Renting in Madrid: 6 legal mistakes nobody warns you about — and how to avoid them.

Prime Capital Estate | Madrid
3 days ago
3 min read

Real estate lawyer in Madrid advising clients on rental contracts, tenant rights and property law in Spain

What your estate agent doesn't always explain — but your lawyer should.

At our agency we guide clients through both buying and renting property in Madrid. Time and again, the most expensive problems don't come from the market — they come from the contract. Here are the six legal points most people overlook, and the ones that cause the most damage.

1. The type of contract changes everything

There are two main types of residential lease in Spain: the vivienda habitual contract, governed by the LAU with a minimum protection period of 5 years (7 if the landlord is a company), and the contrato de temporada (seasonal contract), designed for non-permanent stays. The problem is that many landlords use the second to avoid the obligations of the first. If you plan to live in the property as your primary residence, you are entitled to a long-term lease — regardless of what the first page of the document says.

Watch Out

A seasonal contract signed by someone actually seeking permanent residence can later be challenged in court.

But litigation takes time and money.

Far better to identify the issue before signing.

2. The deposit: what's legal and what isn't

The law allows one month's rent as a security deposit (fianza) for long-term residential leases. Additional guarantees — a bank guarantee or extra deposit — are legal if expressly agreed, but cannot be demanded unilaterally. Crucially, the deposit must be registered with the relevant regional authority — in Madrid, the Agencia de Vivienda Social. Failure to do so is a legal violation. And if the deposit is not returned within 30 days of the lease ending, the tenant is entitled to interest.

3. Who pays the agent's fee?

Since the Ley de Vivienda came into force, agency fees for long-term leases are the landlord's responsibility — not the tenant's. If anyone asks you to pay an agency commission as a condition of renting, that is an illegal practice. It is more common than you might think, especially with foreign tenants who are unfamiliar with the regulations.

Key Point

At Prime Capital Estate, we never charge agency fees to tenants on residential lease contracts.

That is both our policy — and the law.

4. Rent increases have a legal ceiling

From 2025, the reference index for rent updates is no longer the general CPI but a new index produced by Spain's National Statistics Institute (INE), specifically designed for the rental market. Any clause that allows increases above that index is void. Check your contract: if it simply says "according to CPI", the practical application has changed.

5. The landlord sells the flat. Do you have to leave?

No. This is one of the most persistent misconceptions. The 2019 reform, still in force today, requires the new owner to honour the existing tenancy agreement. You cannot be evicted due to a change of ownership. For added protection, it is advisable to have your contract registered at the Land Registry (Registro de la Propiedad).

6. Eviction is not immediate — for either party

Spain has one of the most tenant-protective eviction procedures in Europe. A landlord cannot reclaim a property unilaterally — not by changing the locks, not by cutting off utilities. The process is judicial and can take a long time. If the tenant is deemed socially vulnerable, the judge may suspend the eviction entirely. This protects tenants — but also creates real risk for landlords who fail to verify financial solvency before signing.

Checklist before you sign

Confirm the contract type matches your actual situation (permanent residence vs. seasonal)
Verify that the deposit will be registered with the official Madrid housing authority
Check who is paying the agency fee — it must be the landlord
Review the rent update clause — it must reference the INE 2025 index
Document the property's condition in writing and with photos before moving in