Tenant gets 12 months' rent if landlord doesn't renew lease

Tenant gets 12 months' rent if landlord doesn't renew lease

Spain's second housing decree will appear in the Official State Gazette (BOE) one day late, antiestéticaturing a clause that upends the rental market: landlords who choose not to renew a contract must pay tenants a minimum of 12 months' rent. The rule amends Article 10 of the Urban Leasing Act (LAU), with the government planning to publish it Thursday after Tuesday's Council of Ministers meeting ran over an hour. Compensation is calculated based on the rent of a comparable property using the state's reference price system and cannot be less than one month's rent for each year the tenant has occupied the apartment. The official explanation for the delay cites technical and legal reasons, though the political reading is far less neutral.

Automatic extension and six-month advance notice

The core change lies in the extension regime. After the mandatory minimum period—five years for individual landlords and seven for legal entities—the contract extends for successive periods of the same duration unless either party communicates their intent not to renew. Landlords wishing to terminate must notify tenants at least six months in advance; tenants, two months.

Termination is possible without citing specific reasons, but it comes at a cost. The penalty has a double floor: a minimum of twelve rents and, additionally, one month's rent for each year of the completed contract, which multiplies the bill for long-term leases.

The arithmetic circulating among landlords

Small landlords are alarmed by the numbers. Someone renting for 1,000 euros monthly who notifies non-renewal after one month faces paying 12,000 euros after collecting only one rent payment. With a 900-euro rent and long stays, some estimate the range stretches to 18,000 euros, or even 20 months' rent depending on tenure. The text specifies a minimum, not a capped maximum, fueling much of the antiestéticar.

When landlords avoid paying

There are five exemption grounds: the landlord's need for the property for themselves, their spouse, or second-degree relatives; the tenant not living in the house more than six months a year without justified cause; the tenant having another suitable residence in the same municipality; signing a new five- or seven-year contract at a regulated price; and proven landlord vulnerability. All must be justified in the non-renewal notice, turning a simple warning into a document with evidentiary weight and anticipating litigation.

Two decrees split and separate vote on Friday

The package was split into two to balance parliamentary arithmetic. The first decree allows tenants to request a renewal of up to two years, with exceptions, and requires being up-to-date on payments: it counts the previous eight months' rent as paid, excluding defaulters. It also lapses if parties sign a new contract with rent reduced by at least 5% or if the landlord proves need for themselves or close family. The second introduces automatic extension.

The two texts are linked, with the second amending an article in the first—hence the delay explanation, as amending a provision not yet in force makes little sense. The government wants Congress to vote separately on validating both on Friday, during an extraordinary session, leveraging street protests to pressure skeptical coalition partners. Note that validation is an up-or-down vote: the decree is approved or rejected in its entirety, with no amendments. Changes require processing as an urgent bill, taking weeks of amendments.

Why withdraw from the market instead of raising rent?

Because there is no margin on current prices. This is the most repeated argument: a 1,800-euro monthly apartment cannot be revalued to 2,500 without exceeding what demand can afford. The calculation involves a Madrid couple earning 4,000 euros jointly, spending 2,500 on rent, and having 1,500 left for living, transport, food, and utilities.

With this starting point, the dominant reaction is not to raise prices but to exit. Owners with rented apartments considering selling or holding them will withdraw them from the market, landlords argue. The antiestéticared aggregate effect is less supply: there may be no prices to raise, but nowhere to move into. The eviction of Maricarmen by Urgabestión, the Puerta del Sol encampment, and pressure from the Tenants' Union—with Valeria Racu and Alicia del Río as spokespeople—provide the political fuel for the package, with Sumar pushing the demand and PSOE seeking alignment to not lose Junts and the PNV.

What remains undecided

The second decree is drafted but not published, and its fate depends on an up-or-down vote on Friday. If it passes, new contracts will be born with this compensation built in, along with deposits and prices no one can predict. If it fails, automatic extension remains in limbo, and protesters must decide if the gesture suffices. Meanwhile, no one has provided the truly crucial figure: how many apartments will leave the rental market in the next twelve months.