Rental Contracts in Spain: What Tenants and Landlords Need to Know

If you're renting out property in Spain (or thinking about it) there are a few things about Spanish rental law that can catch landlords off guard. Not because the law is intentionally complex, but because it works differently than most people expect.

The Ley de Arrendamientos Urbanos (LAU) is Spain's rental housing law. It's been updated several times, most recently in 2019 and 2023, but there are still misconceptions floating around, especially in expat and international property circles. I see the same mistakes repeatedly: landlords who think they understand the rules, sign a contract based on outdated advice, and end up in a legal situation they didn't anticipate.

This article covers the most important things you need to understand if you're renting property in Spain, particularly on the Costa del Sol where I practice. It's not exhaustive — rental law could fill a book — but these are the points that matter most in real-world situations.

I. Contract Type: Permanent Housing Vs. Temporary Rental

Spanish rental law distinguishes between two types of contracts: vivienda habitual (permanent housing) and uso distinto de vivienda (which includes arrendamientos de temporada), in accordance with Articles 2 and 3 of the Ley de Arrendamientos Urbanos.

The key is understanding that duration doesn't determine the contract type. Purpose does. However, the classification isn't based solely on the stated purpose in the contract. According to consolidated Supreme Court doctrine, courts make a comprehensive assessment of all circumstances to determine the true nature of the tenancy.

Many landlords think that writing "11 months" or "6 months" on a contract makes it temporary. It doesn't. What matters is the tenant's actual situation.

Permanent housing (vivienda habitual) applies when:

• The tenant needs it as their primary residence

• They work here with an indefinite contract

• They're registered as a resident (empadronado)

• They have no other housing in Spain

Temporary rental (arrendamiento de temporada) applies when:

• The tenant has a specific, documented temporary need

• Student enrolled in a temporary academic program

• Worker on a fixed-term employment contract

• Person receiving temporary medical treatment

The contract should state the specific temporary reason: "Tenant requires housing for duration of academic year 2025-2026" or "Tenant temporarily relocated for employment contract ending 30 June 2026."

If the tenant's need is permanent — they live here, work here, have no other home — then it's permanent housing regardless of what the contract says. The court will look at the tenant's actual situation, not the label on the document.

Why this matters:

Under permanent housing contracts, pursuant to Article 9.1 LAU, the tenant has the right to remain for a minimum period of 5 years (or 7 years if the landlord is a legal entity). This operates through mandatory renewal for the landlord until these periods are reached, unless legal grounds for termination exist.

The tenant, however, has more flexibility. After the first 6 months, the tenant can terminate the contract at any annual renewal with proper notice (Article 11 LAU). The landlord cannot terminate before the full 5 (or 7) years unless the tenant breaches the contract (non-payment, damage, etc.).

In practical terms: the tenant can leave when they want (after 6 months). The landlord is locked in for 5 years minimum.

I've seen cases where landlords try to evict tenants after 11 months, thinking the contract is over. The tenant refuses to leave. The court reviews the tenant's situation, determines it's permanent housing, and rules that the tenant has 5 years. The landlord loses, pays legal costs, and the tenant stays.

How to create a valid temporary contract:

If you genuinely have a tenant with temporary needs, document it properly:

• Include enrollment documents, temporary work contracts, or medical treatment timeline

• State the specific reason in the contract

• The tenant should not register as a permanent resident

• The tenant should have a permanent residence elsewhere (their home country, family home they'll return to)

Without this, the contract will likely be classified as permanent housing if challenged.

II. Company Ownership: 7 Years, not 5

Here's something many foreign landlords don't know: if you own the property through a company (Sociedad Limitada or SL), your tenant doesn't get 5 years. They get 7 years.

Article 9.1 of the LAU establishes:

• Landlord = individual (persona física) → tenant has right to 5 years

• Landlord = legal entity (persona jurídica/company) → tenant has right to 7 years

This regime is a mandatory minimum, operating through compulsory renewal for the landlord until these periods are reached, unless legal grounds for termination exist.

The law assumes companies are professional landlords with more resources, so tenants get additional protection.

Many international buyers structure property ownership through a Spanish SL for tax or estate planning reasons. That's legitimate. But you need to understand that rental contracts under company ownership are automatically 7 years minimum, not 5. You cannot contract around this. It's mandatory law.

Article 9.3: "I Need the Property Back"

Article 9.3 of the LAU allows the landlord to recover the property at the end of the contract (year 5 or 7) if they need it for personal use or for a first-degree relative (spouse, children, parents).

Important: This need should be expressly stated in the contract itself to be exercisable, though recent reforms have made interpretation more flexible. It's still highly recommended to include it from the outset.

Requirements:

• Notify tenant at least 2 months before you need the property (not necessarily at contract end, but during the mandatory renewal period)

• Written notification (certified mail recommended)

• State who will occupy it (landlord or specific relative)

Seems straightforward. The problem arises when landlords lie.

I've seen this scenario multiple times, the landlord doesn't actually need the property, but wants the tenant out. Maybe they can rent it for more to someone else, or convert it to tourist rental, or just don't like the tenant. So they send the notice: "I need the property for my son."

The tenant leaves. Two months later, the property is on Airbnb. Or listed for rent again. Or simply empty.

Here's where Article 9.3 becomes expensive:

If the tenant discovers within three months that the property is not being used for the declared purpose, they can sue for Return of the property (court order) + Compensation.

This isn't discretionary. If the court finds fraud, that compensation is mandatory. Plus the landlord pays legal costs.

What counts as "not using it for stated purpose":

• Property listed for rent on any platform

• Property used for tourist rental

• Property remains empty

• Property used by a different relative than stated

• Landlord moves in briefly (2 weeks) then leaves — not genuine use

Tenants who know their rights document everything. They monitor the property. They check Airbnb, Idealista, Booking.com. They ask neighbors. They photograph the building. And if they detect fraud, they sue.

If you're going to use Article 9.3, it must be true. Your son or parent must actually move in. Register as resident. Pay utility bills. Live there for at least a year, not two weeks. Because if the court determines it was a setup, you don't just lose money. You lose the property too.

IV. Who Pays What: Agency Fees And Deposits

Since the reform introduced by Law 12/2023, the rules on agency commissions are clear, but many contracts still get this wrong.

Agency commission:

In permanent housing contracts (vivienda habitual), agency fees and contract formalization costs are mandatory paid by the landlord, regardless of who hired the agency. This is non-negotiable under the 2023 reform.

In temporary rental contracts (legitimate arrendamientos de temporada, not mislabeled permanent housing), you can agree that the tenant pays the agency fee. But it has to be genuinely temporary. If the contract is later determined to be permanent housing, that commission you charged the tenant can be reclaimed.

I've seen tenants who paid an agency commission on a contract labeled "11 months temporary," discovered it was actually permanent housing because their need was permanent, and successfully reclaimed the commission.

Deposits:

The mandatory security deposit (fianza) is one month's rent, deposited with the regional government agency, in accordance with Article 36 LAU. Everyone knows this.

What not everyone knows: In permanent housing contracts, you can request additional guarantees, but with limits. Maximum two additional months, and it cannot be cash deposited with the government. It must be in the form of a bank guarantee or deposit held outside the government system.

Note that this two-month limit applies specifically to permanent housing (vivienda habitual). For other uses (uso distinto), different rules may apply.

If you ask for "three months deposit" in a permanent housing contract thinking it protects you better, two of those months are not legal under the reformed LAU, and the tenant can reclaim them.

The rule for permanent housing: one month mandatory deposit, maximum two months additional guarantee (non-cash form), and agency commission paid by landlord. If your contract says otherwise, someone hasn't updated their template since the 2023 reform.

V. Common Situations And Practical Advice

Situation 1: You want to rent for just one year

If the tenant's need is permanent (they work here indefinitely, have no other home), you cannot guarantee one year. Your options:

• Accept 5 years (or 7 if you own through company)

• Tourist rental (VUT) if you have the license

• Temporary rental with documented temporary cause (student, fixed-term work contract)

There are no shortcuts. If you try to create a fake temporary contract and the tenant challenges it, you'll lose.

Situation 2: You need to sell the property

If you have a tenant with permanent housing contract, they can stay for the full 5 (or 7) years. You can sell the property, but the buyer inherits the tenant and the contract. This typically reduces the property value by 15-20%.

Your options:

• Negotiate with the tenant (offer compensation for early departure)

• Wait until the contract ends

• Accept the reduced price

You cannot force the tenant out just because you want to sell.

Situation 3: The tenant stops paying

Non-payment is grounds for eviction. The procedure is governed by Articles 250.1.1º and 440.3 of the Ley de Enjuiciamiento Civil (Civil Procedure Law). Typically, the process takes 6-12 months from first missed payment to recovering the property. Legal costs: €1,500-€3,000.

Important: The tenant has the right to "enervar" (halt) the eviction by paying the full debt before the trial, unless they've already done so in a previous eviction proceeding. This is a legal mechanism that allows tenants to stop the process by settling arrears.

During the eviction process, the tenant often isn't paying, and you're not receiving rent. This is why many landlords consider non-payment insurance (€30-50/month), though coverage varies.

Situation 4: You own multiple properties through an SL

If your SL owns more than 10 properties, you're classified as a "gran tenedor" (large landlord) under the 2023 law. Additional obligations apply. Most individual foreign investors don't hit this threshold, but if you're building a rental portfolio, be aware of it.

VI. Final Thoughts

Spanish rental law provides strong protections for residential tenants. This isn't arbitrary — it reflects policy choices about housing security. As a landlord, you're operating within that framework.

The key is understanding the rules before you sign a contract. Many of the problems I see are completely avoidable. They happen because landlords relied on outdated advice, or assumed the law works like it does in their home country, or tried to create workarounds that don't actually work.

There's a correct way to structure rental contracts in Spain. It requires understanding the distinction between permanent and temporary housing, knowing the mandatory durations, and accepting that certain protections for tenants are non-negotiable.

If you're about to rent out property and want to make sure you're doing it right, or if you have an existing contract and aren't sure what your rights are, it's worth getting proper legal advice. A one-hour consultation can save you years of problems.

The law isn't going to bend to fit what you wish it said. But if you work within it correctly, you can rent property in Spain without creating legal time bombs.

Need help with a rental contract? Whether you're a landlord setting up a new tenancy or a tenant questioning your rights, book a consultation.We'll review your situation and tell you exactly where you stand under Spanish law.

Article published March 2026. LAU most recently modified by Law 12/2023, of 24 May, on the Right to Housing (Ley 12/2023, de 24 de mayo, por el Derecho a la Vivienda). Legal references based on Supreme Court and Provincial Appellate Court jurisprudence 2015-2025.