You fix my house and I rent it for free

"A flatmate got a rental like that years ago, it was advancing little by little and it seems to me an alternative." Antonio refers to a viable formula in Spain, although little known: the reform of a house in exchange for free rent for a certain time or, failing that, a lower monthly rent. Jorge is looking for a flat to rent "in very poor condition to make me a complete reform in exchange for living a season without paying the rent, what we agree together". It's the claim you've placed in an ad app. The same has been done by the user Abdo: "I am looking for housing in Madrid to reform in exchange for low rent. Asked in more detail about the scope of the works, he replied that he could make a general reform. "I have the tool and the material."

The presence of this form of exchange is not the majority in Spain, although you can find a few ads from interested individuals. They seek to alleviate the significant economic burdens of renting a home, especially in large capitals. The most frequent is to agree on partial interventions, that is, painting, updating the bathroom or changing the windows. "The rent is freely agreed by the parties, who must establish whether in exchange for the works a lower rent or a grace period is set in their payment," says Fátima Galisteo, head of the firm Galisteo Abogados.

In the case of inherited homes that are very deteriorated, the formula "allows the owner to save all or part of the economic outlay that would involve updating it. In addition, the house is renovated and revalued, "they point out in the office of KLJ Abogados. In this firm they have recently advised a rental with option to buy in Madrid. The tenants were going to invest about 8,000 euros in a work, so "the parties agreed that during the first eight months the rent would not be paid."

Sergio Nasarre, director of the UNESCO Chair in Housing at the Rovira i Virgili University (URV), believes that the poor condition and age of the building stock, together with the shortage of housing, rental prices and the low incomes of many tenants, should increase interest in this form of leasing, which also exists in other countries such as France. However, "the lack of knowledge of the figure and the absence of accompaniment, both private and public, which do not help to overcome the mistrust that could be generated by its novelty and nature, can hinder its development and generalization," says Nasarre.

Rental rehabilitation is not only good for landlords and renters. It is also a way to improve the deteriorated housing stock, both in the center of cities and in rural areas. Nasarre is in favor of municipalities favoring these schemes through municipal architects or with the subsidy of the acquisition of materials. "They are much less onerous than promoting, directly rehabilitating or acquiring public housing," he says.

The payment with works is included in the Law of Urban Leases (LAU) since 2013. Until then, this modality was regulated, although not explicitly, by the Civil Code. Thus, landlords and tenants have the same rights and obligations as in the case of a conventional rental. In fact, what is signed is a standard contract subject to the LAU, with the exception that it must be specified that it is not paid with money, but with works. With this type of rental it is important to leave everything in writing and as detailed as possible. "We always recommend that the issues related to the work (execution budget, quality report, obtaining licenses ...), as well as the term for which the tenant will be exempted from the total or partial payment of the agreed rent are included in the contract", they explain in KLJ Abogados. In addition, it is convenient to set what will be the rent (in money) to be paid when the term covered by the works is exhausted. For example, details Nasarre, "if the reform covers three and a half years, the tenant can demand that the contract be extended for a year and a half more." In this case, the tenant must pay the payment in money. And, at the end of the rental contract, "you can not ask in any case for additional compensation for the cost of the works," recalls the lawyer Galisteo. It is essential that the reform conforms to the agreement, both in qualities and materials, since, otherwise, it may be cause for termination of the contract.

From Girona to Madrid

In Spain, there are different non-profit associations that promote social rental through this formula. The Sergi Foundation has been working for two decades on this purpose in Girona. Since 2008, the year of the great brick crisis, until just over a year ago they launched a program so that citizens with few resources – especially construction workers who lost their jobs – could rent at zero cost for a while in exchange for doing non-structural works in homes. Since April they have launched the ReHabitem project in order to reform empty homes. "We request a loan that is paid through the social rent paid by the tenant, so that the owner will not receive anything during the five years of the contract or will enter half. It will depend on the amount of the works, which cannot exceed 12,000 euros," says Lluís Puigdemont, director of the foundation. Anything in excess of that amount is paid by the owner. The purpose, says Puigdemont, is "to give life to the neighborhoods and avoid occupations." It is too early to assess the program. At the moment, the SERGI Foundation, with which different social cooperatives and several professional associations such as real estate agents, architects and technical architects collaborate, has obtained two homes in the urban area of Girona. "The purpose of the program is to guarantee the right to decent housing for families who are in a situation of residential exclusion and who cannot find a rental apartment through conventional channels," they point out in the Association of Real Estate Agents of Girona.

What some municipal housing companies offer is different, although the objective is the same: to help the owner to rent his closed and deteriorated housing and help tenants who cannot afford a market rent. The Municipal Housing and Land Company (EMVS) of Madrid launched the Reviva program last year. The objective is to recover the empty homes that thousands of owners have in disuse and thus increase the supply. The way to do this is that the owner transfers the usufruct of his empty home to the EMVS for a minimum of four years. In this program there is the option that, if the house is in poor condition and needs reforms, the EMVS advances the cost of the works up to a maximum of 45,000 euros at 0% interest, an advance that the owner will return deducting it from the rent he will receive each month. The municipal company is responsible for the payment of VAT on the works, as well as the non-payment insurance, the community fee and the IBI, in addition to the management of the rental and maintenance of the apartment. In return, the rent is between 15% and 20% below the market rate. Since 2022, 93 homes have been achieved and all have done work: more than half for an amount of up to 8,000 euros and 32% has been comprehensive reform.

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