Housing law: what landlords renting out properties in Madrid need to know
Key points of housing law for landlords renting out properties in Madrid: contracts, rent reviews, management fees and how to stay properly informed.
Law 12/2023 on the right to housing introduced significant changes for those letting out their flat. Many landlords in Madrid have doubts about how it affects them: what they can charge, how rent is reviewed, or what obligations they have. In this guide we go through, in general terms, the aspects worth knowing, with one clear recommendation: before signing, check your specific case with a professional, because the regulations and how they are applied may change.
What the law regulates
The law sets out a state-wide framework for housing and amends aspects of the Urban Leasing Act. Among other things, it includes measures on rent reviews, estate agency fees, the definition of a large landlord and the possibility of declaring stressed residential market areas. The application of some of these measures depends on each autonomous community activating them.
Management and arrangement fees
One of the best-known changes is that estate agency management fees and contract formalisation costs are the landlord’s responsibility. In other words, if you use an agency to let your main home, its fees cannot be passed on to the tenant. It is worth bearing this in mind when calculating profitability.
Rent review
The law introduced temporary limits on annual rent reviews and provided for a new reference index for updates. Check the rent review clause in your contracts and confirm which index applies at any given time, as this has changed over time.
Stressed areas and large landlords
The law allows stressed areas to be declared, where additional rent restrictions may apply, especially for those classified as large landlords. If you are letting in Madrid, check at any given time whether there is any declaration affecting your property and whether you fall within any of the categories defined by the regulations.
Duration and extensions
Main home rental contracts retain minimum terms and extensions in favour of the tenant, and the law provides for exceptional extensions in certain cases. Before planning to sell or move into the property yourself, review the agreed term and the notice periods.
Good practice for landlords
1. **Use an up-to-date contract**, adapted to current regulations.
2. **Pay the deposit** to the relevant body of the Comunidad de Madrid.
3. **Choose the tenant carefully**, checking solvency and references.
4. **Consider rent guarantee insurance** for extra peace of mind.
5. **Record the condition of the property** with an inventory and photographs.
6. **Set a realistic rent**, based on market data.
Letting or selling?
Some landlords, faced with the changes, wonder whether it is still worth letting or whether they would prefer to sell. Both options may make sense depending on your situation. To compare them, you can calculate the sale value and indicative rent with our free online valuation tool.
How UBICASA can help
At UBICASA we can help you let your flat in Madrid with up-to-date contracts and tenant selection, or sell your flat if you decide to change strategy.
This article is for information only and does not constitute legal advice; always consult a lawyer on the current regulations. Contact us Monday to Friday from 10:00 to 15:00 and from 16:00 to 19:00.