Rental contracts renew automatically and landlords must pay compensation

Automatic summary, not yet reviewed

1. When a primary residence rental contract reaches five years (seven if the landlord is a company), it automatically renews in successive five- or seven-year periods. To prevent renewal, either party must give notice: the landlord six months ahead, the tenant two months.
2. If the landlord gives notice of non-renewal, they must pay the tenant compensation: the greater of twelve monthly amounts based on the state rental price reference system, or one month per year of residence. It is paid when the apartment is handed over.
3. No compensation is due in several cases, which must be stated in writing in the notice: if the landlord needs the home for themselves or close relatives, if the tenant has not actually lived there, if the tenant already owns another suitable home in the same municipality, or if the parties sign a new contract.
4. Extraordinary extensions remain: up to one year for tenants in social and economic vulnerability, and up to three annual years in designated stressed rental market areas. Landlords must accept them in the cases provided, and they cannot be combined with each other.
5. The new rules apply to existing contracts only for expirations after they take effect. Non-renewal notices given before publication remain valid and do not create compensation, and for contracts expiring within six months, four months' notice is still enough.
6. The rule takes effect on November 15, 2026.

Who it affects

• Tenants: Tenants of primary residences: their contract renews automatically and they receive compensation if the landlord does not renew, with exceptions.
• Landlords: Landlords: they must give six months' notice, pay compensation if they do not renew, and accept extraordinary extensions in the legal cases.
• Large landlords: Companies that own apartments: their minimum contract term is seven years and they are subject to the same compensation rules.
• Contracts ending: Contracts already notified before publication: they follow the previous rules and do not create compensation.

Words worth knowing

Prórroga tácita (tacit renewal)

The contract extends automatically, without anyone signing anything new.

Persona jurídica (legal entity)

A company or organization, not an individual person.

Zona de mercado residencial tensionado (stressed rental market area)

An area officially declared where rents have risen sharply and special rules apply.

Tácita reconducción (tacit renewal by continued occupancy)

When the contract ends but the tenant stays and the landlord does not object: the rental is understood to continue.

Real decreto-ley (royal decree-law)

A rule with the force of law that the Government can pass urgently, without prior approval by Congress.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries