OVER the last two years, the relationship between real estate agents and agencies in Spain has come under intense scrutiny.
Labour inspectors have increasingly targeted so-called ‘autonomos falsos’ – workers classified as self-employed when in reality they are full time employees.
This misclassification has allowed agencies to swerve social security contributions, but effectively maintain an exclusive relationship with the worker.
The new government crackdown is part of a wider fight against casual work practices, with delivery riders and drivers the first to have been targeted.
Real estate is now firmly in the inspectors’ sights, with Valencia leading the push.
Since 2022, agencies there have been subject to audits, fines, and forced regularisation of workers with penalties ranging from €3,750 to €12,000 per agent, plus up to four years of unpaid social security contributions.
Imported business model
Traditionally, agents were employees, but with the arrival of international firms – particularly in hotspots such as the Costa del Sol – the American model of commission-only freelancers took root.
This has led to confusion and, in some cases, outright abuse.
Spanish law is clear: for an agent to qualify as truly self-employed, they must work independently, set their own hours, provide their own tools, and bear their own business risks.
They cannot be managed, scheduled, or supplied with company equipment.
Yet inspections have revealed many agents sitting at company desks, working fixed hours, using office computers, and even following holiday rosters.
By contrast, genuine freelancers may represent multiple companies, control their own methods, and work without company oversight.
When dependency exists, the relationship is deemed employment – meaning agents are entitled to the protections of country laws.
That agreement allows for commission-based pay but guarantees a monthly minimum salary and ensures commercial staff receive at least 5% of net fees.
Industry at a crossroads
Agencies now face a stark choice: employ staff properly, or restructure contracts to meet the legal test for self-employment.
Some have resisted the change complaining about the added costs of social security deductions, while a handful of top-earning agents prefer uncapped commission structures.
But these high-flyers are rare. For most agents, the current system creates churn. Agencies recruit large numbers during boom times, discard underperformers at no cost, and pocket the benefits.
Critics argue that formalising the sector would not just protect workers, but professionalise the industry.
Incredibly, Spain still has no national licensing requirement for estate agents.
In Catalunya, training and certification are compulsory, but in regions such as Andalucia, anyone with a business licence and a phone can set up shop.
The lack of standards – combined with commission-only pay and hefty freelancer contributions – creates a perfect storm. Agents are understandably tempted to cut corners or mislead clients to close sales.
Illegal practices, such as charging tenants finder’s fees despite government bans, remain widespread.
Fines for Engel & Volkers
Some firms, however, have taken a different path.
At my firm, Terra Meridiana, for example, our sales staff have been employed since 2003.
We believe in a level playing field where all competition follows the same rules and pays the same contributions.
Even industry bodies are beginning to shift. In spring 2024, the Federation of Real Estate Companies (FADEI) met with the National Anti-Fraud Office to discuss clearer guidelines and compliance.
The move signalled recognition that enforcement would not go away.
And for good reason. High-profile fines have made headlines.
In August this year, Engel & Volkers was hit with €6.4 million in penalties for misclassifying 569 agents in Valencia. And it has now been given another €16 million fine for doing the same for 400 agents in Barcelona.
While a multinational can absorb such losses, smaller firms could be bankrupted.
What comes next?
Inspectors are unlikely to ease off. In 2023, the Labour Inspectorate received a 41% funding boost, allowing it to expand investigations.
With food delivery cases largely resolved, real estate is now front and centre.
Around 40% of agents are believed to be freelancers – some estimate, far more – and Spain has about 100,000 agency workers in total.
That leaves huge scope for further crackdowns.
The implications are clear. Agencies that need to direct and manage their staff must employ them.
Those that want independent contractors must allow them true autonomy – no company equipment, no fixed schedules, no dress codes.
Otherwise, they risk devastating fines.
Ultimately, professionalisation benefits everyone. Employment contracts encourage agencies to invest in training and discourage agents from bending rules to make a quick sale.
A more accountable sector could also improve Spain’s reputation in the international property market.
The shake-up may be painful in the short term. But with inspectors determined, agencies will have to adapt.
And those that embrace compliance and professionalism could come out stronger – while those clinging to old habits risk being left behind.
Click here to read more Adam Neale: Property Insider News from The Olive Press.