The Rental Agreement

Understand what to expect from the tenancy agreement when renting property in Gibraltar...

Legally binding rental agreements are required so that both parties know their obligations. The agreement should be signed in front of a witness and include vital information such as:

  • How domestic bills are to be paid/split
  • When the rent is to be paid
  • How much rent is to be paid
  • The method of rent payment
  • Date of tenancy commencement
  • Duration of tenancy
  • Services to be provided by the landlord (if any)
  • Liability for interior and exterior property maintenance and repair fees
  • Notice period
  • Good practice laws for the area (if any)

Long-term leases and short-term lets are both commonplace in Gibraltar. Leases are usually 12-month renewable leases, but in some cases 6-month leases are granted.

Short-term rental is usually defined as a period lasting a matter of weeks, and is classed as a holiday rental.

Rental payments for long-term leases generally do not include rates for water, electricity, television and Internet. Short-term leases usually include these, but the higher rental rates reflect this.

For long-term leases, six month's notice is required to terminate the rental contract.

Inventory

Ii is usual for the landlord to prepare an inventory and notes of the property's condition when renting it out, especially when the property is rented through an agent, and when it is furnished. The tenant should double-check and agree the inventory and property condition within days of moving in. Non-communication regarding the inventory after a given period of time is often taken as an acceptance of the contents of the document.

Deposits and Agency Fees

A deposit equal to one month’s rent is usually required to secure a rental. This payment is confirmation that a tenant wishes to enter into negotiation with a landlord and for the property to be taken off of the market. In addition, a further month's rent is usually payable up-front at the commencement of the agreement. The deposit is usually returned to the tenant within 15 days after vacating the premises.

Documentation and Insurance

Household insurance is the responsibility of the tenant unless otherwise specified. Insurance may be taken out by the landlord in respect of the building and the contents if the flat is let furnished.

Many landlords and agencies require one or more references from prospective tenants. These may be in the form of an employer's reference, previous landlord's reference or a bank reference. When obtaining a bank reference, charges may apply.

A guarantor is usually not necessary because thorough background checks are made concerning the tenant’s history and financial position. Letting agents will not knowingly introduce a tenant to a landlord if there is a good chance the tenant will default on rent payments.

Taxes and Additional Costs

Land tenure follows the UK principle of being either freehold or leasehold. The government of Gibraltar owns the land that most new property is built upon. It leases the land to a development company, typically for 150 years, and the lease is then passed to the purchaser of property built on it.

Freehold property is scarce and is associated with older buildings, mainly located in the central town area. Leasehold properties are usually subject to a service charge to be paid annually or quarterly to a management company. When renting, it is advisable to be aware of which party is liable to pay this.

Pets are usually not allowed when renting, but some landlords may be flexible. Any permitted pets will be required to be micro-chipped and registered at the Gibraltar veterinary clinic.

Sub-letting is allowed with the landlord's permission, but the landlord is entitled to 50 percent of the sub-let amount on top of the agreed rental rate.

Tenants’ and Landlords’ Obligations

The tenant is responsible for changing the registered name of the gas, telephone, water and electricity contracts to their own name when moving in and for cancelling them when leaving. They are also responsible for notifying the local authorities of their residency.

Many rentals stipulate that the tenant must have the property professionally cleaned when vacating.

When looking to rent a property, it is important to establish before putting down a deposit whether the property allows the tenant to register the address as their main residence for ID cards, medical treatment and schooling; some properties do not allow this.