Spain's new rental law: Five exceptions to landlord compensation

Royal Decree-Law 27/2026, published in the Official State Gazette (BOE), requires landlords in Spain to compensate tenants with 12 months' rent if they refuse to renew a lease, unless one of five exceptions applies. The regulation also covers existing contracts, antiestéticaturing transitional rules for those expiring within six months.

The BOE has published Royal Decree-Law 27/2026, the second of two decrees approved by the Government to intervene in the rental market. The rule enters into force the day after publication and introduces a measure that will shake up the relationship between landlords and tenants: if the owner decides not to renew the contract, they must compensate the tenant with **12 months** of rent. This figure is not symbolic. With an average rent of **€1,000** per month, the minimum cost to recover the property rises to **€12,000**. However, the law includes five scenarios that exempt the landlord from this payment. Moreover, the rule applies to contracts already in force, not just those signed from now on.

The regulation also includes automatic lease extensions, a measure designed to prevent evictions and provide stability for tenants. The text, which along with the first decree will be examined by Parliament in the Congress of Deputies, specifies how it applies depending on the timing or phase of the current contract. The key factor is the proximity of the expiration date and the originally agreed duration.

## The 12-month compensation and its calculation

Compensation is calculated based on a comparable dwelling. The text sets a floor: it will never be less than one month's rent for each year the tenant has lived in the property. In practice, for a ten-year contract, the minimum would be ten months, but the general reference is twelve. The payment falls to the landlord who terminates the contractual relationship at expiry without qualifying for any of the exceptions.

Parliament examines the decree alongside the first package of measures. Parliamentary proceedings could introduce changes, but the text published in the BOE already defines the regime facing owners and tenants. The rule refers to millions of active primary residence leases in Spain, a figure that indicates the scale of the impact. This is not a minor reform or a technical adjustment.

## Changes for already signed contracts

For leases currently in force, the key issue is how much time remains until the expiration date. If more than six months remain when the rule starts applying, the landlord must communicate their decision not to renew in writing with at least **6 months'** notice. The previous **4-month** deadline disappears. The tenant's notice period, however, remains at two months.

If the contract has less than six months left before expiring, a transitional regime opens. The landlord can notify non-renewal with a minimum of **4 months'** notice. This flexibility is intended for cases where complying with the new deadline is materially impossible. That transitional regime only affects contracts already signed, not those subscribed after the rule enters into force. But the bulk of the obligation stands: if the landlord terminates the contract at expiry, they must pay the twelve-month compensation, unless an exception applies. The rule does not distinguish between old and new contracts when applying compensation; it only modulates notice periods.

## The five scenarios avoiding compensation

The first exception allows the landlord to recover the property for themselves or for second-degree relatives, such as parents or siblings, but only if the landlord is a natural person. The second focuses on actual use: if the tenant has not lived there for more than six months in the last year, or if they have another available home in the same municipality, the landlord is released. Proven vulnerability of the owner is the third route.

The fourth case is that the parties sign a new contract. The fifth, and perhaps the most debated, is that the tenant rejects a reliable offer for a new contract communicated within the notice period. That offer must guarantee the tenant's stay for a minimum of **5 years**, or **7 years** if the landlord is a legal entity. The total amount of the new monthly rent must comply with current regulations, even if the property is not in a tense residential market zone. In other words, the landlord can propose a new contract, but at tense-zone prices if the regulations require it.

## Tacit renewal no longer extends year by year

Until now, when a contract reached its initial term and neither party spoke up, it was renewed year by year up to a maximum of three. With the new rule, that scenario changes completely. If the landlord does not communicate their intention not to renew with **6 months'** notice, the contract is mandatorily extended for a period identical to the original. That means **5 more years** if the landlord is a private individual, or **7 more years** if it is a company or legal entity. The difference with the previous system is notable: before, tacit renewal was limited to three years maximum. Now, the contract can extend for decades if the landlord does not give notice.

The measure aims to provide stability for the tenant and prevent lack of communication from becoming a de facto way to recover the property without compensation. Owners who want to recover the property will have to act in good time and, in many cases, pay. The rule enters into force the day after its publication in the BOE, but its application to existing contracts is already defined.

For any decision regarding a rental contract, it is advisable to consult a lawyer or legal advisor.