OWNERS’ INFORMATION AND CONTRACT MODEL
OWNERS’ INFORMATION AND CONTRACT MODEL |
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Renting property is extremely simple: As simple as including your listing at www.CasaSpain.com with a single click in order to start receiving calls and/or e-mails. However, we list below a series of recommendations for those of you that like 'to have all loose ends tied', as a result of concerns or questions we have received over our many years of experience in this business.
1. WHAT IS TOURIST OR VACATION RENTAL?
The definition of 'periodic rental' can be analysed from two points of view:
a)
Tourist legislation:
In all Autonomous Decrees governing tourist rentals these are defined in accordance with standard characteristics as those 'properties', 'housing', 'accommodation units', 'habitable units' which, with certain fixtures and fittings and services, and habitually and by virtue of payment of a price, are targeted at serving - through the assignment of use thereof - as accommodation for tourists or holiday purposes.
Within the concept of "tourist rentals", is the classification or subdivision of rentals into "apartments" (with the distinguishing mode of the "studio"), "bungalows" and "villas", in accordance with the different terms and characteristics thereof.
b) Urban lease legislation:
Elsewhere the 1995 Urban Release Act implicitly defines holiday rentals as those that affect their building for use other than housing; viz., the main purpose of which is not the satisfaction of the permanent housing needs of the tenant.
2. WHAT ARE THE LEGAL REQUIREMENTS TO RENT MY PROPERTY IN SPAIN?
1. Requirement for administrative authorisation.
In accordance with the governing regulations and classification of tourist apartments enacted by the self-governing regions, the exercise of the activity is conditioned to obtaining the corresponding administrative authorisation beforehand, even alluding to infiltration and providing for certain sanctions for those clandestine tourist rentals. However, clandestine tourist rentals account for a considerable number and an updating of state legislation (more than 30 years old) has been requested from different areas of the sector, to bring it into line with current times, new needs, new demands and users’ preferences.
For this reason the demands of regional legislation are only fulfilled by operating companies, apartment complexes, rural accommodation and those other establishments that engage 'professionally' in the business.
Elsewhere, there is no reason why an individual cannot rent their property for different purposes; not just tourist purposes. For this reason, it is often very difficult for a penalising administration to demonstrate that the rental of the property occurs through 'tourist use' or is of an 'habitual' nature.
What is clear is the periodic rentals are governed by the Urban Lease Act:
The current Urban Lease Act no longer distinguishes between accommodation leases and business premise leasing and the like, which it used to do, but does now differentiate between accommodation rentals (targeted as satisfying the ongoing housing needs of the tenant, their spouse or dependent children) and leases for other purposes, or which encompass second residence leases or periodic leases (such as holiday ones). The peculiarity is that with regard to periodic rentals private individuals are totally free to regulate the relationship as opposed to the more governed habitual residence rental contracts.
2. Written agreement requirement.
In accordance with the Urban Lease Act there is no need for the contract to be formalised in writing. Moreover, in practice it is not usual for written contracts by and between individuals with regard to holiday rentals.
However, we recommend regulating all aspects of the relationship through a contract, in which the parties are free to set down the conditions. It not only helps the lessor to specify under what conditions the property is let and under what conditions it must be returned, but also enables fixtures and fittings to be inventoried, duly guaranteed by the deposit and, in extreme cases, will facilitate judicial disputes.
Elsewhere, if no contract is formalised in writing and it is rated as a 'periodic rental', all of the prescriptions of accommodation rental will doubtless apply, which are far more beneficial for the tenant. By way of example, the Urban Lease Act lays down a minimum duration of five years in benefit of the tenant, the right to purchase the property, if the tenant abandons the property their spouse or common-law partner may continue the lease contract, etc.
Because of its utility, we provide you with a model that may be useful.
3. The need to issue an invoice and provide tax returns.
The decree that regulates the obligation for businesses and professionals to issue invoices obliges lessors of tourist accommodation to issue an invoice and charge VAT at 7%. However, if the property is targeted exclusively at housing; viz "there is no obligation to provide complementary services that fall within the realm of the Hotel industry" (enquiry 577 to local tax authorities –AEAT-dated 28/01/04) the operation will be exempt.
In conclusion, if no additional services are provided, such as periodic cleaning, supply of towels, laundry, etc., there is no need to charge VAT at 7% on the invoice, as it would be a non-tourist accommodation lease. If this is affirmative, you must:
Present form 036 to the AEAT tax authorities.
Charge 7% VAT on each invoice.
Make quarterly tax returns using form 300 and annual summaries using form 390 (except for large corporations, which use a different system).
We recommend that you check with your tax consultant or get free information by calling the AEAT helpdesk on 901 33 55 33.
3. WHAT SERVICES MUST MY RENTAL INCLUDE?
The main conclusion to be taken from examination of the general technical requirements and minimum services set forth in the governing decrees of the different self-governing regions is that, generally speaking, the aforementioned technical requirements and minimum services must be considered sufficient to satisfy the holiday or tourist accommodation needs of the occupants. However, there are differences in the regulations of each self-governing region.
The rental is going to be targeted at tourist accommodation as an alternative to hotel accommodation, offering a series of conveniences that these do not have. The market requires ongoing improvements to quality and a larger number of conveniences to attract clients. Photographs and videos will provide an image that will be fundamental when it comes to getting customers.
4. WHAT PRICE SHOULD I ASK FOR??
Obviously, the rental price must be in accord with the fixtures and fittings and services with which the properties are equipped and the degree of compliance with the general technical requisites and classification established in each self-governing region, although the criteria are not uniform:
Once the price has been set, all of the regional regulations set forth the obligatory nature of suitable advertising of the prices to be received by the company exploiting the accommodation services, and specify whether or not VAT is included. The principle of publishing prices satisfies the need of notifying prices to the competent local authorities and also the need of placing the corresponding price lists in visible areas of the establishment to enable users to be aware of these.
They also regulate the minimum services (supply of water and electricity, cleaning, rubbish collection, use of swimming pool, gardens, etc.) which, apart from the accommodation, must always be included in the unit and global daily price paid for the tourist apartment. It is also necessary to appropriately inform clients of the price of any complementary services that exist and which require separate payment.
Tip: Check the advertisements already published in CasaSpain.com and put the price that is in line with the quality of the property and its location with regard to places of interest.
5. FOR RENT BY DAYS, WEEKS OR MONTHS?
This depends on the accommodation to be rented and the time the owner wants to spend administering bookings, accompanying the customer to pick up the keys, cleaning, maintenance and, of course, the return to be obtained and the risk to be taken on.
In high season it is easier to rent for fortnights or even months, although daily rental is more profitable. Standard practice is to rent for days or weeks and provide discounts for longer rental periods.
In low season it will be easier to rent on a daily or weekly basis although we also recommend the option of renting by month for those that rent for non-tourist purposes, such as employment or other reasons.
6. WHAT ARRIVAL AND DEPARTURE TIMES CAN I GIVE MY PROPERTY?
Generally speaking, regulations provide for occupation to commence at 5 p.m. (6 p.m. in Catalonia) on the first day of the contracted period and end at 12 noon (10 a.m. in Valencia), on the day on which this period finalises.
We recommend that the contract establishes the obligation to leave the apartment immediately once the contracted period is finalised, with compensatory clauses of up to three times the price corresponding to excess days.
7. CAN I ASK FOR ADVANCE PAYMENT OR A DEPOSIT?
The DEPOSIT is useful insofar as it ensures that the property is handed back in optimum conditions once the rental period has finalised. This is why it must be paid on handover of the keys or on formalisation of the contract.
The Urban Lease Act sets forth that the deposit is obligatory and its exclusion cannot be agreed. In the event of rentals for use other than accommodation, the deposit is set at an equivalent of two monthly payments. However, any astute reader will notice that this is disproportionate for those short-term rentals. Although there are no legal solutions in this regard, accepting a lower amount or specifying in the contract that the deposit is proportional to the duration of the contract would act as a guarantee and any appeal would have to be accepted fairly in the event of any hypothetical sanction.
Elsewhere, due to the fact that, regrettably, lessors have refused to return the deposits for unjustified reasons, the State and also the self-governing regions have established the obligation that the lessors of urban property deposit the amount of the bonds with them, without any accrual of interest. It will be the Government that returns the amount once the contract has finalised. Breach of this obligation constitutes an administrative infringement that can be penalised.
There is also the ADVANCE PAYMENT which will later be discounted from the full amount of the rent. This acts as compensation for the lessor in the event of any booking cancellation. Advance payments are usually a maximum of 40% of the total price when it is for less than one month; 25% in bookings of one month; and 15% when longer periods are involved. The contract conditions must make it very clear under what conditions the advance payment will be used to guarantee the booking, if any part of it will be returned, etc.
Moreover, some tourist decrees set forth that in the event of cancelling bookings, and unless agreed otherwise, the operating company must reimburse the customer with the sum received in advance or by way of a deposit, with the right to retain certain amounts as compensation which differ depending on the self-governing region in question and the time when the cancellation is made. For example: In the Canary Islands this amount is set at 5% of the deposit when cancellation is made more than 15 days prior to the date of taking up occupation; 50% when it is carried out between 7 and 15 days; 75% when cancellation is made between 6 and 4 days beforehand; and 100% when cancellation is made 3 or 4 days beforehand.
For increased security, the contract should regulate the booking requirement up to a specific time and forfeiture of the advance payment.
Without prejudice to the freedom to make agreements, the regional regulations set forth that the obligation of reserving accommodation shall cease, with forfeiture of the advance payment, when the accommodation is not occupied within 48 hours following the agreed date (in the Basque Country before 12 p.m. the day following the date set for occupation), unless the client confirms their arrival within this period and this takes place before the amount of the accommodation for the days elapsed exceeds the amount of the deposit paid.
8. WHAT HELP CAN CASASPAIN.COM GIVE ME?
CasaSpain.com does not receive commissions or manage your rental, and you must therefore be available to take bookings, formalise the contract, hand over the keys, organise cleaning and maintenance, etc. If you are not interested in carrying out these tasks we can put you in contact with our collaborating agencies in the area, if there are any.
Our task will be to promote your rental through Internet, using graphic means, in four languages and with all the complements described in the Advertisers’ Area.
In exchange we receive a fixed price per year for the inclusion and maintenance of your advertisement >> Consult our price list..
9. AM I BOUND BY MY PROPERTY ADVERTISEMENT?
Advertising carried out through any means has contractual probative value and a binding effect by and between the parties thereto. As a result:
More specifically, the General Act for the Defence of Consumers and Users and the General Advertising Act recognise the foregoing rights and you must be especially scrupulous when it comes to defining the advertisement. You must likewise maintain your prices up-to-date using your advertiser’s code and correct any error as expeditiously as possible, using the means we place at your disposal.
Finally, you must warn of any especially relevant details that could cause inconvenience or discomfort in a type of accommodation, tourist properties, that are supposed to be properly furnished
Party of the first part, Mr/Ms ________, of legal age, with right of abode for the purpose of notifications in _______________ , and holder of passport or national ID document number____________( hereinafter referred to as 'the Owner').
Party of the second part, Mr/Ms ________, of legal age, with right of abode for the purpose of notifications in _______________ , and holder of passport or national ID document number____________( hereinafter referred to as 'the Tenant').
Both parties recognise the other's legal capacity for this act.
PROPERTY: Address:______________________
In the conditions and with the furniture and services whose description and photographs are shown at www.CasaSpain.com under reference ______ (see the printout attached to the contract).
The Property is clean, in a perfect state of use, upkeep and fit for habitation. Moreover, the supplies and services that the property has work properly. The Tenant likewise fully agrees to carry out the inventory that is attached to the contract.
II. Both parties have agreed to the periodic lease of the aforementioned Property, by virtue of which they set forth this contract, which will be governed in accordance with the following,
1. PURPOSE
The Owner hereby assigns the property described and the furniture described in Recital I to the Tenant, who accepts, on a periodic lease and with the duration that will be indicated to the Tenant. This lease constitutes a periodic lease for (holiday/occupational or other) reasons, pursuant to article 3.2 of Law 29/1994 governing urban leases, and under no concept or situation that occurs shall the lease that is subject to this contract be of an habitual nature.
2.1 The periodic rent net of tax is _______euros (7% VAT included), which shall be paid as follows:
2.2. A series of complementary services are also provided, and these are not included in the foregoing price:
2.3 Prior to arrival at the property, the Tenant shall surrender a deposit of_________euros, in accordance with the provisions set forth in article 36 of the Urban Lease Act, in proportion to the period of the lease. This deposit shall be returned on termination of the contract once the property has been checked.
The second payment and deposit shall be paid in cash on the first day of the period contracted once the lease contract has been signed. At this time, the owner shall hand over an original copy of the contract to the tenant, together with a set of keys and an inventory of the apartment.
2.4 Should the Tenant cancel the reservation there is a penalty that depends on the number of days remaining until the commencement of the rental period:
* More than 30 days: 50% of the advance.
* 15-29 days beforehand: 75% of the advance.
* Less than 14 days: 100% of the advance.
For these purposes the Tenant must notify cancellation in writing through any means that requires acknowledgement of receipt.
2.5 List of documents to be provided for formalisation of the contract.
- Photocopy of national ID document or passport.
- Photocopy of the first page of the savings book of the holder of the national ID document, for reimbursement of the deposit.
3.- TERM
This contract is granted for a period of _________ days from 5 p.m. on [date], and shall be automatically cancelled without the need to give any notice whatsoever at 12 p.m. on[date]. The Tenant must surrender the keys prior to this time.
The obligation to reserve the Property shall cease, with the loss of the corresponding deposit, when the Property has not been occupied within 4 hours following the day set for the occupancy, unless the client confirms their arrival within this term and the said arrival occurs before the amount corresponding to the accommodation for the days that have passed exceeds the amount corresponding to the deposit paid.
Failure to abandon the Property within the agreed term shall oblige the Tenant to pay a penalty equivalent to the amount corresponding to three times the daily rent, which may be required for weeks completed until the Property has been left completely vacant by the Tenant. This is without prejudice to the costs, expenses and other indemnifications this party is liable for, including lawyers and solicitors' fees, even when their intervention is not officially required, for each hour/day of delay.
The Tenant shall leave the property in the condition in which they found it, leaving it free from articles and belongings, with the services in perfect condition, together with the fixtures and fittings mentioned in Recital I, where no extension thereof shall be possible unless a written agreement is reached by and between the parties.
4.- OBLIGATIONS OF THE PARTIES
5.- WAIVERS
The Tenant hereby waives the rights set forth in articles 31 to 33 of the Urban Lease Act, and therefore the rights of leasing, subrogation, subrogation or transfer, whether totally or partially, right of first refusal, redemption and right to challenge the transfer.
6.- APPLICABLE JURISDICTION AND LEGISLATION
The Parties to this contract hereby submit to the jurisdiction and competence of the courts and tribunals corresponding to the location of the property, expressly waiving their right to any other privilege to which they may be entitled.
This contract shall be governed by the laws of Spain and, more specifically, by the current Urban Lease Act.
In witness whereof both parties ratify this contract and sign it in two counterparts and for a sole purpose, in the place and on the date ut supra.
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The Owner Signature |
The Tenant Signature |
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