentals. Furthermore, existing rental agreements remain unaffected by the new regulation. However, if you have already rented an apartment, you can agree with your landlord on a new version of the contract in accordance with the regulations in force since 2013. Here is an overview of the most important points of Spanish tenancy law and what you as the tenant must pay attention to.
Rental agreement: What has to be considered?
Important to know: In Spain, the rental agreement is informal, i.e. it can also be concluded verbally and legally. However, it is of course recommended that both parties agree on a written wording in order to have more legal certainty, especially in possible disputes. In particular, questions regarding the deposit and the amount of rent should always be clarified in the rental agreement, as should the exact address and size of the rented property, including the cadastral number, which allows a clear assignment. While both natural persons and legal entities may act as landlords, only natural persons are permitted as contractual partners on the tenant's side. However, married couples or shared flats can also be accepted as contract partners here, for example. One change resulting from adjustments made in 2013 is the future permissibility of an e-mail address, which is indicated instead of a postal address for the delivery of messages between the contracting parties.
Rent increases: What is permitted?
Due to the changes in the Rental Act, the rental agreement is to be relatively freely structured by both contracting parties, i.e. no concrete agreements are prescribed by the state. However, there are legal regulations with regard to possible increases: These may only be carried out once a year. Unless otherwise agreed in the contract, the amount is based on the consumer price or cost of living index IPC (short for índice de precios de consumo). This means that a rent increase of as many percentage points is permissible as the corresponding values of the IPC have changed. The IPC that was the most current at the time the contract was concluded is used as a reference. If the landlord, in Spanish arrendador, has made structural improvements, an increase in rent is permissible for the first time after three years, with which he can refer to these improvements. Although this increase may be based on the capital that had to be spent on these improvements, the maximum permissible limit is a maximum of 20% of the rental payment due at that time. It should also be noted that public subsidies must be deducted from the capital spent. When the rental payment is due can be determined individually in each rental agreement. As a rule, a monthly advance payment is agreed in the first seven days of the calendar month. Payment can be made by bank transfer or in cash (then the place of payment has to be the rented apartment, and of course the landlord is obliged to confirm).
Rental period: What is usual and allowed?
The term of the lease is laid down in Article 9 of the LAU. Whereas a minimum period of five years applied before 2013, this has now been reduced to three years. The official idea behind this is to take account of a short-term change in the tenant's living conditions in a more modern way: those who have to change their job and move to another location, for example, will benefit from the new regulation. But of course the landlord also benefits from this regulation. It should be noted that the landlord can assert his own use after the end of the first year of tenancy, which means that the tenancy agreement can be terminated by the tenant after only one year. If the rental contract stipulates a term other than three years, the principle of tacit renewal must be observed: If you as a tenant do not cancel at least thirty days before the end of the term stated in the contract, the contract is initially extended by one year until the minimum term of three years has been reached.