Royal decree-law to safeguard the extension of residential leases

The Council of Ministers approved on September 29 Royal Decree-Law 27/2026, on urgent measures to reinforce the stability of residential lease agreements for primary residences. The regulation is published in the Official State Gazette (Boletín Oficial del Estado) no. 243, of October 1, 2026, section I, page 128380, with official reference BOE-A-2026-20385, and enters into force the day following its publication, October 2. The text modifies article 10 of Law 29/1994, of November 24, on Urban Leases.

The reform is based on a diagnosis: contracts signed after the entry into force of Royal Decree-Law 7/2019, of March 1, have been reaching the end of their minimum five-year term since 2024 and, for the most part, are under tacit extension, which for the first ones expires in 2027 and for those entered into between 2019 and 2022—the largest volume currently in effect—between 2027 and 2030. The Executive maintains that the expiration of the contract has become the primary mechanism for passing price increases on to households and that processing through the ordinary legislative procedure would not allow for a timely response.

The measure is issued at the proposal of the Minister of Social Rights, Consumption and 2030 Agenda and under article 149.1.8.ª of the Spanish Constitution, which grants the State exclusive competence in civil legislation. The text is signed by King Felipe VI and countersigned by the President of the Government, Pedro Sánchez Pérez-Castejón.

Mandatory extension and new notice periods

Upon the expiration of the contract or any of its extensions, once a minimum duration of five years has elapsed—seven if the lessor is a legal entity—the contract shall be mandatorily extended for successive terms of the same duration unless one of the parties notifies their intention not to extend it.

• The lessor’s notice period increases from four to six months.
• The lessee’s notice period remains at two months.
• Voluntary extensions agreed upon after a notice of non-extension may not be shorter than these periods.
• Stipulations that worsen the conditions of the original contract are null and void.

Indemnity of twelve monthly payments

The lessor who validly communicates their intention not to extend must indemnify the lessee with an amount equivalent to, at least, twelve monthly rent payments for a dwelling of similar characteristics. The calculation shall be made, whenever possible, according to the state reference system for residential rental prices and, in no case, may be less than one monthly payment for each year of residence, prorated by months and days. The indemnity is paid at the time of the delivery of the dwelling, and the sale of the property does not extinguish the right, which corresponds to the subrogated acquirer.

Exceptions and extraordinary extensions

Compensation shall not be applicable when the non-renewal is due to a justified cause detailed in writing in the notification:

• The need of the lessor (natural person) for the dwelling for themselves, for second-degree relatives, or for a spouse in cases of separation, divorce, or annulment; if they do not occupy it within three months, the lessee recovers the right.
• Lack of effective occupancy for more than six months during the previous twelve, unless there is a justified cause.
• Availability of another suitable dwelling in the same municipality.
• Signing of a new contract or rejection of a reliable offer with a minimum stay of five or seven years.
• Proven vulnerability of the lessor.

Extraordinary extensions for social and economic vulnerability, for up to one year and mandatory acceptance for large holders, and those for stressed residential market areas, for up to three years and preferential application, are maintained.

Transitional Regime

The new regime applies to current contracts regarding expirations occurring after the day following its entry into force. For contracts with less than six months remaining until expiration, the lessor may provide four months’ notice. Non-renewal communications already issued remain effective and do not generate compensation, and contracts under tacit renewal shall be subject to the new regulation starting from the first expiration that occurs four months after the entry into force.

The regulation directly affects millions of renting households and owners of rental properties: it turns contract continuity into the rule and termination into an express, notified, and economically compensated decision. The preamble itself invokes the experience of Germany, France, and the Netherlands and recalls that the Constitutional Court, in its Judgment 89/1994, of March 17, endorsed the forced extension of the previous leasing legislation.

Source: Official State Gazette, no. 243, of October 1, 2026, section I. General provisions, page 128380 (official reference: BOE-A-2026-20385).