Selling a rented property in Spain: the lease and the tenant's rights

Selling an apartment occupied by a tenant is entirely possible in Spain, but it follows rules that many foreign owners discover too late. Two of them can derail a transaction: the lease does not end with the sale, and the tenant holds a preferential right to buy. Ignoring them means risking a buyer walking away or, worse, a tenant stepping into the buyer's place after the signing.

The sale does not end the lease

The buyer generally steps into the landlord's shoes and takes over the running contract. Exactly how long they are bound to respect it depends on the regime applicable when the lease was signed: the Ley de Arrendamientos Urbanos (LAU) has been reformed several times, and the rules differ notably according to whether the lease was registered at the Registro de la Propiedad. The very first thing to do is therefore to date your contract, then have it checked which regime applies to it.

The tenant's pre-emption right (tanteo y retracto)

Before selling, you have to notify the tenant of your intention to sell and of the terms of the deal, first among them the price. The tenant can then acquire the property on the same terms (that is the tanteo) within a short legal window, of around thirty days.

Without proper notice

If that notification was not made, or was made in an incomplete or misleading way, the tenant keeps the right, after the sale, to step into the buyer's place by reimbursing the price paid: that is the retracto. In other words, a sale closed without proper notification remains open to challenge. This is why the notification is served in a way that leaves enforceable proof (a notarial act or a certified letter with attested contents) and why the buyer and their lawyer will insist on seeing it before signing.

The limits of this right

It may have been waived in the contract in the cases allowed by law, notably for long leases; it does not apply where an entire building is sold as a block to a single buyer; and its exact scope depends, again, on the regime applicable to the lease. None of these exceptions can be assumed: they are verified with the contract in hand.

A different buyer: the investor

An occupied property does not appeal to the same audience. You lose the buyer who wants to live there or spend holidays there (by far the largest group on the Costa Blanca) and you address an investor, who buys a yield rather than a feeling. That buyer looks at the rent, its regularity and the time left on the lease, and values the property accordingly. A well-run lease, with a reliable tenant and a market-level rent, is a selling point; an under-market rent still running for several years is a discount.

The rental file

So prepare a rental file as carefully as the property file: the signed contract and its amendments, proof that the fianza has been lodged with the relevant body of the autonomous community, the payment history, the receipts, evidence that the IBI and the gastos de comunidad are up to date, and the current insurance policy. Also state what becomes of the fianza: it follows the lease and must be passed on to the buyer, who will return it to the tenant at the end of the contract.

Showing an occupied home

The tenant lives there, and is not required to open the door at any hour. Access arrangements depend on the contract and on what the law allows; in practice, everything rests on a clear agreement negotiated in advance: fixed slots, reasonable notice, a limited number of viewings, sometimes something in return. A tenant faced with a fait accompli can make the property invisible, refuse photographs or discourage visitors, and that shows immediately in the pace of the sale. Conversely, a tenant who is informed and involved in the schedule becomes an asset, including in reassuring the investor who will buy.

Holiday lets

Those contracts do not fall under the residential lease regime and do not create the same rights for the occupant. On the other hand, the tourist licence attached to the property is an asset in its own right: the conditions for obtaining, keeping and transferring it are set by each autonomous community, sometimes by the municipality, and the community bylaws may themselves restrict it. Check all of that before making it a selling point in the listing.

Tax in the year of the sale

The rent collected up to the sale remains taxable (for a non-resident landlord it is declared through the Modelo 210), and the sale itself triggers the 3% withholding, the taxation of the capital gain and the municipal plusvalía. Be aware, too, that the depreciation claimed during the rental period can affect the calculation of the gain: this is a point to have checked by a gestor, as it sometimes changes the result appreciably.

Wait for the lease to end?

That widens the audience considerably and simplifies the transaction, but it has a cost: time, and market risk over that period. The right trade-off depends on the level of the rent, the time left to run and your own horizon.

These points are indicative and the exact regime of your lease should be confirmed by an abogado. At Alveo Properties, we read your rental contract before going to market, arrange the notification to the tenant in the proper form, and position the property towards the audience that will actually buy it: an investor for an occupied property, a resident or holidaymaker for a vacant one.