The obligation of a security deposit for room rentals to students in Madrid is generating legal uncertainty and financial penalties. The Community of Madrid requires the deposit of two months’ rent as a security deposit in these contracts. It does so by equating the rental of rooms to students with rentals for a use other than housing, as stated in article 3.2 of the Urban Leasing Law (LAU).
The recent ruling of the Administrative Court No. 9 of Madrid (n.º 225/2025, of July 9) confirms the legality of a penalty imposed for non-compliance with this obligation. However, the court recognizes
Application of the Regulations to the Security Deposit for Room Rentals to Students in Madrid
The controversy focuses on determining whether the contracts for the transfer of rooms with access to common areas, entered into with students and for limited periods (generally academic years), should be governed by:
- The Civil Code (arts. 1542 et seq.), in which case there would be no obligation to deposit a security deposit with the regional administration, or
- The LAU, as a rental for a use other than housing, subject to the obligation to deposit a security deposit in accordance with article 36 of the LAU.
The regional administration has opted for this second interpretation, with the consequent exercise of its sanctioning power, for not having deposited the legally required security deposit.
Essential Content of the Ruling
In this case, a penalty exceeding 12,000 euros was imposed on a lessor entity. The reason was the failure to deposit the security deposit derived from several room rental contracts. The appellant argued that these contracts were not subject to the LAU, but to the Civil Code, and that therefore the deposit was not required.
The court, without ruling on the civil nature of the contract, endorses the administrative action and considers its subsumption within the scope of the lease for a use other than housing to be reasonable, based on:
- The temporary nature of the contract (e.g., academic year).
- The partial transfer of an urban property with shared use of common areas.
- The circumstantial housing purpose.
The ruling reiterates the constitutional doctrine on the need for specificity and culpability in the sanctioning field. It concludes that, in the specific case, there is a legally subsumable conduct in the applicable infringing type.
However, the judicial body expressly admits that the issue presents reasonable interpretative doubts. This justifies not imposing the costs of the process on the appellant, in application of article 139.1 of the Law of the Contentious-Administrative Jurisdiction.
This conclusion raises a relevant legal reflection: is it coherent to confirm the existence of an administrative infraction when the judicial body itself recognizes the existence of a reasonable interpretative doubt about the applicable legal regime?
Although formally the conduct fits the sanctioning type, the express recognition of the normative controversy, and the exoneration of costs, indicates that the non-compliance was not evident nor, necessarily, intentional or negligent.
In these cases, especially when there are contradictory rulings and consolidated practices, it is debatable to apply the sanction without thoroughly assessing the culpability of the lessor. This is particularly relevant in contexts where the rental of rooms does not have a clear and peaceful fit within the current legal framework. And also, where the lessor acts in accordance with a defensible doctrinal interpretation, although ultimately not shared by the administration.
Consequences for Lessors
Obligation of Security Deposit for Room Rentals to Students in Madrid
The deposit of a security deposit by the lessor with the Community of Madrid is required. In cases that are classified as rentals for a use other than housing (such as room rentals to students), the amount of the security deposit is equivalent to two months’ rent.
Sanctioning Regime
Law 12/1997, in its article 9, provides for penalties in case of non-compliance of up to 50% of the amount not deposited, with a maximum limit of 90,151.82 euros. In the case resolved, the penalty was set at 48% for signing the inspection report in disagreement.
Controversial Nature of the Legal Regime
The ruling illustrates that there is no unanimous or peaceful consensus in the judicial doctrine on the nature of this type of contract. The fact that reasonable legal doubts are recognized may be relevant in assessing the concurrence of culpability or the possibility of alleging good faith, although it does not automatically exempt from the objective duty of compliance.
In any case, the current sanctioning regime remains fully in force for cases of security deposit in the rental of rooms to students in Madrid. This includes when acting in accordance with a coherent alternative interpretation.
Technical Conclusion
Although the contentious-administrative jurisdiction does not fix the civil regime of the contract, the ruling supports the criterion of the Community of Madrid: the rental of rooms to students, although partial and temporary, is governed by the LAU as a rental for a use other than housing.
Therefore, the lessor is obliged to:
- Demand and deposit two months’ rent as a security deposit with the competent regional body (IVIMA).
- Comply formally with the obligations derived from the legal regime of urban leases regardless of the term or the agreed use.
Final Consideration on the Social and Economic Impact
From a technical-economic perspective, may be debatable the automatic equivalence between the rental of rooms for housing purposes (for example, for students) and the rental for commercial or professional use, for the purposes of depositing a security deposit.
This interpretation, maintained by the Community of Madrid, imposes on the student – or whoever mediates to facilitate access to housing – the obligation to assume a security deposit equivalent to two months’ rent. This may represent a disproportionate burden in the current context of difficulty in accessing housing, especially in the young segment.
Likewise, the associated sanctioning regime penalizes an economic activity that fulfills an essential function. Such as the temporary rental of rooms to facilitate studies or professional internships.
Without prejudice to its legal coverage, a normative or jurisprudential interpretation would be desirable. Allowing to differentiate between the residential purpose and other forms of transfer of use of real estate. This avoids regulatory dysfunctions that negatively affect the supply of affordable housing.
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