The housing rental process
Practical information for renting a home
After the housing offer and search process, once we have reached an agreement between the owner and the tenant, either privately or through a public rental program, the contract is signed. This contract will be the link between the landlord and the tenant.
In the formalization of the housing rental contract, it is mandatory for the tenant to deliver a deposit equivalent to one month's rent. The owner must deposit the deposit at the Social Housing Agency of the Community of Madrid and the tenant, in turn, must pay the Property Transfer Tax (ITP). In case of conflict between the parties, and if the arbitration clause has been included in the contract, you can go to the Arbitration Council.
In the case of protected housing, the lease contracts must include mandatory clauses and must be visaed by the General Directorate of Housing and Rehabilitation. In addition, the agreed monthly payment will be limited to a Maximum Rent.
In any case, if you need help to rent your home or to find a rental home, the Community of Madrid puts at your disposal the Rent Plan, as an intermediary service in the lease.
Content of the contract
What is it?
The rental contract is the link between the lessor (who assigns the use of the dwelling) and the tenant (who acquires the use of the dwelling), by which the lessor transfers the use and enjoyment of a real estate (the dwelling) to the tenant for a certain period of time, while the tenant agrees to pay the rent freely fixed between the parties, and to return the property as received at the conclusion of the lease.
Said contract will be used as evidence in the event of possible discrepancies that may arise during the term of the lease.
The rules relating to the rental of housing include furniture, storage rooms, parking spaces and other dependencies, leased spaces or services provided as accessories to the home.
Required data
- Identity of the contracting parties: lessor and lessee
- Identification of the farm or rented housing
- Duration agreed to the contract
- initial rent
- Clauses that the parties have agreed
Energy Efficiency Certificate
The lease agreements entered into as of 1 June 2013, buildings or homes, the owner must have the Energy Efficiency Certificate.
Duration of the rental contract
According to Law of Urban Leases, it is established that the duration of a rental contract will be that freely stipulated by the contracting parties.
Lease contracts entered into under the LAU as of March 5, 2019
The Urban Leasing Law, modified by Royal Decree Law 7/2019 of March 1, establishes some general conditions regarding the duration of the contract, such as the following:
The duration of the lease will be freely agreed by the parties. If this is less than five years, or less than seven years if the lessor is a legal person, when the contract expires, it will be obligatorily extended for annual installments until the lease reaches a minimum duration of five years, or seven years. years if the lessor is a legal entity, unless the lessee informs the lessor, at least thirty days prior to the date of termination of the contract or any of the extensions, his desire not to renew it.
The term will begin to count from the date of the contract or from the placing of the property at the disposal of the lessee if this is later. Proof of the date of availability will correspond to the lessee.
Leases for which no term of duration has been stipulated or this is indeterminate, without prejudice to the right of annual extension for the lessee, in the terms resulting from the previous section, will be understood as concluded for one year.
Once the first year of the contract has elapsed and provided that the lessor is a natural person, the mandatory extension of the contract will not proceed when, at the time of its execution, the need for the lessor to occupy the leased dwelling before five years have elapsed in order to use it as a permanent dwelling for himself or his relatives in the first degree of consanguinity or by adoption or for his spouse in the event of a final judgment of separation, divorce or marriage annulment.
To exercise this power to recover the dwelling, the lessor must notify the tenant that he needs the rented dwelling, specifying the cause or causes among those provided for in the previous paragraph, at least two months before the date on which the housing is going to be needed and the tenant will be obliged to deliver the leased property within said period if the parties do not reach a different agreement.
If after three months from the termination of the contract or, as the case may be, from the effective eviction from the dwelling, the landlord or his relatives in the first degree of consanguinity or by adoption or his spouse had not proceeded in the event of a final judgment of separation, divorce or marriage annulment to occupy this by itself, depending on the case, the tenant may choose, within a period of thirty days, between being reinstated in the use and enjoyment of the leased dwelling for a new period of up to five years, respecting , in the rest, the existing contractual conditions at the time of termination, with compensation for the expenses that the eviction of the dwelling would have entailed up to the time of reoccupation, or be compensated for an amount equivalent to one month for each year that remain to be fulfilled until completing five years, unless the occupation had not taken place due to force majeure, understood as such, the impediment caused by those suc those expressly mentioned in regulations of the rank of Law to which the character of force majeure is attributed, or others that could not have been foreseen, or that, foreseen, were unavoidable.
If the expiration date of the contract, or any of its extensions, after at least five years have elapsed, or seven years if the lessor is a legal entity, neither party has notified the other, at least four months in advance of that date in the case of the lessor and at least two months in advance in the case of the lessee, their wish not to renew it, the contract will be obligatorily extended for annual terms up to a maximum of three more years, except that the lessee informs the lessor one month prior to the termination date of any of the annuities, his desire not to renew the contract.
Leases entered into as of June 6, 2013
The Law of Urban Leases, modified by Law 4/2013, of June 4, on measures to make the housing rental market more flexible and promote it, establishes some general conditions regarding the duration of the contract, such as the following:
- The duration of the lease will be freely agreed by the parties. If this is less than three years, when the expiration date of the contract arrives, it will be obligatorily extended for annual installments until the lease reaches a minimum duration of three years, unless the lessee informs the lessor, at least 30 days before the date of termination of the contract or any of the extensions, their wish not to renew it.
The term will begin to count from the date of the contract or from the placing of the property at the disposal of the lessee if this is later. Proof of the date of availability will correspond to the lessee.
- They shall be understood to be celebrated by one year the leases for which no term has been stipulated or this is indeterminate, without prejudice to the right of annual extension for the lessee, in the terms resulting from the previous section.
will not proceed mandatory extension of the contract if, once the first year of the contract has elapsed, the landlord informs the tenant that he needs the rented property to use it for permanent housing for himself or his relatives in the first degree of consanguinity or by adoption or for his spouse in the event of a final judgment of separation, divorce or marriage annulment. Said communication must be made to the tenant at least two months before the date on which the property is going to be needed and the tenant will be obliged to deliver the leased property within said period if the parties do not reach a different agreement.
- If the expiration date of the contract or any of its extensions arrives, after at least three years duration of that, neither party would have notified the other, at least with thirty days prior to that date, your will not to renew it, the contract will necessarily be extended for one more year.
Leases entered into until June 5, 2013
For those lease contracts concluded under Law 29/1994, until June 5, 2013, the Urban Leasing Law establishes some general conditions regarding the duration of the contract, such as the following:
- If the contract does not stipulate a specific term, it will be at least one year, extendable up to the five years, unless the tenant expresses his will not to renew (provided that he notifies the owner at least thirty days before the expiration date of the contract). Once the five-year term has elapsed, and if neither of the parties expresses its intention not to renew, the lease is extended in a mandatory manner for the lessor and, if the tenant so wishes, up to a maximum term of three more years.
The term will begin to count from the date of the contract or from the placing of the property at the disposal of the lessee if this is later. Proof of the date of availability will correspond to the lessee.
- Exception to the forced extension for lease contracts signed after December 24, 2009
The mandatory extension of the contract will not proceed when, at the time of its conclusion, the need for the landlord to occupy the leased dwelling before the expiration of five years to use it as a permanent dwelling for himself or herself is expressly stated in the contract. their relatives in the first degree of consanguinity or by adoption or for their spouse in the event of a final judgment of divorce or marriage annulment.
- Exception to the forced extension for lease contracts signed until December 23, 2009
The mandatory extension of the contract will not proceed when, at the time of its conclusion, the need for the lessor to occupy the leased property before the expiration of five years to use it as a permanent home for himself is expressly stated in it.
The rental price
The price of the rental or rent is set freely by the parties. During the term of the contract, the rent may only be updated by the lessor or the lessee on the date that each year of the contract is completed, in the terms agreed by the parties.
Lease contracts entered into under the LAU as of March 5, 2019
The Urban Leasing Law, modified by Royal Decree Law 7/2019 of March 1, establishes in relation to the updating of the rent of the contract, such as the following:
The rent will be that freely stipulated by the parties and unless otherwise agreed, its payment will be monthly and must be made within the first seven days of the month. In no case may the lessor require the advance payment of more than one month's rent.
During the term of the contract, the rent may only be updated by the lessor or the lessee on the date that each year of the contract is completed, in the terms agreed by the parties. In the absence of an express agreement, rent updates will not be applied to the contracts. In the event of an express agreement between the parties on any mechanism for updating monetary values that does not detail the reference index or methodology, the income will be updated for each annuity by reference to the annual variation of the Competitiveness Guarantee Index on the date of each update. , taking as reference month for the update the one that corresponds to the last index that was published on the date of update of the contract.
In any case, the increase produced as a result of the annual update of the income may not exceed the result of applying the percentage variation experienced by the Consumer Price Index on the date of each update, taking as the reference month for the update the one that corresponds to the last index that was published on the date of update of the contract.
The updated rent will be due from the tenant from the month following that in which the interested party notifies the other party in writing, expressing the percentage of change applied and accompanying, if the tenant requires it, the appropriate certification from the National Institute of Statistics. The notification made by note on the receipt of the monthly payment of the preceding payment will be valid.
Contracts entered into as of April 1, 2015
During the term of the contract, the rent may only be reviewed by the lessor or the lessee on the date on which each year of the term of the contract expires, in the terms agreed by the parties.
In the absence of an express agreement, rent revision will not be applied to the contracts.
In the event of an express agreement between the parties on any mechanism for reviewing monetary values that does not detail the reference index or methodology, the income will be reviewed for each annuity by reference to the annual variation of the Competitiveness Guarantee Index on the date of each review. , taking as the reference month for the review the one that corresponds to the last index that was published on the date of review of the contract.
Contracts entered into as of June 6, 2013
During the term of the contract, the rent may only be updated by the lessor or the lessee on the date on which each year of the contract is completed, in the terms agreed by the parties, or failing that, according to the general CPI.
In the absence of an express agreement, the contract will be updated by applying to the income corresponding to the previous year the percentage variation experienced by the national general index of the consumer price index system in a period of twelve months immediately prior to the date of each update. , taking as the reference month for the first update the one that corresponds to the last index that was published on the date of execution of the contract, and in the successive ones, the one that corresponds to the last one applied.
The date of update of the rent will be that in which one year of validity of the contract is fulfilled and will be due to the tenant from the month following its written notification.
In the lease contracts, the parties may freely agree that, for a given period, the obligation to pay the rent may be totally or partially replaced by the tenant's commitment to reform or rehabilitate the property under the agreed terms and conditions. At the end of the lease, the tenant may not request additional compensation for the cost of the works carried out on the property in any case. Failure by the lessee to carry out the works in the agreed terms and conditions may be cause for termination of the lease.
Contracts entered into until June 5, 2013
The rental or rental price is freely set by the parties. During the first five years of the contract, the amount of the rent will be the same as that which has been paid from the beginning, although it may be updated in accordance with the general CPI.
The date of update of the rent will be that in which one year of validity of the contract is fulfilled and will be due to the tenant from the month following its written notification.
After the first five years have elapsed, the lessor and the lessee may agree that from the sixth year the specific CPI for housing will be applied, which can be consulted in the National Institute of Statistics (INE)
How do I calculate the rent update?
You can calculate the update of the last 12 months that corresponds to your income on the website of the National Institute of Statistics, through the following link:
Works in rental housing
The Urban Leasing Law stipulates and regulates the works that must be carried out in a leased dwelling.
conservation works
The landlord is obliged to carry out all those repairs that are necessary to preserve the state of the dwelling in habitable conditions.
In case of having to carry out the works, the landlord has no obligation to increase the rent that the tenant pays as rent.
The lessor will not be obliged to pay for the repairs in the event that the deterioration is the responsibility of the lessee.
If the execution of the conservation works of the property cannot be delayed until the end of the lease, the tenant will have to accept them. In the event that these last for more than 20 days, the tenant has the right to have the rent reduced proportionally to the part of the house that he cannot use.
When the works must be carried out urgently (to avoid serious and immediate damage), the tenant may carry them out as long as they notify the owner.
If the conservation works have been ordered by the competent authority and their completion makes the dwelling uninhabitable, the tenant may choose to suspend or terminate the contract without the right to receive any type of compensation.
improvement works
Improvement works are those that affect the hygiene, health and comfort of the property and its occupants. These works must be paid for by the owner, although if they last for more than 20 days, the tenant and owner may agree that the rent be reduced proportionally to the part of the house that cannot be used.
The lessor is obliged to notify the lessee of the work in writing, at least three months in advance and must indicate the nature of the work, start date, duration and expected cost.
Likewise, the tenant has a period of one month from the notification to withdraw from the contract in the event that the works significantly affect the use and enjoyment of the leased property. In this case, the lessor will not be able to start the works until two months have elapsed since the withdrawal.
Tenant works
The Urban Leasing Law establishes some cases in which the tenant needs the landlord's written consent. This is the case of works that imply a modification of the structural elements of the dwelling or a decrease in its safety conditions and, therefore, imply the risk of collapses.
In the event that the tenant does not obtain the landlord's written consent, the latter may request the termination of the contract and demand that the tenant restore the dwelling to its original state or maintain the works if that suits him.
In addition, for lease agreements entered into after June 6, 2013, the parties may freely agree that, for a given period, the obligation to pay rent may be totally or partially replaced by the tenant's commitment to reform or rehabilitate the property under the agreed terms and conditions. At the end of the lease, the tenant may not request additional compensation for the cost of the works carried out on the property in any case. Failure by the lessee to carry out the works in the agreed terms and conditions may be cause for termination of the lease.
Expenses and taxation
query that tax benefits exist in the Community of Madrid.
The tenant of a dwelling must be responsible for the general expenses derived from its own use: water, electricity, gas, telephone, etc...
In addition, the landlord and the tenant of a dwelling may agree who should bear those expenses that cannot be individualized and that correspond to the dwelling. In this sense, the tenant may be responsible for the expenses related to the Community of Owners (in those buildings that are under the Horizontal Property regime), the Real Estate Tax (IBI), etc. In order for these expenses to be valid and passed on to the lessee, they must be recorded in writing and determine the annual amount at the date of the contract. In addition, these expenses may only be increased annually and by a percentage that does not exceed twice the percentage variation experienced by the CPI in the twelve months prior to the update.
Taxation for the tenant
After the approval of RDL 7/2019 of March 6, 2019 of urgent measures in the matter of housing and rent, the tax exemption on property transfers and documented legal acts, onerous property transfers modality, in the signing of housing leases for stable and permanent use referred to in article 2 of the LAU (lease that falls on a habitable building whose primary purpose is to satisfy the tenant's permanent need for housing), incorporating for this purpose section 26 in article 45.IB) of the TRLITPAJD.
Taxation for the owner
The amounts that the owners of the house receive for rent are taxed in personal income tax as income from real estate capital. However, the amounts received are deducted from the expenses that can be deducted for the lease and a reduction is applied to the resulting amount, which can reach 60%.
Energy Efficiency Certificate
Obligation
Since June 1, 2013, it is necessary for the owner of a home who wants to rent it to have both the Energy Efficiency Certificate corresponding to the home in question, as well as the Energy Efficiency Label that will be issued once obtained and that is It must be displayed in any offer and advertising that is made of the home.
However, the CEE was already required for the construction of new buildings since the entry into force of Royal Decree 47/2007, of January 19, which approves the basic procedure for the certification of energy efficiency of newly built buildings. Therefore, if you believe that said regulations could already be applied to the building in which your home is located, consult the Building Book that will contain the CEE. In this case, to obtain the Label, the presentation of said certificate will suffice.
What is it?
The certificate contains information on the energy rating of the property, which allows knowing its energy consumption and comparing it with other homes. It is valid for 10 years, after which time it must be renewed.
Delivery to the tenant
Once the lease is signed, a photocopy of the certificate must be given to the tenant.
How do I get it?
To request it, you can go to any competent professional for its issuance: architect, technical architect, engineer or technical engineer.
Processing
The owner must submit the Energy Efficiency Certificate before the General Directorate of Industry, Energy and Mines, attaching it to the existing application form for this purpose. More information about this procedure is available at the following link to the Portal del Ciudadano de la Comunidad de Madrid.