16 Feb Permanent Residence Lease vs. Seasonal Rental Contract
Permanent Residence Lease
vs
Seasonal Rental Contract
Did you know that the rental contract can vary depending on the intended use of the rental property?
A seasonal rental is perfect for those who need a place to stay temporarily due to work relocation, home renovations, or medical reasons. This purpose must be clearly stated in the contract, as it's one of the key requirements for it to be considered a seasonal rental and not a permanent residence lease.
Below, we detail the differences between both types of contracts so you can decide which one suits you best.
Duration
The duration varies significantly depending on the type of contract:
- In a seasonal rental, the duration is agreed upon by both parties and must be explicitly stated in the contract, including the start and end dates. The contract can be renewed for periods of equal length up to three additional times if needed by the tenant. It’s important to note that the law does not specify a maximum or minimum duration, as long as the start and end dates are provided, as well as the intended use of the rental.
- For a permanent residence lease, the duration is regulated by the Spanish Urban Leasing Law (LAU) and is set at one year, renewable annually for up to five years. If neither party states otherwise, the lease will automatically renew annually for an additional three years. With the new Housing Law, an extraordinary one-year extension has been added, which the tenant can request if they are considered vulnerable.
Use
- In a seasonal rental, the use must be justified by a specific need, whether it’s work-related, due to renovations in the primary residence, medical reasons, etc. This circumstance must be reflected in the contract.
- For a permanent residence lease, the primary purpose is to meet the tenant’s permanent housing needs.
Due to the new Housing Law, real estate agencies are not allowed to charge fees when signing a permanent residence lease, but they can charge fees for seasonal rental contracts.
Security Deposit
- For a seasonal rental, since it is not considered a permanent residence, the security deposit is two months’ rent.
- For a permanent residence lease, the security deposit is one month’s rent, and both parties may agree on any additional guarantees in cash.
From a tax perspective, if the contract is for a permanent residence, the landlord is taxed on 40% of the rental profit (income minus deductible expenses) in the next tax return. However, if it is a seasonal rental contract, the landlord is taxed on 100% of the rental profit.
Rent Guarantee Insurance
- For a seasonal rental, rent guarantee insurance cannot be contracted, but a surety bond insurance can be arranged.
- For a permanent residence lease, rent guarantee insurance can be contracted.
Remember! Law 29/1994 establishes specific rules for each type of contract. Get informed and choose the option that suits you best.
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