The Spanish government warns large real estate companies and funds of the mandatory nature of accepting rent extensions

BarcelonaThe Ministry of Social Rights, Consumer Affairs and the 2030 Agenda sent a letter this Monday to large real estate companies and investment funds to inform them that the contracts of their tenants that expire between March 22, 2026, and December 22, 2027, must be extended as long as they request it. The text sent by the government was addressed to thirteen large holders who concentrate more than 100,000 homes throughout Spain, as reported by the ministry led by Pablo Bustinduy. Thus, the letter reminds these companies that the extension of rental contracts will be mandatory once the tenant requests it, according to the recent royal decree-law approved by the Council of Ministers, which currently does not have sufficient parliamentary majority to be validated in Congress the recent royal decree-law approved by the Council of Ministers and which for the moment does not have a sufficient parliamentary majority to be validated in Congress.

The decree, published in the Official State Gazette (BOE) on March 21, allows the tenant to extraordinarily renew their rental contract once it ends, as long as the contract's deadline is between the foreseen dates. Therefore, the regulation creates a new right to renew the rental contract for a maximum of two years, which, if activated, the landlord must extend maintaining the terms and conditions in force. Furthermore, the letter also requests the entities' utmost diligence to ensure that the measures are correctly applied and asks for internal procedural mechanisms to be adopted to ensure immediate compliance.

The measure will not be applicable when the owner and tenant agree to renew the lease agreement, or sign a new one, with a rent lower than that agreed in the current contract. An extraordinary limitation of the annual rent update to 2% is also established, although if the landlord is not a large holder, this must be carried out by agreement between the parties. At the latest, the decree must be voted on in Congress the week of May 6. However, everything indicates that it may be brought to a vote the last week of April, as no plenary session is scheduled for the first week of May.