Summary of Royal Decree-law 27/2026, of 29 September, adopting urgent measures to strengthen the stability of primary-residence lease agreements (BOE no. 243, of 1 October 2026), in force since 2 October 2026.
Quick answer
- What is it? Royal Decree-law 27/2026, of 29 September (published in the BOE on 1 October 2026), in force since 2 October 2026, which rewrites article 10 of the Urban Rentals Act (LAU).
- What changes? After the minimum term, the lease is mandatorily extended for successive periods of five or seven years, and the landlord’s notice period rises from four to six months.
- Is compensation due? Yes: a landlord that does not extend must compensate the tenant with at least twelve months’ rent of a comparable home, unless an express statutory ground applies.
- Does it affect leases already in force? Yes, with respect to expiries after its entry into force, under a transitional regime.
- Is it final? No: Congress must validate or repeal it within thirty days.
Before you read on. This summary concerns a royal decree-law that has just been published and is pending validation by Congress. Its content may change or lapse, and the decree itself leaves open interpretive issues. The transitional regime requires each lease to be analysed separately. This article is informational and does not replace legal advice.
Contents
- What changes: successive five- or seven-year extensions
- Compensation for non-renewal
- When no compensation is due
- Agreed extensions and extraordinary extensions
- Leases in force: transitional regime
- Leases signed from 2 October 2026
- Validation and points awaiting clarification
What changes: successive five- or seven-year extensions
The decree rewrites article 10 LAU and abolishes the tacit annual extension of up to three years. Once the minimum term of five years (seven if the landlord is a legal entity) has elapsed, if neither party gives notice of non-renewal, the primary-residence lease is mandatorily extended for successive periods of five or seven years. The landlord’s notice period rises from four to six months. The tenant’s remains two months.
Practical question · Can the landlord end the lease at any time after the fifth year?
Answer. No. Only at each expiry (at five, ten, fifteen years…, or every seven if a legal entity), with six months’ notice.
Compensation for non-renewal
A landlord that does not extend must compensate the tenant with at least twelve months’ rent of a comparable home, calculated where possible using the State reference price system. The compensation may never be less than one month per year of residence. It is payable on return of the home and, if the home is sold, is borne by the buyer. Because the benchmark is the market rent rather than the lease rent, it may exceed twelve times the rent the tenant was paying.
Practical question · If the lease rent is EUR 800 and a comparable home rents for EUR 1,200, what is the minimum compensation?
Answer. In principle, EUR 14,400 (12 × 1,200), equivalent to eighteen months of the tenant’s actual rent.
When no compensation is due
No compensation is due, provided the ground is stated expressly, in detail and in writing in the notice, where:
- an individual landlord needs the home for themselves or their relatives (if they do not occupy it within three months, compensation is due);
- the tenant has not lived in the home for more than six months in the last year without good reason, or has another suitable home in the same municipality;
- the parties sign a new lease, or the tenant rejects an offer of a new five- or seven-year lease at a rent capped under article 17.6 LAU;
- the landlord’s proven vulnerability applies; or
- the tenant is entitled to a statutory extension that the landlord must accept, even if not requested.
Practical question · Can a company rely on its need for the home to avoid compensation?
Answer. No. The need-based ground is only available to individual landlords.
Agreed extensions and extraordinary extensions
If, after notice, the parties agree an extension, it must last at least five or seven years, and terms worsening the tenant’s conditions are void. The extraordinary extensions remain: up to one year for vulnerability, mandatory where the landlord is a large holder, and up to three years in stressed areas, which applies preferentially.
Practical question · Is it valid to agree, after notice, two more years at a higher rent?
Answer. Not on those terms. The extension must be for at least five or seven years and the rent increase would be void. To change terms, the route is a new lease.
Leases in force: transitional regime
The new regime applies to leases in force with respect to expiries after its entry into force, subject to these rules:
- if less than six months remain until expiry, four months’ notice is sufficient;
- leases already in the tacit annual extension complete it under the previous rules and then move to the new system;
- leases under tacit renewal join the new system from the first expiry after 2 February 2027, with four months’ notice, and prior valid communications remain effective without compensation;
- the two-year extraordinary extension under Royal Decree-law 26/2026 does not apply where the new extension applies. If it applies after a notice of non-renewal, its expiry without a justified ground gives rise to compensation.
Practical question · My lease has been in the tacit annual extension since 2026. Does anything change now?
Answer. Not immediately. It will complete that extension under the previous rules and, at its end, the five-year extensions and compensation will apply.
Leases signed from 2 October 2026
For landlords letting from now on, the lease will have a potentially indefinite term, with exit windows only every five or seven years and a set exit cost, unless a statutory ground applies. The compensation liability travels with the home on a sale, so it must be factored into the valuation of tenanted assets. These rules are in addition to those of Royal Decree-law 26/2026 (expenses, guarantees, temporary leases with a stated cause, IRAV cap).
Practical question · What should someone letting a home today, with a view to selling in ten years, plan for?
Answer. That the first possible exit will be at year five, with six months’ notice and compensation unless a statutory ground applies, or a sale with the tenant in place, which the buyer will reflect in the price.
Validation and points awaiting clarification
Congress must validate or repeal the decree within thirty days. If it is not validated, article 10 LAU would revert to its previous wording, and notices and compensation in this period would raise questions likely to be resolved by the courts. There are also open interpretive issues: the preamble and the first additional provision differ on compensation where the Royal Decree-law 26/2026 extension applies, and the decree does not clarify whether compensation is due at the end of the extraordinary extension in stressed areas.
Practical question · What should be done in the meantime?
Answer. Apply the rules in force, respect the new notice periods, state any statutory ground in the notice and keep reliable evidence of the communication.
Barcelona, October 2026
For information purposes only; not legal advice. For a full analysis, see our newsletter or contact SANDIN ABOGADOS.
Do you have primary-residence leases coming up for renewal?
At Sandin Abogados we review your leases, calculate the impact of the new extension and compensation regime, and prepare notices on time and in the right form.
Author: Susana Sandín Llorente, lawyer and Executive MBA, Sandin Abogados.
Published: 1 October 2026 · Last updated: 1 October 2026
Disclaimer: this article is informational and does not constitute legal advice. The decree is pending validation and may change. Consult a professional before making decisions.
Sources: Royal Decree-law 27/2026, of 29 September (BOE of 1 October 2026, BOE-A-2026-20385) · Act 29/1994 on Urban Rentals (art. 10).
