To understand a housing exploitation contract, it is necessary to know the difference between temporary rental and habitual or permanent housing rental.
It is essential to know what a temporary rental is.

What is a temporary rental agreement?

The termporary rental contract is within the types of contracts established by the Urban Leases Law (LAU in Spanish), specifically in the category of “use other than housing.”

Therefore, a temporary contract is a “housing exploitation contract,” not just like the traditional ones, but this type of contract is made for stays that do not aim to establish a home or permanent residence but rather regulate a temporary stay for non-residents.

It is characterized by having a specific duration of time and purpose, such as work, study, or medical situations.
The fundamental difference between this contract and the permanent housing contract is the transitory nature, since the aim is not for the stay to be stable.

Duration of the temporary rental

The law does not establish a specific duration for the temporary rental contract, but it does establish that it must be defined in the contract.
In general, it is assumed that the contract has a maximum duration of one year, although there are discrepancies in this regard.

In consequence, in the event of early termination of the lease, the tenant may be subject to compensation, unless otherwise specified in the lease.
This compensation can be equivalent to the total monthly payments outstanding until the end of the contract.

Renewal of the temporary rental agreement

Be aware that the extensions of the temporary rental contract are subject to the agreement of both parties, but if agreed, a new contract must be signed.
Unlike leases for a primary residence, the renewal of a temporary rental is for a shorter period, as long as the original purpose of the contract is maintained.

Therefore, renewals of temporary contracts are possible but not at all recommended.
If a one-year renewal is granted, it can be assumed that a stay of habitual residence has been camouflaged with an annually renewable temporary rental contract and that the contract used is the wrong one.

It is indisputable that with several one-year renewals, they are trying to avoid a permanent housing contract, and any judge will ratify this opinion if it reaches the courts.
This is another difference between a temporary rental and a habitual residence.

Termination of the contract before its expiration date

In both types of contracts, both primary and temporary residences, there are legal reasons to terminate the contract, such as non-payment of rent, damage to the property, refusing to make necessary repairs or causing inconvenience to other tenants or neighbors, or changing the needs of one of the parties.

However, in the temporary contract, as it is a commercial agreement, the ideal is to renegotiate the contract in good faith.
If this is not possible, it is essential to follow the provisions stipulated in the rental contract.

In short, knowing that it is a temporary rental will help you access a customer profile that needs a few weeks, months, or even a year of residence.
To be able to do it well, you must have a correct contract and you must know how to access this customer profile.
We recommend hiring an agency specializing in temporary rentals.

Learn more about rental profitability in temporary housing

We highlight the importance of having a good property Management in Madrid—a company that has access to different types of tenants, HHRR departments, and not a traditional street agency—as the best way to maximize security as well as revenue.
You can contact us to learn about Property Management.

Your property manager in Madrid

DFLAT facilitates corporate housing ; we accommodate executives, expatriates, and high-level students with seasonal leasing contracts. It markets properties through various channels: B2C, B2B, moving agencies, relocation, travel, and its own channels.

Contact your new property manager in Madrid and find out about the services for property owners in Madrid.