Spain's consumer authorities oblige landlords to accept rent extension requests

A new regulation set up by Spain's Ministry of Consumer Affairs allows tenants to request an extraordinary extension of their contracts for up to two years as long as they expire "between 22 March 2026 and 31 December 2027". The extension requires landlords to maintain the original conditions of the contract and the ministry has stated that this is a tenant's right that the landlord is obliged to grant.

The ministry has issued a statement that addresses 13 real estate companies and investment funds (including Blackstone, CaixaBank, and CBRE Investment Management) that manage approximately 100,000 homes.

With this notice, the ministry aims to remind property owners and real estate companies of their obligation to comply with the royal decree-law approved by the cabinet on 20 March. This regulation is part of the government's measures to address the economic impact of the war in Iran. It introduces direct changes to standard residential rental agreements.

The Consumer Affairs department has also asked companies to exercise extreme diligence and adjust their internal mechanisms to ensure the immediate application of these measures.

The intervention comes at a particularly delicate time for the rental market. More than one million contracts signed during the pandemic (1,037,603 in total) will expire before the end of 2027, affecting approximately 2.7 million people. Most were signed at a time of lower prices, making their renewal a critical issue for many households.

Forecasts point to significant price increases. While industry estimates place the rises between ten and 20 per cent, the government warns that in certain areas the increase could approach 50 per cent. In those cases, the price hikes could force many people to leave their homes.

The phenomenon has a broad geographical reach, although it is most intense in regions like Madrid, with more than 224,000 contracts affected, followed by Catalonia, Andalucía and Valencia. The accumulation of expiring contracts in these regions threatens to further increase pressure on prices.

To mitigate this impact, the decree combines two tools: the extension of contracts, on the one hand, and the capping of rent increases, on the other. It terms of the latter, it decouples rent increases from the CPI and sets a general cap of two per cent during the extension period.

In recent days, the government reminded eligible tenants to apply for contract extensions as soon as possible, taking advantage of the window before the decree is ratified in the lower house. Second Deputy Prime Minister Yolanda Díaz and Minister of Consumer Affairs Pablo Bustinduy believe that this measure can prevent the forced displacement of thousands of households.

An extraordinary cabinet meeting marked by tension between the coalition partners approved the measure. Although it is already in effect, its status depends on parliamentary approval in the coming weeks.