Author: José S.
Profession: Lawyer
Completed cases: 225
José Antonio is an experienced lawyer in Alicante with over 10 years of expertise. He specializes in property transactions, contractual disputes, family law, inheritance, and business formation, providing expert legal advice to English-speakers.

If you are an expat interested in buying Spanish property, it is useful to have a general understanding of Spanish property laws, to ensure you avoid making a poor investment.

Of course, to describe the property laws of any country could fill volumes, so here we shall restrict ourselves to discussing the new Housing Law introduced in 2023 and the Horizontal Property laws in Spain and how they regulate the rights and obligations of property owners insofar as they affect the shared enjoyment of common areas in urbanisations or buildings containing apartments. As a result they impact most people who own property in Spain.

As one of several Spanish property lawyers, at Advocate Abroad, this is only one of many articles about other areas of Spanish law that affect property buyers in Spain, such as the property purchase process, property taxes and the overall costs of buying property in Spain

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1. New Regulations

The current socialist government in Spain, under pressure from its left-wing government partners have enacted new laws this year.

The new Spanish housing law - Law 12/2023 has, according to its promoters in the Spanish parliament the intention of giving effect to the right to adequate housing, contained in the Spanish Constitution.

It is particularly targeted at those groups considered to be vulnerable, typically those considered to bear economic vulnerability and its reach is broadly two-fold, impacting those areas where the State has an influence in the provision of housing stock - to increase the supply of affordable housing - as well as controlling rental prices which, along with property prices, have surged in recent years. The government's objective is to support those renting property in Spain, by restricting increases in rental prices in certain circumstances.

Therefore, for the purposes of this article, the main impact of the new law will be on rental property owned by Expats, with increased regulation of rental agreements that could potentially affect rental income for those involved.

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2. Restrictions on Rental Prices in Stressed Areas and Large Landlords

It is to be noted that the new housing law regulations on increases in rental prices makes reference to areas considered 'stressed areas', or places where it is difficult to find a rental property at an accessible monthly rent. These are to be found not just in large cities but also in some tourist hotspots dotted around the Spanish Costas.

Another important distinction lies in the amount of rented property owned by the landlord - with any individual or organisation renting out five or more properties subject to greater obligations.

These two factors determine the application of the new law, such that, either a small or large landlord who has properties located in a 'stressed area' may only increase the rental prices each year by a new rate, as determined by the Spanish tax authorities., thus doing away with the previous system of increases determined by the official rate of inflation.

It is immaterial if the property is being rented to a new tenant, with the new rental prices tied to the previous contract.

In areas that are not considered to be 'stressed', only large landlords are impacted by this restriction, with the restrictions to be determined by regional authorities.

3. Other Changes

Other notable changes brought in by the new law are that the landlord must pay any Spanish estate agents bills for marketing the property - the tenant can no longer be made to pay this cost.

Additionally, new surcharges to the Spanish council tax (IBI) are to be levied on any properties left empty for extended periods of time. This will not affect properties that are used for periodic holiday letting or for the owner's own holiday purposes.

Finally, the new new housing law aims to provide greater protection against eviction for those groups of tenants considered to be vulnerable. Typically this would envisage elderly tenants, those with young children or with disabilities.

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4. Tax Benefits introduced by the New Law

The new law attempts to take a carrot and stick approach by offering increased tax deductions for landlords. Unfortunately, these have not been specified, but in the draft law the government has stated a desire to offer up to 90% tax deductions, depending on the status of the tenants, with preferential tax treatment where the tenants are among vulnerable groups.

It remains to be seen whether the new laws will have the desired effect and indeed, the law could foreseeably be overturned in the near future, should the current Opposition party in Parliament win the next election.

However, as it may have an impact on expats buying property in Spain, it is certainly information worth having. If you are currently renting out a property in Spain, and have entered into a rental agreement with a tenant, a Spanish lawyer will be able to advise you on the impact of the new law.

The provisions of Law 12/2023 enter into force on May 26th 2023, except for those relating to tax incentives for landlords. For a fuller treatment of this topic, see property tax in Spain.

5. Buying Property with a Sitting-tenant

In Spain, the legislation that regulates leases is the Law of Urban Leasing: Ley 29/1994 - Ley de Arrendamientos Urbanos (LAU).

This law establishes that the duration of a lease shall be that period which the two parties to the lease have freely agreed, renewable annually for a minimum of up to three years. To this rule there are two exceptions:

  • Where the tenant decides not to renew the lease, with an obligation to inform the landlord of an intention to quit the lease with at least the minimum notice period of 30 days before the end of the contact term or one of the renewal periods. If the tenant wishes to terminate the lease earlier, this needs to be carried-out in compliance with the terms of the lease for such contingencies, with the possibility that the landlord may be entitled to compensation for lost rental payments under the lease.
  • The second exception arises where, at the end of the first year of the lease, the landlord expresses the need to obtain vacant possession of the property in order that they themselves, their children or spouse can live there. In this case, a notice period of two months is required.

Where the landlord is selling Spanish property that is rented out, in the first place, it is necessary to inform the buyer of the fact that the property is subject to a lease. If the buyer wishes to proceed, notwithstanding the fact that the property is rented to a tenant, the conveyance of the property may proceed as it would otherwise. 

In this case, the buyer assumes the role of landlord previously held by the seller (this change is required to be communicated to the tenant) and therefore find themselves in the same legal position with regard to the tenant as the previous landlord.

If the buyer does not wish to buy the property because it is subject to a lease, should it be the case that only a short period of time remains before the lease can be legally terminated, it may be convenient to wait and notify the tenant that you do not wish to renew the lease. If this is not the case, then the only remaining option would be to negotiate with the tenant, given that they are entitled by law to reside in the property for the lease period, renewable up to three years.

A different situation entirely arises where the tenant fails to pay the rent or defaults on other obligations established in the lease, whereby the landlord must initiate eviction proceedings as well as an additional claim for outstanding rent.

It is important to bear in mind that the tenant, once informed of the intention of the landlord to sell the property, has a right of first refusal to acquire the property on the same terms as offered, though this right may be expressly waived by the tenant if the terms of the lease so include it.

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6. Common Errors to Avoid

Buying a property with a sitting-tenant is only one of a number of costly errors that can easily be made when acquiring a property in Spain - or indeed in any country. It's simply an easier mistake to make when you are in a country in which the laws are unfamiliar to you. 

As a general rule, take the following steps, and you should have nothing to worry about:

  • Conduct thorough due diligence to verify property ownership and legal status.
  • Understand all associated tax obligations.
  • Ensure all contracts are reviewed by a qualified legal professional.
  • Be aware of regional variations in property laws.
  • Factor in additional costs such as notary fees and registration charges.

7. Forms of Property Ownership in Spain

Understanding the various property ownership structures in Spain is crucial for making an informed decision. 

Options include:

Sole ownership: this option is straightforward but may entail higher tax liabilities, 

Joint ownership: can be shared between spouses or business partners, offering potential tax benefits. 

Ownership through a company: provides limited liability and tax advantages but involves more complex administration. 

Each structure has its own legal and financial implications, and choosing the right one depends on your individual circumstances and investment goals.

8. More Transparency in Property Transactions through Legislation

Recent updates to Spanish property law have introduced significant changes aimed at enhancing market transparency and revising property tax regulations. 

Notable amendments include adjustments to capital gains tax rates, as outlined in the Royal Decree-Law 3/2020, which modifies the calculation of taxable gains for property sales, potentially increasing tax liabilities for certain transactions. 

Additionally, stricter disclosure requirements have been implemented through the Law 11/2021 on measures to prevent and combat tax fraud, mandating comprehensive reporting of property transactions to ensure compliance and prevent money laundering. 

These changes are designed to promote fair practices and protect buyers' interests. 

Staying informed about these legal updates is essential for navigating the property market effectively and ensuring compliance with the latest regulations, such as the Law 13/2015 on mortgage market reform, which aims to increase transparency in property registration and transactions.

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9. Horizontal Property Law in Spain

Apart from the new laws affecting landlords in Spain, an existing law that affects all home owners in Spain is the Horizontal Property Law. Here we will be detailing various aspects of the Community of Property Owners - as regulated by the Horizontal Property Law - a fundamental institution in Spain that exists to regulate the rights and obligations of the individual owners of properties in a building or within a number of buildings included in a single community or urbanisation. In particular, I will lay out:

  • The structure and office holders
  • Rules that regulate meetings and decisions taken by the Community of Neighbours
  • Liability for Community payments and unpaid instalments

10. The Structure

The Structure of Communities of Property Owners In Spain all Communities of Property Owners are regulated by legislation, specifically Ley 24/1960: Horizontal Property Law, except in Catalonia where such communities are regulated by the Catalonian Civil Code. In addition, each ‘Community’ can have its own statutes, though these must always respect the legislation. 

A Community of Owners is formed by the entire group of owners of homes, commercial properties and any other unit found within a building or urbanisation and which are capable of being utilised independently with its own exit either to a common area within the building or urbanisation or to the public highway. The structure of a Community of Owners may be described as follows: 

  • The President and the Vice-Presidents, 
  • The Secretary,
  • The Administrator, and 
  • Meeting of the Community of Owners. 

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11. The President of the Community of Owners Association

The President must be one of the property owners and is elected either by ballot or by a draw of lots. The person elected may be excused from the office only by providing appropriate reasons before a Court of 1st Instance. 

The President is the legal representative of the Community both in and out of Court. The office of Vice-President is optional and should the Meeting of the Community of Owners decide to name one, then the process is the same as for electing the President. 

12. Secretary and Administrator

The roles of Secretary and Administrator may be exercised by the President, except if this is prohibited by the Statutes of the Community or if the same is agreed at the Meeting of the Community of Owners. The Secretary and Administrator may be the same person or different people, and need not be one of the property owners. 

Therefore, a professional such as a Registered Estates Administrator or other business dedicated to this type of activity may be named as being responsible for these roles. Practice teaches that external management by a local solicitor in Spain or other property expert is most of the time the best performing formula. All the officers of the Community must be named within a period of one year, unless the Community statutes establish a different time period. Administrator’s Functions

  • Safeguard and ensure the proper functioning of the property and it’s installations.
  • Prepare the Community running costs for submission to the Meeting of the Community of Owners.
  • Attend to the maintenance of the building, undertaking any repairs that are urgently required.
  • Overseeing any works that need to be carried-out, including payments to workers.
  • Acting as Secretary to the Meeting of the Community of Owners if no-one else has been designated for this task.

13. The Annual Meeting

Functions of the Meeting of the Community of Owners

  • Appoint the officers of the Community of Owners
  • Approve the accounts and the income and foreseeable costs
  • Approve any proposed refurbishments to be carried out
  • Approve and update the Community Statutes and any Rules of Living in the Community
  • Decide any other matter of interest to the Community

In this way, while the Community of Owners operates day-to-day through it’s President, and it’s Administrator, really it is the individual property owners, meeting together, who make the decisions and who have the ability to make agreements on behalf of the entire Community. 

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14. Common Ownership

Upon buying a property in Spain in an urbanization, the new owner also becomes the owner of a fraction of the common areas of the complex. The common areas are split into hundredths and each owner has a specific number allotted to them, typically according to the size of the property that they own in the complex. 

Of course, with ownership comes responsibility and there is an annual fee to be paid in order to maintain all the common areas and amenities. The fee paid by each owner corresponds to the number of shares in the complex that they have been allotted. The number of shares that have been allotted to each property can be discovered by checking the title deeds of the property. 

15. Meetings

When buying a property in Spain, then the legal responsibilities of the owners may often end at the boundaries of their residence. However, it is more usually the case, especially in Spain, that the property, whether an apartment or a detached residence, is located within an urbanization. 

The owners of property within residential complexes that provide shared amenities for example a porter service, lifts, swimming-pools and grounds maintenance etc. are responsible financially to maintain those shared facilities. 

To manage such matters, each building complex or urbanization has a Community of Owners, which will have a President and a Secretary and will hold meetings each year to discuss and decide on issues of mutual interest regarding the maintenance of the community fixtures and amenities. 

There are a number of important aspects of this responsibility, and to make sure that new owners of property in Spain are aware of these issues. Each Community of Owners is regulated by the 'Ley de Propiedad Horizontal' legislation of 1960, as revised by legislation in 1999. The annual general meeting held each year is when the officers of the community are elected and when they must provide the yearly accounts which describe in detail how the fees have been spent in the previous year and the budget for the following year is set. 

The basic objective of the annual meeting is to decide on all the most important questions that impact on the organization and functioning of the community. Six days notice must be given to each owner regarding the holding of a general meeting. 

The decisions of the meetings are taken by a vote, with each owner's vote being weighted according to the number of shares they have been allotted in the community. A simple majority is normally sufficient for most decisions, and if an insufficient number of owners attend the meeting to provide that majority a second vote may be held half an hour later that only requires a simple majority of those present. 

The decisions reached must be written down in minutes, and a summary of the decisions must be sent to each owner for it to have effect in law. If an owner has an objection to any decision, they must formally protest within 30 days. 

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16. Obligations of the Community of Owners

The community of owners is obliged to carry out the building work and repairs necessary from time to time to adequately maintain the fitness for purpose of all buildings, with particular regard being hard to structure, safety, accessibility and habitability. 

Any owners who object to or delay the carrying-out of such repairs can be held personally liable for any administrative penalties suffered by the community. The community is also required to carry-out alterations necessary to provide access to the building for any disabled person or persons over seventy years of age who are living there, where the cost does not exceed the amount of three months' community fees. 

A common issue that can affect communities of owners is the failure of one or more of the owners to pay the annual community fee. It becomes the responsibility of the community to pursue such debtors, eventually via the courts if necessary. Before getting to that point, the community must have reached the decision to deal with the debtor at a legally convened meeting and have communicated this decision to the debtor-owner in the prescribed manner. 

17. Owner's Obligations to Private Property

Each property owner may make those alterations they consider appropriate to their property as long as no alterations are made to the common structure of the building, nor any detrimental impact on the properties of the other owners. 

Property owners may not carry out any activities (or professions) within their dwellings that are prohibited by the statutes of the community of owners or which may be described as dangerous, damaging or detrimental in general. Any other owner may formally complain to the President of the Community of Owners about any such activity, whereupon the President shall request the immediate cessation of all such activities before initiating legal measures approved by a meeting of the community of owners. 

Each owner should also maintain their property in a good state such that no damage is caused to other properties as a result of failure of any installation in their property. 

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18. Owners Obligations Regarding Common Areas

Any area of the building or urbanization that is not reserved for the exclusive use of the individual owners is by definition a common area, available for use by all. Common areas are normally one of four possible types:

  • Physical structures (foundations, pillars, floors, façades)
  • Installations, Conduits (Electrical installations, Guttering)
  • Community Areas (Swimming-pools, playgrounds, gym areas)
  • Service Areas

Each property owner has the right to use and enjoy common areas of the building or urbanization in common with the other property owners. However, they may not alter any common area and if there is an urgent need to repair a common area this should never be undertaken privately but communicated to the administrator of the community. 

Property owners must consent to access to their private property where necessitated to carry out work necessary to maintain common areas. Should the community vote to install common telecommunication equipment, they may not insist that those owners who voted against should pay a proportional part of the cost. However, should those who voted against the installation decide at a later date that they wish to benefit from it, then they may do so by paying the requisite amount with legal interest added.

19. Frequently Asked Questions

What are the rules for property ownership in Spain?

Spanish law permits an unlimited number of owners on property title deeds. This can help distribute the inheritance tax burden among multiple owners. Foreigners can also own property in Spain via a company, often for tax efficiency or business purposes. This can be done by registering a foreign company or creating a Spanish entity. Additionally, non-EU nationals may own property in Spain, though will require a visa to do so. The Golden Visa and non-lucrative visa are the most popular options currently, in 2024.

What is the new law on renting property in Spain?

The new property rental law in Spain (Law 12/2023 of 24th May 2023)  introduced by the current Socialist government aims to increase the rights of vulnerable tenants, although it could be argued that its biggest impact has been to prevent landlords from evicting unscrupulous tenants who refuse to comply with the terms of their rental agreement. It is uncertain what the long-term effects will be since it would appear that many smaller landlords are opting to sell their properties due to the greater perceived uncertainty introduced by the new laws.

What is the new housing law in Spain in 2024?

Effective from 2024, the revised Housing Law in Spain introduces a series of new regulations and tax incentives aimed at addressing increasing rental costs. As stated earlier, the law seeks to promote affordable housing for young tenants and protect the most vulnerable groups. These changes are designed to provide economic relief and ensure more equitable access to housing across the country, though their full impact remains to be seen. 

What are the new rules for buying property in Spain?

For British citizens, now considered non-EU nationals post-Brexit, buying property in Spain involves additional requirements. You must obtain an NIE number, which is your unique identification number for legal purposes. You need to demonstrate sufficient funds to buy the property and cover associated costs. Additionally, you may need to apply for a visa or residency permit if you plan to stay in Spain for more than 90 days within a 180-day period.

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