Sunday, 9 March 2014

Rent Before You Buy in Spain

It makes sense and gives you access to greater opportunities

There is a movement towards 'Rent before you Buy', in the Spanish housing market, not just for caution but also to ‘live the dream’ and find the best location and home. You should also get to know local practices and start to learn the language! I would be happy to send you any information on financial information if you email me.

· Sample the lifestyle

· Reduce the risk

· Find the most suitable property

This is a list of essential things you must do but it is not meant to be exhaustive.

1. Check that the landlord is the owner

To avoid dispute, you could consult the archives of the Land Registry. However,the owner can do this simply by showing the ‘Nota Simple’ which is a Land Registry certificate confirming the owner. 

2. Clarify fees and charges

Often, the letting of a property is done through an Agent. It is important to ensure with the owner of the property who bears the agent's cost. Establish clearly if the rent is paid directly to the owner or to the agent.

3. Negotiate

The rental market has changed in recent years and many homeowners who can’t sell their second home choose to rent it. Sometimes they prefer to receive a price somewhat lower than keeping it empty, but in general want a tenant to give them some security.
If the applicant meets the profile of a careful owner, there is often room to negotiate a fair rent.

4. Don’t make a verbal contract

The law allows verbal contracts but from the point of view of both owner and tenant, it’s a dangerous scenario. Memories change, relationships get strained and problems can arise.

5. Read the contract

It is one of the errors most frequently committed is to assume that the terms included are those which have been agreed beforehand or that they are ‘standard in Spain’. Always seek clarification and make sure you understand the terms

6. Sign all the sheets

Lawyers and real estate experts recommend signatures on each of the pages and schedules listed in the contract and not just in the first or last. This will prevent changes being made ‘post-contract’

7. Check the house for damage/faults

Sometimes the property you are going to rent is not in the very best condition but has cracks, damage or faults that can be ‘lived with’. These should be reflected in the lease, the landlord may refuse to make the arrangement once the tenant is already in the house. What's worse, some time later, is later conflict over the responsibility.

8. Inventory check

Likewise it is necessary to record the condition of the property, the contract should include clear, in an annex, the furniture, appliances, fixtures and fittings and their physical condition.
Make clear if the house is furnished, semi-furnished or unfurnished. This prevents the tenant after being blamed for having broken a device that was no longer in optimum condition and the owner is covered if there is something missing.

9.  Don’t leave anything to chance

The contracts should not leave anything to chance and everything should be reflected. It is worth anticipating all reasonable circumstances and ensure these are covered in the contract

10. Check everything that’s included or excluded

This is particularly pertinent to payment for services. The contract should cover all of the following, if pertinent;

Water, Electricity & Gas                 
Community or other Local charges
Taxes, but notably, IBI (Real Estate Tax) and IRPF (income Tax)

11. Avoid high deposits

Normally, one months deposit and rent paid monthly in advance should be seen as acceptable to both parties. There may be some concern when owners ask for high deposit.

12. Rent

Once the rent has been negotiated and agreed, it is important that the contract confirms the exact payment terms.

  • The day of the month that payment is made
  • The method of payment, preferably by bank transfer
  • The agreed currency. I know this seems odd, but if landlord and tenant are both British an arrangement could be made in sterling though clearly in Spain the payment should be in euros.

I also recommend that you have a copy of my post ‘Comprehensive List of terms and expressions translated Spanish to English’ which can be obtained from;

David Goodall
Financial Pages in Spain