How To Make A Rental Agreement: Step-By-Step Guide
To proceed to rent a home, a series of procedures must be carried out so that a property can be leased or enjoyed, among which is the rental agreement or lease agreement. It contains the terms and agreements that the interested parties have reached.
What is the rental or lease agreement?
A lease contract, also known as a rental contract, is a document in which the lessor and the tenant proceed to formalize an agreement by which the use and enjoyment of a property are transferred for a specified period of time in exchange for rent.
As with any other type of contract, the lease must include a series of conditions and characteristics that must be considered by both parties when formalizing it.
To guarantee confidence in a potential tenant, at EucarlRealty we offer a delinquency consultation service for individuals.
Types of a rental agreement
Contrary to what many people think, not all rental agreements are the same. In fact, depending on its duration and type of lease, we can distinguish between three main types of rental contracts. The most common is the habitual residence rental contract, the seasonal one, and the tourist one.
Among the main types of lease are the following:
The lease agreement of habitual residence
The first type of housing rental contract is intended for the leasing of habitual dwellings, understood as those properties in which the tenant will live permanently and for a long period of time.
This contract is regulated in the Urban Leasing Law of your country, which establishes different conditions for the rental according to the date it was signed after the changes suffered in recent years.
In its latest update, it was established that the minimum duration of a habitual residence lease is 5 years if the tenant so wishes. It is a contract that is exempt from VAT unless the property has a business use or is signed by a company also depending on the country.
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Seasonal rental contract
In this case, the seasonal housing rental contract is a type of lease in which the property does not act as a habitual residence, but rather as a temporary residence, whether for work, studies or holidays.
These leases are regulated, with a duration agreed by the owner and the tenant. In fact, the duration is the most important thing that must be reflected in it. This rental is exempt from VAT.
Tourist lease contract
The third of the main rental contracts is the one for tourist use. These are regulated by the current laws of each autonomous community.
One of its main characteristics is that it has a short duration and it is common for it to include hospitality services such as laundry, cleaning … These contracts may or may not be subject to VAT depending on whether they include hotel industry services and/or are provided by a company (taxed) or not (exempt).
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Other types of contracts
In addition to the above, we can find other types of rentals, among which we must talk about:
- Shared leasing: It is the usual one among students, young people, foreigners, displaced workers, and so on. This type can be distinguished between whether the responsibility for payment is individual or collective of the tenants.
- Rent with the option to buy: In the model of the rental contract with the option to buy, we have a double rental contract for a habitual residence for a specified period and, later, a second purchase agreement. The contract must include the price of the property, the monthly payment and the discounted part of the final price in the event that the sale is executed.
- Social rental: They are rented to individuals and families at risk of residential social exclusion.
Duration of the housing rental contract
According to current law, the duration is the one that is established in principle by the two parties involved, being of free decision. However, there are some differences between:
- Contracts of less than 5 years: Contracts of less than five years (in the case of individuals) or seven years (legal entities), will be forcibly extended if the tenant so wishes, regardless of whether the landlord does not want to. In this way, a contract with a duration of less than five years can be extended annually up to five years.
- Rental contract with an indeterminate term: In an apartment rental contract with an indeterminate term, this will be considered to be one year. In the same way, the same rule already mentioned of annual extension is applied until reaching five years. After this time, if there is no decision to cancel the contract by either party, an extension may be made up to a maximum of three years.
- Contracts of more than 5 years: In a housing rental contract that has a duration of more than five years, the lease will come to an end on the date that appears in it.
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Essential elements in a rental contract
When making a rental contract it is necessary to know the essential elements that must appear in it. These are the following:
- The parties: The parties must be mentioned in the contract, including both the tenant and the lessor’s data, that is, their addresses, document numbers, nationality, etc. In addition, with regard to tenants, all persons of legal age who will live in the property must be listed.
- Property: The rental contract model must include the information about the home that is made available to the tenant by the owner, including the complete and exact address.
- Rent: Rent is the monthly amount that the tenant must pay to the landlord. At this point, the payment method must also appear, either by bank transfer, in cash or another agreed method. The day on which the payment must be made must be specified.
- Duration of the contract: The housing rental contract must include the duration of the contract. The minimum duration is 5 years, with the possibility of renewing for three more years. Regarding the possible termination of the contract, the tenant can execute it in a time not less than 6 months and it must be stated whether he will have to pay any type of compensation for not respecting the agreed time.
- Guarantee: When this contract is drawn up, a clause should not be missing in which the guarantee is indicated. In addition, in each Autonomous Community, it must be deposited with the corresponding body.
- Additional guarantees: These do not appear in any legal rental contract, since this will depend on whether the landlord requested them or not.
- Works carried out: In general, who carries out the reforms in the property is the landlord. These works must appear in the contract together with the detail of the budget used. The tenant, on occasions, may also wish to make some kind of reform, although for this he must have the owner’s consent. This consent must appear in the rental agreement.
- Repairs and breakdowns: Every lease must include the obligations of the tenant and the owner with regard to the maintenance of the property. The owner will be the one who has to take care of the repairs unless the problem has been caused by a problem of misuse of the house. The tenant, on the other hand, must guarantee that he will keep the house in the condition in which he received it.
- Subletting: The subletting process is prohibited unless the property owner states otherwise.