Spain implements new rental housing regulations

The Spanish government has introduced significant changes to the Urban Leasing Law (LAU) via Royal Decree-Law 29/2026, aimed at regulating rental contracts and protecting tenants.

Under the new rules, if a landlord and tenant chain more than two consecutive temporary contracts for the same property, the lease will automatically be classified as a permanent residence from the first agreement. Temporary leases may still be used if a specific, justified reason for a limited stay is provided.

Additionally, landlords must now provide six months' notice if they do not intend to renew a permanent residence contract, an increase from the previous four-month requirement. This applies to contracts that have reached five years for individual owners or seven years for legal entities. Failure to provide timely notice results in an automatic extension of the contract for another five or seven years.

Landlords who choose not to renew after these periods must also pay an indemnity to the tenant. The compensation amount is the higher of two calculations: twelve monthly payments based on the official state rental price reference index, or one monthly payment for every year the tenant has resided in the property. This indemnity is payable upon the tenant vacating the premises.