The Spanish government has moved to limit auto extension in rental contracts as part of a broader set of measures designed to curb uncertainty around future rent increases for tenants. The new package addresses concerns about how rents might rise and who should bear responsibility when agreements are renewed, aiming to stabilize housing costs amid economic volatility.
Under the freshly approved rules, borders on rent increases that were previously set by the inflation rate will remain in place through the end of the year for contracts tied to the consumer price index. Beginning in 2024, the ceiling for rent hikes will rise to three percent, a change foreseen in housing legislation after extended negotiations in the Cortes Generales. These percentages define the permissible range for next year’s rent adjustments and reflect the government’s effort to balance tenant protection with landlords’ financial planning in a shifting macroeconomic environment.
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Alongside eliminating automatic lease extensions that previously allowed annual renewal without explicit negotiation, the eviction ban was also adjusted to require alternative housing arrangements for those facing displacement. Nadia Calviño, the First Vice President and Minister of Economy and Digital Transformation, stated that the Housing Act, which has been approved by the Cortes Generales, provides protections for vulnerable tenants and allows certain contracts to be extended for an additional year when appropriate. This creates a safety net for tenants who need continuity while negotiations unfold and new terms are agreed upon.
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With the removal of the auto-extension option, leases cannot be automatically renewed beyond June 30, 2023 unless both parties reach an agreement on new terms or the owner demonstrates a legitimate need to use the home for personal or family use. The policy shift closes a loophole that effectively kept rents at a price shielded by law, forcing both sides to renegotiate under the updated framework. This change is a clear signal that automatic protections are folding into a broader, more transparent process for setting rent terms.
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In summary, the disappearance of the automatic lease extension, together with the legally mandated limits on increases, adds a layer of uncertainty about future rental prices and the protection afforded to tenants. Those affected should stay alert during negotiations with landlords and consider alternatives that offer stability in rent amidst rising housing costs. While the new act tightens certain controls, it also creates space for proactive planning by renters who want to avoid sudden spikes and secure predictable housing expenses in the years ahead.