Spain rental market tightens: non-payment insurance, bank guarantees and pay slips
Rental requirements in Spain are rising, demanding non-payment insurance, bank guarantees and pay slips, even as the new housing law takes effect without changing them.
English · Original discussion in Spanish · Published
Landlords tighten rules: non-payment insurance, bank guarantees and full financial disclosure
How much of your life must you reveal to sign a rental contract? As of May 2023, almost everything. Non-payment insurance, bank guarantees, the last three pay slips, employment history, bank statements, several months in advance, or a penalty for leaving early. These are the growing requirements landlords impose on tenants, and in theory, none are illegal. The housing law takes effect on May 26, 2023, without addressing these criteria.
What do landlords require to rent an apartment?
The catalogue has become standard. An ad asks for "proof of solvency and payment, previous rental references, indefinite employment contract, last three pay slips, employment certificate, and last tax return," all for an apartment that hasn't seen a coat of paint in decades for 1,000 euros a month. At the other end of the market, earning 1,500 euros and still being unable to rent a flat in Madrid.
A lawyer consulted summarizes it plainly: landlords hold the power. These practices may be lawful, but tenants have no choice but to accept them. One word sums it up: savagery.
Non-payment insurance: rising costs and disputed charges
Allianz states that contracting non-payment insurance has been steadily rising in recent months, attributing it to small landlords seeking peace of mind. There is a key difference: the owner contracting the policy implies assessing the tenant's solvency, whereas passing the cost as part of the monthly rent is another matter.
The cost varies. Against the drama of a lost pay slip, such a policy costs around 200 euros annually and includes a one-month waiting period. For a tenant already paying 900 euros in rent, plus deposit, agency fees, community charges, property tax, and utilities, the difference between paying rent and paying rent plus the landlord's safety net is the month itself.
Is it legal to pass non-payment insurance costs to tenants?
The Urban Leasing Act (LAU) does not state this explicitly. Article 20 allows agreeing that the tenant assumes general property expenses, and tenant unions argue that non-payment insurance is not a general expense. Article 36 allows additional guarantees beyond the deposit, limiting their value to two months' rent for contracts up to five years, or up to seven if the landlord is a legal entity.
A judge in Barcelona annulled clauses imposed by the Azora fund on a tenant in early 2023, marking the first time in Spain, including an abysmal rent hike and the non-payment insurance. Her reasoning: tenant insolvency is inherent to any rental contract. The comparison with car or crop insurance is obvious, as is the counterargument: an accident is inherent to driving, and the driver pays the insurance.
Landlord accounts: 700 euros yielding 300
The other side has its own arithmetic. A landlord calculates that with 700 euros in rent, they net around 4,000 euros annually, or 300 euros a month, after deducting 1,200 euros for community charges and property tax, plus other usual extras. Below that, they say, the apartment closes and sits empty. And someone putting a 200,000-euro property into the hands of a stranger wants to know who they are dealing with: guarantees exist across all sectors.
When legal risk rises, prices trinc. Regulating the market more, argue landlords, does not protect tenants: it reduces supply and makes what remains more expensive. The result is a landlord demanding more and a tenant who can pay but still fails the filter.
What the housing law changes from May 26, 2023
Little, in one specific detail. The new law reforms part of the LAU: property management and contract formalization fees are now the landlord's responsibility, not the tenant's. That is, the agency charges the owner. All other requirements, insurance, guarantees, and financial screening, remain where they were, in that gray area where the market sets the conditions and the law stays silent.
It remains to be seen if the effect ends up being the opposite of intended. The most repeated forecast is that the law will go "patch by patch," and each adjustment will add a new requirement to the next contract.
Renting a home has become an exam with a tribunal. The surprising part is not the syllabus. It is that the pass mark is set, curiously, by the one who collects the rent.
How much of your life must you reveal to sign a rental contract? As of May 2023, almost everything. Non-payment insurance, bank guarantees, the last three pay slips, employment history, bank statements, several months in advance, or a penalty for leaving early. These are the growing requirements landlords impose on tenants, and in theory, none are illegal. The housing law takes effect on May 26, 2023, without addressing these criteria.
What do landlords require to rent an apartment?
The catalogue has become standard. An ad asks for "proof of solvency and payment, previous rental references, indefinite employment contract, last three pay slips, employment certificate, and last tax return," all for an apartment that hasn't seen a coat of paint in decades for 1,000 euros a month. At the other end of the market, earning 1,500 euros and still being unable to rent a flat in Madrid.
A lawyer consulted summarizes it plainly: landlords hold the power. These practices may be lawful, but tenants have no choice but to accept them. One word sums it up: savagery.
Non-payment insurance: rising costs and disputed charges
Allianz states that contracting non-payment insurance has been steadily rising in recent months, attributing it to small landlords seeking peace of mind. There is a key difference: the owner contracting the policy implies assessing the tenant's solvency, whereas passing the cost as part of the monthly rent is another matter.
The cost varies. Against the drama of a lost pay slip, such a policy costs around 200 euros annually and includes a one-month waiting period. For a tenant already paying 900 euros in rent, plus deposit, agency fees, community charges, property tax, and utilities, the difference between paying rent and paying rent plus the landlord's safety net is the month itself.
Is it legal to pass non-payment insurance costs to tenants?
The Urban Leasing Act (LAU) does not state this explicitly. Article 20 allows agreeing that the tenant assumes general property expenses, and tenant unions argue that non-payment insurance is not a general expense. Article 36 allows additional guarantees beyond the deposit, limiting their value to two months' rent for contracts up to five years, or up to seven if the landlord is a legal entity.
A judge in Barcelona annulled clauses imposed by the Azora fund on a tenant in early 2023, marking the first time in Spain, including an abysmal rent hike and the non-payment insurance. Her reasoning: tenant insolvency is inherent to any rental contract. The comparison with car or crop insurance is obvious, as is the counterargument: an accident is inherent to driving, and the driver pays the insurance.
Landlord accounts: 700 euros yielding 300
The other side has its own arithmetic. A landlord calculates that with 700 euros in rent, they net around 4,000 euros annually, or 300 euros a month, after deducting 1,200 euros for community charges and property tax, plus other usual extras. Below that, they say, the apartment closes and sits empty. And someone putting a 200,000-euro property into the hands of a stranger wants to know who they are dealing with: guarantees exist across all sectors.
When legal risk rises, prices trinc. Regulating the market more, argue landlords, does not protect tenants: it reduces supply and makes what remains more expensive. The result is a landlord demanding more and a tenant who can pay but still fails the filter.
What the housing law changes from May 26, 2023
Little, in one specific detail. The new law reforms part of the LAU: property management and contract formalization fees are now the landlord's responsibility, not the tenant's. That is, the agency charges the owner. All other requirements, insurance, guarantees, and financial screening, remain where they were, in that gray area where the market sets the conditions and the law stays silent.
It remains to be seen if the effect ends up being the opposite of intended. The most repeated forecast is that the law will go "patch by patch," and each adjustment will add a new requirement to the next contract.
Renting a home has become an exam with a tribunal. The surprising part is not the syllabus. It is that the pass mark is set, curiously, by the one who collects the rent.
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (320 replies).
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