You sign a nine-month contract for a project in Madrid. You are asked for two months’ deposit instead of one, the invoice has no VAT on it, and three weeks later you receive a notice from the Madrid regional authorities about a tax you had never heard of — one that you, as the tenant, are expected to pay.
None of this is necessarily a mistake or an abuse. It is how temporary rentals work: a type of tenancy that may look similar to an ordinary residential rental but operates under a different set of rules. The confusion can be costly, especially because much of the information available online is written for landlords rather than for the person signing the contract as a tenant.
This guide explains what a temporary rental actually is, what the contract you sign should contain, what it costs in Madrid using 2026 data, and which rules are currently in force.
This article provides general information only and does not replace legal or tax advice tailored to your specific circumstances.
Key takeaways
- A temporary rental is a tenancy for a use other than permanent housing, governed by Article 3 of Spain’s Urban Leases Act, commonly known as the LAU. It is neither a permanent residential tenancy nor a tourist rental: it is a different category with its own rules.
- There is no statutory eleven-month limit. The Madrid regional government states that these contracts have no minimum or maximum duration. What determines the nature of the tenancy is the temporary reason for the stay, not a particular number of months.
- The statutory deposit is two months’ rent, twice the amount required for a standard permanent residential tenancy, under Article 36.1 of the LAU.
- Transfer tax, or ITP, is payable by the tenant when applicable, and seasonal tenancies in Madrid do not fall under the exemption intended for housing rented for stable and permanent use, according to the Madrid regional government.
- Residential rents in the city of Madrid stood at €23.2 per m² in July 2026, according to idealista data reported by Moncloa.
- The proposed national reform intended to regulate seasonal rentals specifically has not yet been approved.
What is a temporary rental, and how does it differ from a residential tenancy?
A temporary rental is the letting of a home for a defined period and for a specific reason: a work assignment, a course of study, medical treatment or another housing need that is limited in time.
Legally, Spain’s Urban Leases Act does not classify it as a permanent residential tenancy. Article 3 places it among tenancies for a use other than permanent housing.
The wording can sound strange because the tenant will, of course, be living in the property. The distinction is that the LAU reserves the more protective permanent residential regime for people who establish the property as their habitual and permanent home.
That regime includes, among other things, mandatory extensions of five years when the landlord is an individual and seven years when the landlord is a legal entity.
If your usual home remains in another city and you come to Madrid for a specific period because of a work project, studies or another genuinely temporary reason, a seasonal tenancy may be the appropriate arrangement.
The Madrid regional government describes these contracts as urban property tenancies entered into for a particular season and states that they are governed by the LAU, the agreement between the parties and, where applicable, the Civil Code.
The three categories that are often confused
There are three different arrangements worth distinguishing before signing anything.
Permanent residential tenancy
This is governed by Article 2 of the LAU.
It applies to the property in which you establish your habitual and permanent residence.
The statutory deposit is one month’s rent, and the tenant benefits from mandatory extensions of up to five years, or seven when the landlord is a legal entity.
Seasonal tenancy
This is governed by Article 3 of the LAU.
It covers a housing need that is limited in time and linked to a specific reason that should be reflected in the contract.
The statutory deposit is two months’ rent, and the duration is agreed between the parties.
Tourist-use dwelling
This does not fall under the ordinary residential tenancy regime of the LAU. Instead, it is governed by regional tourism regulations.
In Madrid, tourist-use dwellings are regulated by Decree 79/2014 and subsequent amendments.
They are primarily intended for short-term tourist accommodation and operate very differently from housing someone who is relocating for several months for professional or academic reasons.
If you are still deciding what type of accommodation you need rather than what type of contract to sign, you can read our comparison of aparthotels, hotels and monthly apartments.
How long can a temporary rental last? The eleven-month myth
There is no general maximum duration established by the LAU for a seasonal tenancy.
The Madrid regional government expressly states that these rentals have no minimum or maximum duration and that their terms are subject to what the parties agree.
The well-known eleven-month contract is therefore a market practice, not a legal limit.
So where does the figure come from?
Some landlords use a period of less than one year as an additional way of signalling that the agreement is genuinely temporary and that there is no intention to establish permanent residence.
But duration alone does not determine the legal nature of the tenancy.
What matters is the real purpose of the arrangement.
A three-month contract that is actually being used to establish a permanent home in Madrid could ultimately be treated as a permanent residential tenancy.
Likewise, a fourteen-month contract may still qualify as a seasonal tenancy when there is a genuine, documented temporary reason that is consistent with the agreed duration.
Which arrangement fits each situation?
Tourist-use dwelling: primarily intended for short-term tourist accommodation marketed under the corresponding tourism regulations.
Seasonal tenancy: covers a genuine temporary housing need. The LAU does not establish a general maximum number of months.
Permanent residential tenancy: intended for a person’s permanent home and subject to the specific protections and extension rights provided by the LAU.
For a professional stay of one to six months, a seasonal tenancy will normally be the relevant arrangement provided there is a genuine temporary reason.
What exactly should your contract say?
A properly structured seasonal tenancy should make clear why the rental is temporary.
In addition to identifying the parties, the property and the rent, the Madrid regional government highlights elements such as:
- The duration of the agreement.
- The tenant’s permanent address.
- Their place of municipal registration.
- The reason for the tenancy.
The final point is particularly important.
The reason — a temporary employment contract, relocation, master’s degree, medical treatment or another specific circumstance — is what helps demonstrate that the housing requirement is limited in time.
If the contract does not state that reason, or if the stated reason does not reflect reality, there is a greater risk that the agreement could be classified differently.
The tenant’s permanent address can also help demonstrate that their habitual residence remains outside the temporarily rented property.
What to check clause by clause
Duration and early termination
The statutory withdrawal right under Article 11 of the LAU, which applies to permanent residential tenancies, does not automatically apply to seasonal tenancies.
If there is a possibility that your project may end earlier than expected, it is advisable to negotiate an explicit early-termination clause.
It should specify:
- The notice period.
- Any applicable penalty.
- How notice must be given.
- What happens to amounts already paid.
Without a specific clause, you may remain liable under the terms agreed for the full contractual period.
Utilities
Check whether electricity, water, gas and internet:
- Are included in the rent.
- Are charged separately.
- Have a monthly consumption cap.
- Are reconciled at the end of the stay.
In mid-term apartments, some or all utilities are often included, but the exact conditions should be stated in writing.
Extension
A seasonal tenancy does not necessarily renew automatically.
If there is a possibility that your assignment may be extended, agree from the outset:
- How an extension can be requested.
- How much notice is required.
- What rent will apply.
- Whether the extension depends on availability.
Rent review
Short contracts will often end before any rent review becomes relevant.
If your stay lasts longer than a year, check whether the agreement contains a rent-adjustment mechanism and which index or method will be used.
What does a temporary rental cost in Madrid in 2026?
Madrid’s residential rental market reached €23.2 per m² in July 2026, according to idealista data reported by Moncloa.
Across the wider Madrid region, the figure stood at €21.4 per m², 6.6% higher than a year earlier.
Using the city of Madrid figure, an 80 m² residential property would have a reference rent of approximately €1,856 per month.
However, that figure does not directly represent the cost of a temporary furnished apartment.
It is a reference for the conventional residential rental market.
A mid-term apartment will normally be delivered:
- Fully furnished.
- Fully equipped.
- With a ready-to-use kitchen.
- With utilities already connected.
- With internet.
- In some cases, with utilities included.
- Ready to move into from day one.
The landlord also faces greater tenant turnover, more check-ins and check-outs, additional cleaning and a higher risk of vacancy between stays.
Those factors may all be reflected in the rent.
That is why directly comparing the price of an empty long-term residential property with a fully equipped apartment rented for three months means comparing two different products.
At the lower end of the market, a room in a shared apartment in Madrid cost €587 per month during the first quarter of 2026, according to idealista/news.
What makes the price go up or down?
Length of stay
Typical effect: the longer the stay, the lower the monthly rate may be.
Why: a longer stay reduces turnover and vacancy risk for the landlord.
Move-in month
Typical effect: September and January may experience greater pressure on prices.
Why: they coincide with the start of the academic year and new corporate assignments and professional relocations.
Utilities included
Typical effect: the advertised rent is higher, but the overall cost may be lower and simpler to manage.
Why: it avoids utility connection procedures, multiple contracts and separate bills.
District
Typical effect: areas such as Salamanca, Chamberí and Centro tend to sit above the city average.
Why: they combine strong demand with a relatively limited supply of furnished accommodation suitable for temporary stays.
Lead time
Typical effect: searching earlier gives you more options and may allow you to secure better terms.
Why: the supply of high-quality furnished apartments is limited, and the strongest options may be reserved well in advance.
None of these factors has a universal fixed price.
To compare two properties properly, always request the total monthly cost in writing and check exactly which expenses are included.
The taxes almost nobody explains: VAT and transfer tax
Two taxes often cause confusion in temporary rentals: VAT and Transfer Tax, known in Spain as ITP.
They work very differently.
VAT: generally exempt when the requirements are met
The letting of a home is exempt from VAT when the property is used exclusively as housing, according to the Spanish Tax Agency.
The exemption may also cover furniture and certain ancillary spaces, such as parking spaces or storage rooms, when they are rented together with the home.
There is an important exception.
When the landlord provides services associated with the hotel industry, the tax treatment can change and the transaction may be subject to the reduced VAT rate of 10%.
These services may include:
- Regular cleaning during the stay.
- Regular changes of bed linen and towels.
- Reception services.
- Other continuous services associated with hotel accommodation.
Delivering the property clean at the beginning of the tenancy or providing a washing machine does not, by itself, turn the rental into a hotel service.
The clause that can determine your employer’s invoice
When a company signs the tenancy agreement in order to house one of its employees, the VAT exemption may still apply when the relevant requirements are met.
One important element is that the people who will ultimately use the property are identified specifically and individually in the agreement.
In practical terms, the employee who will occupy the property should be named.
A generic contract signed by a company without identifying who will actually live in the property may receive a different VAT treatment.
If you are responsible for organising employee relocations, you can find more information in our legal and tax guide for HR teams.
ITP: the tax payable by the tenant
In the Madrid region, residential tenancies used as a stable and permanent home are exempt from Transfer Tax under the conditions established by regional regulations.
The Madrid regional government also states that, for certain permanent residential contracts signed from 29 November 2024, it is no longer necessary to file the self-assessment in order to benefit from the exemption.
The key point is that this exemption is linked to permanent residential tenancies.
A seasonal tenancy falls under Article 3 rather than Article 2 of the LAU and may therefore remain subject to ITP.
For tenancy agreements, the taxpayer is the tenant.
In other words, where the tax applies, the tenant is responsible for settling it.
In Madrid, this is done using Form 600.
The amount is not simply calculated by applying a percentage to one month’s rent. It is determined according to the relevant taxable base and the applicable tax rules.
Although the amount may be relatively modest for short contracts, it is worth understanding the obligation before signing.
Ask the landlord or property manager:
- Whether the agreement is subject to ITP.
- Who prepares Form 600.
- Who submits it.
- What the filing deadline is.
- What documentation you will need.
Deposit, guarantees and what else can be requested
The statutory deposit for a seasonal tenancy is two months’ rent, under Article 36.1 of the LAU.
For a permanent residential tenancy, the statutory deposit is one month.
This is not an optional surcharge imposed by the landlord: it is the amount established by law for tenancies classified as being for a use other than permanent housing.
In addition to the statutory deposit, the parties may agree on additional guarantees.
These may include:
- Additional deposits.
- Bank guarantees.
- Employer guarantees.
- Employer letters.
- Other agreed forms of security.
It is always worth distinguishing clearly between:
Statutory deposit: two months’ rent.
Additional guarantees: other amounts or guarantees negotiated separately.
Before signing, also check:
- Who holds each amount.
- Under what conditions it will be returned.
- What damage may be deducted.
- When repayment will be made.
- What evidence will be used to assess the condition of the property.
One final point is important: the rules are not identical throughout Spain.
Catalonia introduced specific rules for certain seasonal and room rentals in 2026 through Law 11/2025.
That is Catalan regional legislation and does not apply to tenancy agreements in Madrid.
Can you register with the town hall under a seasonal tenancy?
Municipal registration, known in Spain as empadronamiento, records where a person actually lives.
Having a seasonal tenancy does not automatically prevent you from registering in Madrid if you genuinely reside at the address during your stay.
Municipal registration and the tenancy agreement deal with different legal questions.
The padrón is an administrative record of where you actually live.
A seasonal tenancy is a civil contract based on the existence of a temporary housing need.
Registering with the town hall therefore does not automatically turn a seasonal tenancy into a permanent residential tenancy.
However, all aspects of the real situation may become relevant if there is a discrepancy between what the contract says and how the property is actually being used.
If you come to Madrid for several months for a clearly documented temporary reason, municipal registration may be an ordinary administrative step where needed.
If the stay becomes indefinite and Madrid genuinely becomes your permanent home, it may be necessary to reconsider whether a seasonal tenancy remains the appropriate legal arrangement.
Municipal registration may be necessary or useful for:
- Applying for a public healthcare card.
- Certain immigration procedures.
- Municipal administrative procedures.
- Applying for a school place.
- Demonstrating residence.
What regulations are currently in force, and what could change?
As of August 2026, seasonal tenancy agreements continue to be governed primarily by Spain’s 1994 Urban Leases Act, without a new national reform having entered into force that specifically replaces this regime.
Relevant developments have occurred during 2026, but they should be distinguished from proposals that are still going through the legislative process.
The proposed reform has still not been approved
The bill intended to regulate seasonal and room rentals specifically remains under parliamentary consideration.
Among other things, the proposed text would introduce a more specific definition of temporary housing, require a justified and demonstrable temporary reason, and establish rules concerning successive contracts.
However, those measures are not currently part of national law in force.
For that reason, always check the publication date of any article that presents these proposed changes as current legal requirements.
The national rental register was annulled
Spain’s Supreme Court partially annulled Royal Decree 1312/2024, which had created the Single Rental Registry and national rental registration number.
The decision is judgment 629/2026 of 21 May, issued by the Third Chamber of the Supreme Court and published in the Spanish Official State Gazette.
The Court annulled the affected provisions on the basis that the national government had encroached on powers belonging to Spain’s autonomous regions.
According to information published by the General Council of the Judiciary, regional registers and any applicable municipal licences remain relevant.
This is particularly important because some content published before the judgment may still describe the national registration number as a current requirement.
Catalonia has different rules
Catalonia introduced specific regulations through Law 11/2025, which entered into force in 2026.
Among other things, it regulates certain seasonal and room rentals and establishes its own rules in designated stressed housing areas.
This is Catalan regional legislation.
It does not apply to tenancy agreements in Madrid.
Checklist: nine things to check before signing
- The reason for the temporary stay appears in the agreement and matches your actual circumstances.
- The duration is clearly defined with a start date and an end date.
- Early termination is covered by a clause stating the notice period and any applicable penalties.
- The deposit is two months’ rent and you know how and when it will be returned.
- Any additional guarantees are clearly quantified.
- Utilities are clearly defined: you know what is included and whether any consumption cap applies.
- ITP has been reviewed and you know who must file Form 600 and within what deadline.
- VAT has been handled correctly and, if your employer signs the agreement to house you, you are identified as the user of the property where required.
- The furniture inventory is signed, dated and preferably supported by photographs.
Frequently asked questions
What is a temporary rental in Madrid?
It is the letting of a home for a defined period and for a specific reason, such as a work project, studies or medical treatment.
It is governed by Article 3 of the LAU as a tenancy for a use other than permanent housing.
It is different from both a permanent residential tenancy and a tourist-use dwelling.
How long can a temporary rental contract last?
The LAU does not establish a specific general maximum duration.
The Madrid regional government states that these contracts have no minimum or maximum duration and that the duration is agreed between the parties.
The well-known eleven-month limit is a market convention, not a legal requirement.
What matters is that there is a genuine temporary reason justifying the arrangement.
Does VAT apply to a temporary rental?
As a general rule, a rental used exclusively as housing is exempt from VAT.
The tax treatment changes when the landlord provides services associated with the hotel industry, such as regular cleaning during the stay, reception or other ongoing hospitality services.
In those cases, VAT may apply at the corresponding rate.
Who pays ITP on a seasonal tenancy?
When the agreement is subject to Transfer Tax, the taxpayer is the tenant.
The tenant is therefore responsible for complying with the tax obligation and filing Form 600 where required.
The exemption available in Madrid for certain permanent residential tenancies does not automatically apply to seasonal tenancies.
How much deposit can be required for a temporary rental?
The statutory deposit is two months’ rent under Article 36.1 of the LAU.
The parties may also agree on additional guarantees, such as an additional deposit or bank guarantee.
These guarantees should be clearly distinguished from the statutory deposit, and the conditions for returning them should be set out in the agreement.
Can I register with the town hall if I have a seasonal tenancy?
It may be possible if you genuinely live in the property.
The municipal register records where a person actually resides and addresses an administrative question that is separate from the civil classification of the tenancy agreement.
Registering does not automatically turn a temporary tenancy into a permanent residential tenancy, although the reality of the occupation should always remain consistent with the temporary reason stated in the contract.
In short: how to decide
A temporary rental is designed to meet housing needs that are limited in time.
If you are coming to Madrid for a few months for work, study or another specific reason, you are not necessarily dealing with a permanent residential tenancy or tourist accommodation: there is a specific contractual category designed for this situation.
Before signing, try to answer three questions clearly:
Is the reason for your stay written into the contract?
The agreement should explain why your housing need is temporary.
Do you know how ITP will be handled?
Check whether the tax is payable, who will file Form 600 and what the deadline is.
Do you know what happens if your project finishes early?
Early termination should be expressly addressed in the agreement.
If all three answers are clearly set out in writing, you will have removed much of the uncertainty that commonly surrounds seasonal tenancy agreements.
At Nestic, we prepare our mid-term apartments and their documentation so these issues are clear before move-in.
Published on 20 August 2026. Last updated: 20 August 2026.
This article is for informational purposes only and does not constitute legal or tax advice. For advice relating to your individual circumstances, consult a qualified professional.