On Tuesday, the government approved two royal decree-laws containing new housing measures that directly affect the rental market. Among the announced changes are the possibility of extending certain leases for two years, greater protection against evictions, new rules for seasonal and room rentals, and restrictions on home purchases by certain investment funds.
However, there is one important point to note: this is not a single decree, but rather two different texts, and both will now have to pass through Congress.
Some rental contracts may be extended by two years
The first decree includes an extraordinary extension for rental contracts for primary residences that are currently in effect and expire before December 31, 2028.
In these cases, the lease may be extended through annual renewals for a maximum of two additional years.
This will not be a completely automatic extension for every tenant. Among the conditions outlined during the negotiations is that the tenant must be current on rent payments and have been so for the previous eight months.
The automatic renewal of leases is covered by another decree
The measure that could bring about the most profound change in lease terms has finally been separated from the rest.
A second royal decree-law specifically addresses the automatic renewal of rental contracts for primary residences once their expiration date has been reached.
The goal is to ensure that the expiration of a lease does not necessarily mean the tenant has to leave the property or sign a completely new lease. The government has announced, however, that there will be safeguards for cases in which the landlord needs to reclaim the property.
The specific details will depend on the final text published in the Official State Gazette (BOE).
Protection against certain evictions will remain in effect until 2030
The first decree also extends until December 31, 2030, the extraordinary measures that allow for the suspension of certain eviction proceedings when they affect households in a situation of economic vulnerability and without alternative housing.
This does not, therefore, mean that all evictions will be halted. The measure is limited to cases that meet the requirements established by the law.
New rules for seasonal and room rentals
Another new development affects two types of rentals that have become increasingly common in cities like Madrid: seasonal rentals and room rentals.
The decree aims to specifically regulate temporary leases by requiring a valid reason to justify their temporary nature and preventing this arrangement from being used as a substitute for renting a primary residence.
The regulation will ultimately also apply to leases in which only a single room is rented. The fine print of both measures will be defined in the full text of the regulation.
Restrictions on home purchases by certain funds
The package approved by the Council of Ministers also establishes a ban, in effect until 2028, on certain home purchases by investment funds when such purchases are speculative in nature.
The government has yet to specify, in legal terms, which transactions and companies will be subject to this restriction.
One measure that had been discussed during the negotiations but ultimately does not appear in the decrees is the expropriation of homes owned by investment funds.
Congress now has the final say
Approval by the Council of Ministers does not conclude the process.
The government has requested an extraordinary plenary session of Congress this Friday to vote on the ratification of the two royal decree-laws separately.
This means that one could receive the Chamber’s approval while the other might not. Until then—and pending full access to the texts published in the Official State Gazette (BOE)—some of the specific conditions may still change or be omitted if either decree is not ratified.