If I let my flat to a company for its employees, is it a residential tenancy?

Question

José Manuel Alburquerque · Accepted Answer

There is no certain answer today. Before 8 October 2026, the courts normally treated it as a commercial lease (“uso distinto del de vivienda”), because the tenant is the company and the person living in the flat is someone else. Since that date, the law excludes from that category contracts whose purpose is to house people, but it still says that a residential tenancy is one that meets the tenant's own need for a home. A contract with a company no longer fits well into either category, so the prudent course is to draw it up as a residential tenancy or to have the employee sign as the tenant. What has changed Until now, most courts took the view that a company has no need for a home. That is why letting to a company to house its employees was treated as a commercial lease, which is governed above all by what was agreed, without the minimum term or the other protections for homes. The “Tribunal Supremo”, Spain's Supreme Court, in its judgment 568/2020 of 28 October, on a 1985 contract, said that a tenant company cannot benefit from the protections that the law gives to those who rent a home. The October 2026 decree has changed the definition of the commercial lease category, which now excludes “in all cases” contracts whose purpose is to house people. It is therefore doubtful whether a contract with a company to house its employees can still be framed in that way. But the law does not turn it into a residential tenancy either. It only continues to treat as a home a flat in which the tenant does not live when the tenant's spouse or children live there. It does not mention employees. There are still no judgments clarifying the point. Contracts signed before 8 October 2026 keep, in principle, the rules under which they were signed until the agreed term ends. If they are renewed, the renewal is then subject to the new law. The prudent course today There are two ways to avoid surprises: Draw up the contract with the company as a residential tenancy and comply with its rules. That means a minimum term of five years, or seven if the landlord is a company, a statutory deposit (the “fianza”) of one month's rent and an additional guarantee of no more than two months' rent. Nor can the IBI, the local property tax, or the letting agent's fees be passed on to the company. In a stressed residential market area (“zona tensionada”), the rent limits also apply. That way, if a judge were to regard it as a residential tenancy, the contract would already comply with its rules. Have the employee sign as the tenant, even if the company pays the rent or acts as guarantor. If the employee's stay is temporary and there is a genuine reason for it, such as a work posting for a few months, a temporary residential tenancy can be used, provided that the employee keeps his or her usual residence elsewhere. The reason must be stated in the contract and be capable of proof. It is for the landlord to prove it. If it is missing, the contract is treated as a residential tenancy of a main home from the outset. In Catalonia, temporary lettings also have their own rules, which should be checked before signing. What the tax authorities say If the tenant is the company, the contract should also state who will live in the flat: For the letting to be free of VAT, the contract must specifically identify the person or persons who will live in the flat. If it does not, the tax authorities take the view that VAT at the standard rate of 21 % is charged on the rent. For you to get the allowance for residential lettings on your income tax return, it must be clear from the outset that the flat is for the exclusive use of a person identified in the contract. A generic purpose, such as “its employees”, is not enough. The company does not have to withhold the “IRPF”, Spain's personal income tax, from the rent it pays you when it rents a home for its employees.