New rental law 2026: 12-month compensation if landlord does not renew

Key data

If you have a rental property, the rules of the game have just changed radically. The Royal Decree-Law 27/2026, in force from October 1, 2026, modifies article 10 of the LAU and makes automatic renewal the general rule: if you don't act in time, your contract renews on its own. And if you decide not to renew it without justified cause, you pay.

The stated objective of the regulation is to strengthen tenant stability. The real cost is borne by landlords who want to recover their property without proving justified cause.

What does this regulation establish?

RDL 27/2026 modifies article 10 of the LAU to establish successive automatic renewal as the general rule upon expiration of the minimum contract duration period. Until now, upon contract expiration, annual tacit renewal operated; now renewal is for periods of equal duration to the original contract, unless one of the parties expressly communicates their intention not to renew.

Comparative table: before and after RDL 27/2026

Justified causes that exempt from compensation

The landlord is exempt from paying compensation if they prove one of these causes:

• Need for the property for personal use or that of a second-degree relative.
• Non-effective occupancy of the property by the tenant.
• Availability to the tenant of another suitable property in the same municipality.

Transitional regime

• Non-renewal communications already sent before entry into force are respected.
• For contracts expiring in the 6 months following October 1, 2026, the landlord can give notice with 4 months in advance (instead of the general 6 months).

Economic and operational impact

The most direct impact is economic and affects landlords who want to recover their property upon contract expiration. If they cannot prove justified cause, they must pay compensation calculated on the reference price index, with a ceiling of 12 monthly payments and a floor of 1 monthly payment per year of residence.

This means that the longer the tenant has lived in the property, the higher the guaranteed minimum compensation. A tenant with 8 years of residence is entitled to a minimum of 8 monthly payments, even if the calculation on the reference index might result in less.

Operationally, the longer notice period (6 months) requires landlords to plan any decision about the property further in advance. An error in calculating deadlines could result in the contract automatically renewing for another period, delaying recovery of the property.

Who does it affect?

• Individual landlords with residential rental properties: must review all contracts and calculate expiration dates.
• Legal entities as lessors (companies, funds, enterprises): the minimum period before renewal operates is 7 years (compared to 5 years for individuals).
• Residential tenants: benefit from greater stability and the right to compensation if the landlord does not renew without justified cause.
• Property managers and administrators: must update their expiration control systems and adapt notice models.
• Legal and real estate advisors: must inform their landlord clients of the new regime before contracts expire in the coming months.

Practical example

An individual landlord has an apartment rented since October 2019. The contract expired in October 2024 and has been in renewal since then. The tenant therefore has 7 years of residence in the property as of October 2026.

The landlord wants to recover the apartment in April 2027. To avoid automatic renewal, they must communicate their decision not to renew with at least 6 months in advance, that is, before October 1, 2026. If they don't do so in time, the contract automatically renews.

If they communicate non-renewal on time but cannot prove any justified cause (personal use, second-degree relative, etc.), they must pay the tenant compensation. With 7 years of residence, the guaranteed minimum is 7 monthly payments. If the calculation on the reference price index results in a higher amount, that amount applies, with a ceiling of 12 monthly payments.

If the landlord proves they need the property for personal use or that of a second-degree relative, they are exempt from paying compensation.

What should landlords do now?

1. Audit all active rental contracts: identify the expiration date of the minimum period and calculate when automatic renewal operates.
2. Calculate notice deadlines: if you want not to renew a contract expiring in the coming months, check if you still have time to give the 6 months notice (or 4 months if expiration is before April 1, 2027, under the transitional regime).
3. Document justified causes if applicable: need for personal use or second-degree relative, non-effective occupancy by tenant, or availability of another suitable property in the same municipality. Without documentation, there is no exemption from compensation.
4. Review notice models: non-renewal communication documents must be adapted to the new 6-month period and correctly reflect the applicable regime.
5. Seek advice before acting: if you have doubts about whether your situation fits a justified cause, consult a lawyer before communicating non-renewal. An error could cost up to 12 monthly payments.

Official source

Consult complete regulation at official source

Notice: This article is for informational purposes only and does not constitute legal advice. For specific decisions, consult a qualified professional. Source: https://www.boe.es/diario_boe/txt.php?id=BOE-A-2026-20385