Important to know: In Spain, the tenancy agreement does not have a prescribed form, meaning it can also be legally concluded orally. However, it is still recommended that both contracting parties agree on a written version to have more legal certainty, especially in possible disputes. In particular, questions of the deposit and the rent should definitely be clarified in the tenancy agreement, as should the exact address and size of the rented property, including the cadastral number, which enables a clear assignment.

While both natural and legal persons can act as landlords, only natural persons are permitted as contracting parties on the tenant's side. However, married couples or shared flats, for example, can also be included as contracting parties.

One change that has resulted from adjustments in 2013 is the future admissibility of an email address, which is specified instead of a postal address for the delivery of communications between the contracting parties.

Due to the changes in the tenancy law, the tenancy agreement can be designed relatively freely by both contracting parties, meaning that no specific agreements are prescribed by the state. However, there are legal regulations regarding possible rent increases: these may only be made once a year. Unless otherwise agreed in the contract, their amount is based on the Consumer Price Index or Cost of Living Index IPC (short for índice de precios de consumo). This means: a rent increase is permitted by as many percentage points as the corresponding IPC values have changed. The IPC that was most current at the time of the conclusion of the contract is used as a reference.

If the landlord, in Spanish arrendador, has carried out structural improvements, a rent increase is permissible for the first time after three years, where he can refer to these improvements. Although this increase may be based on the capital that had to be spent on these improvements, the permissible maximum limit is a maximum of 20% of the rent due at this time. In addition, it should be noted that public subsidies must be deducted from the capital spent.

When the rent payment is due in each case can be individually determined in each tenancy agreement. Usually, a monthly prepayment is agreed within the first seven days of the calendar month. Payment can be made either by bank transfer or in cash (then the place of payment has to be the rented property, and of course there is then an obligation for the landlord to provide a receipt).

The duration of the tenancy is set out in Article 9 of the LAU. While a minimum term 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 circumstances in a more timely manner: anyone who has to change jobs and move to another location, for example, benefits from the new regulation. But of course the landlord also benefits from this regulation. It should be noted that the landlord can claim owner-occupation after the end of the first rental year, which means that the tenancy agreement can be terminated by the landlord after just one year. If a term other than three years has been agreed in the tenancy agreement, the principle of tacit renewal must be observed: If you as the tenant do not give notice of cancellation at least thirty days before the end of the term stated in the contract, the contract will be extended for an initial period of one year until the minimum term of three years has been reached.

A deposit is mandatory. The amount of the deposit is usually one or two months' rent; the exact amount is specified in the tenancy agreement. The new version of tenancy law from 2013 stipulates that the deposit may be updated for the first time after three years of tenancy, which means that with each subsequent extension of the tenancy, the contracting parties can insist on a corresponding adjustment of the deposit. However, it should continue to be the equivalent of one to two months' rent. If the contracting parties have not agreed anything specific with regard to the mechanisms for adjusting the security deposit, it will be adjusted in accordance with the regulations for agreed rent adjustments. These aspects are regulated in Art. 36 of the LAU.

If the landlord initiates eviction proceedings, you will — if they are successful, which is almost always the case — have to bear the resulting court costs. The latter is automatically the case if you do not appear at the court hearing. At the same time, however, it is also possible to seek an out-of-court settlement, e.g. by using mediation.

Another reason for the termination of the tenancy can be the aforementioned registered personal use of the property by the landlord. Whereas before 2013 this had to be stipulated in the contract from the outset, this is no longer necessary; instead, after the first year of tenancy, the landlord can register his intentions with a notice period of at least two months and terminate the contract for this reason. However, he must then actually implement this personal use, i.e. he or family members must move into the residential property. Otherwise, the tenant has the right to claim damages.

The Spanish tenancy law, which has been in force since 1995 and last updated in March 2019, attempts to protect both contracting parties equally — unlike earlier versions, which focused mainly on the tenant as the contracting party to be protected, but thereby also indirectly generated disadvantages for them: Due to the unfavourable conditions for landlords, many hesitated to offer their properties for rent, so that the rental market, already battered by the long-term effects of the Spanish Civil War, stagnated further. The current tenancy law is to be seen as a reaction to those conditions and current developments.

With the LAU and its amendments, the prerequisites for a more flexible and dynamic property market have long been created, from which those who are looking for a residential property for a long-term tenancy in Mallorca benefit.

Even if there are a number of legal regulations and some peculiarities have to be observed in Spanish law, the general freedom of contract still leaves enough room to agree with the landlord on a tenancy agreement that meets the needs of both parties as far as possible.