Killer Deposits Keep Rentals Empty

Strictly speaking this is a properties topic but is an issue that directly or indirectly effects most. I am looking for a long-term rental San Luis / Quesada communities. My wife and I tick all the ‘ideal tenants’ boxes and there is no shortage of ideal properties for rent. There is just one killer: The deposit.

Some charge as much as two months rent deposit so for a €450 apartment you’re expected to shell out €1,350 and of course a further €450 one month after moving in. Get real!

The €900 is in their bank for the duration of your stay. Recovering it can be problematic. Think of it as an agent’s fee rather than a refundable deposit. This way you are less likely to be disappointed when you lose it or a few hundred euros are deducted for replacing a doormat and cleaning an oven. There are far easier ways of ensuring fair play between owner and tenant.

John, If you want to transfer €900 to my bank account, for me to use as I wish, with a ‘promise’ to return it sometime in the future, feel free to do so. I am equally accommodating to others.

There was an article in the Daily Mail recently. It exposed the corruption that underscores the agents deposit scam. What a mailbag that produced from disgruntled ripped off tenants.

This is like a prospective boss wanting €900 deposit in case damage is done to the computer or to pay for legal services in the event of an employee suing for wrongful dismissal. Aren’t properties insured, their contents too?

As a good tenant I object to being penalised for the poor behaviour of a minority. Believe me, for every bad tenant there are two owners who are as bent as a dog‘s back leg. I never heard of one declaring the income from rent.

There are easier legal ways of ensuring good behaviour. But this is not a personal issue. Greed and corruption is leaving properties empty.

I am not condoning it but if a minority of renters do leave something to be desired, is there possibility that some might have done so out of revenge. When researching an article on the subject I heard of such cases. This included a good tenant who, on unfairly losing his deposit, super glued all the owners locks up. Bad tenant or bad owner. It all makes an interesting topic.

That is very kind of your son, Johnzx, and he can obviously afford not to collect a monthly rent for his apartment.  I can understand that owners are nervous about letting out their properties in case they are victims of all the problems mentioned.  However, it works both ways.  

We have been looking for a property to rent in Spain over the winter months and, although there are hundreds (thousands?) of properties available, we refuse to take on a place where the owner insists on a large deposit up front.  Why?  It's not just about finding such a large sum of money in order to secure a rental.  It's because we are worried that the deposit will not be paid back to us when we vacate the property. Also, if we can't get to view a property before we take it on (highly likely for those of us that reside in the UK), how do we know it is all the owners say it is?  

When we took on a rental property on the Costa Blanca a few years ago, two of the three agents that we visited advised us not to pay the last month's rent on the properties we were interested in as we were unlikely to get it back from the owner when we vacated the property! They must have known something we didn't at the time.  Back then, all the propeties with these two agents incurred a deposit that was equal to a month's rent and the deposits were to be paid to the owner him/herself along with the first month's rent. We eventually took a property with the third agent who used the British method of keeping deposits (again, equal to a month's rent) in a seperate account, held by this agent, and this was returned to us in cash on the day we vacated the property.  

My sister, however, wasn't as wise as we were.  The following year, she rented a property owned by a couple living in the UK, whereby she paid a month's rent in advance along with a large deposit directly to the owner. As she became friendly with others on the small community where she stayed, she was advised she was unlikely to get her deposit back as the owners were notorious for keeping the money.  It seems they were in arrears with their mortgage payments and they needed the money!  When it came to vacating the property which had been looked after so beautifully by my sister (leaving it cleaner than when she had taken it over!) the place was inspected by a friend of the owner who acknowledged it had indeed been left in a lovely condition, that she would inform the owner who would send my sister the deposit back within a week.  However, without even inspecting the property themselves, the owners 'made up' reasons why my sister wasn't entitled to get her deposit back!  ie; things were missing, the place was left in such a state that they had to pay for it to be cleaned etc etc. All lies!  My sister had no way of disproving these lies, even though she had taken photos of the property as she had left it.

This is not an isolated case, as I'm sure anyone reading this will aknowledge, and I'm sure it happens only in a small percentage of cases, but the fact that it could happen to US means we will only leave a reasonable deposit when we next rent a place in Spain and, if we have the slightest notion that we may not get our deposit back, we would consider letting the owner keep it in lieu of the last month's rent.

So what's the answer to ensure that both renters and owners are not left out of pocket.....or in an even worse position?

Is there not a small claims court that can action a speedy considerable fine and adequate compensation for these "minority" issues relating to rental deposits?

Are agents not legally required to hold deposits in a separate account and then view the property at the end of term and sign some formal and legally binding confirmation acknowledging that the property has been left in good condition and be responsible for return of deposits?

Is there a major gap in regulation and consumer protection here which could be addressed by the Government, especially if they are increasingly conscious of improving brand Spain!  

Surely It would be in the Government's interest to ensure that there be greater regulation and a simple, timely but effective fallback procedure to act as a means of recovering deposits with compensation to act as adequate deterrents.

Yet again we are back to the need for effective timely consumer protection in Spain!

Maddie,

That is very kind of your son, Johnzx, and he can obviously afford not to collect a monthly rent for his apartment.  I can understand that owners are nervous about letting out their properties in case they are victims of all the problems mentioned

I have said this many times before but please forgive me.

To let legally in Spain as a private owner is practically impossible (and with new laws even more difficult) and for what one gets left with it is certainly not worth the hassle, and the risks involved.   

Of course most let illegally, probably in ignorance, so they are not aware of this fact of life.

Ads   Is there not a small claims court that can action a speedy considerable fine and adequate compensation for these "minority" issues relating to rental deposits?

There is no cheap, simple, effective MO.  That's why my son prefers to let a friend whom we can trust, use his apartment for free,

Johnzx

I take it that there is no professional body that regulates the rental industry in Spain, nor adequately controls agents?

Faro observed many moons ago in relation to local colegios who demonstrated failure to self regulate that what was required was "a centralised and independent disciplinary committee with power to fine and revoke practising certificates and once a complaint is made it is investigated in a timely manner".

IMHO his wise words should be heeded in all areas relating to the real estate and legal professions in Spain....

Thats why it is clear that practically all private lets are illegal

In order to get around the rental rules and regulations (these vary greatly from one autonomous region to another) but more importantly to avoid declaring on their tax return, it is concievable that such "free" arrangements could be made between landlords and tenants. This is just suposition, just throwing this out there for discussion. I am sure non of the upstanding law abiding individuals here would do such a thing. 

In order to get around the rental rules and regulations

But it would not get around anything.  It would be illegal just as those who let now without the myriad of permissions, etc. which are already required by law.

Johnzx you stated "I did post that if one lets legally, there are so many hoops to jump through and taxes and fees to pay, that there is really no point in letting at all,  as the amount left is not worth any risks of damage etc. "...... mmm....... is this then part of the Government's intention to support the Spanish Hotel industry in the current economic climate and raise extra finance from those who have second homes? In which case there will be little incentive for the Government to provide timely effective fallback procedures to protect renters deposits etc.... now there's an interesting slant on things!

Perhaps this will please the Spanish fraternity? Again this may well be part of the Government's aim to only encourage wealthier investors who don't have to concern themselves with covering their overheads through rental income. But it's extremely hard in the interim on those who haven't made sufficient financial provision for such eventualities and now can't sell their properties or for whom rentals are no longer cost effective.  Add to that the potential to use distressed properties for social housing........ all part of the changing face of Spain in these hard economic times.

John,

I have noticed many people mentioning this but as you have just mentioned it I thought I would ask... why do so many say that it is virtually impossible to rent legally a property in Spain? It depends on many issues.

With over 80% of tourists renting private properties rather than going to hotels, I don't think the Government will be very successful if it decides to blindly support the hotel industry. It will just force even more people not to declare and increase the submerged market in rentals.. and in Spain we all know what happens when people feel a law is not fair.... they just ignore it.

By the way.. rental deposits are far too high, in Valencia they are asking between 2 and 3 months deposit whihc is ridiculous and I agree with Mike it is one of the reasons many can't move into a rental...

It's not just tenants that can get ripped-off or scammed by rental agents, landlords/owners can too, sometimes both at the same time.  Read about our experience of a rental agent in Jalon, Costa Blanca

Search for "Jalon Villa Rentals scam" on Google

I had a agent wanting to charge me 400 euro last week to set up the utillty bills in my name on a 6 month rent. Dream on. Why wound a owner put a property for rent with agents that want silly fees.. They will never fill the property. Renters will run a mile  I have

So what is going to be the true full answer when the next person comes on here asking for advice on how to go about moving to Spain and buying a house, when the advice they have been given almost without fail is "Never buy in Spain...Rent"

Considering what has been said here, rentals are all but illegal.

Baz, I don't think that it is illegal for the renter to rent a property without a tourist license. In any case not all regions insist on a license. The Valencian region doesn't for one, but  there may be others.

http://www.spain-holiday.com/rentalbuzz/holiday-rental-licences-in-the-valencian-community

Reasonable expectations for a rental accommodation I would think, but it could all be blown away by the sound insulation bit if someone did want to complain.

Also makes a mockery of the poster who keeps going on about all rentals in Spain are all but illegal.

Personally on the side of the Landlord his risk is far greater in my view and 99% of tenants take the P--s, if I was a landlord I would not rent to anyone who cannot afford a reasonable deposit and probably they are not very prudent or appreciate there situation.

And yes we are tenants too.

Love Hugh

The law covering long term rentals is the Ley de Arrendamiento Urbano (LAU 29/1994) under which the only legally recognized deposit is to the value of one-months rent. It is, as usual the Estate Agents who are acting illegally, although they will claim that 1 months rental is the agents 'commission' for arranging the letting and the second months payment is a months rent in advance. The month in advance is supposed to be refunded less any reparation required although it is very rare to get anything back - so the occupier rarely pays the last months rent.

In UK a 'scott or delapidation schedule' is prepared prior to occupation noting any damage or poor quality that could be the subject of a claim on cessation of the tenancy that affected the deposit refund and/or cliam for damages. This could also be complied by a tenant here.

In respct of Hugh's post - Agents don't care who they rent property out to as long as they get their money. Does anyone know of an instance where references have taken and checked by an agent here? I don't.