Generally, contractual lease provisions can be freely negotiated but some terms are required by law, including a minimum lease period and guarantees for the owner. If a party involved requires the lease to be registered with the Land Registry, it must be formalised before notary as a public deed, providing both parties with greater protection. Lessees are required to pay a deposit covering any damage to the leased building.
If there is no agreed rent review process, the landlord can increase the annual rent in line with the consumer price index. VAT may be payable on the rent, depending on whether the parties are individuals or companies.
Recently, the rules that cover the length of lease were changed to promote the rental market and increase security for rental property owners. The minimum domestic lease term has been reduced to three years and commercial lease term to five years which can be renewed for a further five years unless one of the parties wishes to terminate the contract.
Landlords must expressly agree to a sublet or sharing of a property. The tenant must notify the landlord if they transfer the lease and the new tenant assumes their rights and obligations, in addition to providing the same guarantees.
The owner of a leased property continues to be responsible for paying property tax and community fees for the upkeep of common areas. Any agreed transfer of liabilities only serves to bind the parties to the contract and the landlord continues to be liable to any third parties.
The tenant is usually liable to keep the property in good repair. Increasingly, tenants take out liability insurance to cover any damage but are not legally required to do so. A tenant requires the landlord’s permission to carry out any improvements and is generally not compensated for this.
In a further effort to protect rental property owners, the period that they must wait before terminating a lease due to unpaid rent has been reduced and eviction can now proceed on proof that one month’s rent has not been received. Eviction procedure costs are payable by the tenant.
Rent cannot be withheld by a tenant for any reason. Instead, if they have a grievance, a tenant must make an independent claim for damages or breach of tenancy agreement. A tenant may terminate a lease agreement if the landlord is in breach of their obligations to provide the property in good condition and suitable for its intended use.