Spain Orders Real Estate Funds to Accept Mandatory Two-Year Rental Extensions

Spain's Ministry of Social Rights, Consumer Affairs and Agenda 2030 sent formal letters on Monday to 13 major real estate companies and investment funds, ordering them to accept mandatory two-year extensions on rental contracts expiring between March 22, 2026, and December 31, 2027, if requested by tenants. The ministry, led by Pablo Bustinduy, said the 13 entities collectively manage more than across Spain. The measure stems from Royal Decree-Law 8/2026, approved on March 20, 2026, as part of the government's economic response package to the war in Iran. Among the companies notified are vehicles linked to Blackstone — specifically Testa Homes and Fidere — as well as CaixaBank and Nestar, which is owned by CBRE Investment Management.

Rent hikes capped at 2% under the new emergency rule Under the decree, tenants whose primary residence contracts fall within the specified window may request an extraordinary extension in annual periods for a maximum of two additional years, and landlords are legally obliged to accept. Rent increases during those extensions are capped at 2%, a provision Bustinduy described as particularly significant given inflationary pressures linked to the conflict. The ministry's Directorate-General for Consumer Affairs urged all 13 entities to immediately adapt their internal procedures to guarantee compliance. The letter specifies that the extension preserves all existing contractual conditions, meaning neither rent nor other terms can be altered beyond the 2% cap. An exception applies when both landlord and tenant voluntarily agree to renew at a lower rent than the current contract provides. „The rule in force under this decree law entails the mandatory extension of all rental contracts that expire this year and in 2027, and also capping rent increases at 2% — that is, they may not be raised by more than 2%, which in the context of inflation resulting from the illegal war in Iran is very important.” — Pablo Bustinduy via LaSexta Bustinduy also urged tenants to notify landlords by burofax or certified letter to formally invoke the extension right.

Junts opposition threatens decree's survival in Congress The decree's parliamentary future is uncertain. The text must be ratified by the Congress of Deputies within approximately one month of its submission, and the political party Junts has announced it will vote against the measure, leaving the government without a guaranteed majority. Several sources described the decree's ratification as likely to fail. The government's strategy, however, is to encourage as many tenants as possible to formally request extensions before the congressional vote takes place, because extensions already granted remain valid even if the decree is subsequently rejected. According to La Razón, only extension requests made between March 22, 2026, and the date of publication of any non-ratification notice in the Official State Gazette would be preserved in that scenario. Bustinduy expressed confidence the government would ultimately prevail in the vote. „I am convinced, absolutely convinced, that we are going to win the vote.” — Pablo Bustinduy via LaSexta

Sumar ministers pushed hard for the measure's inclusion The decree's passage through the Council of Ministers was not straightforward. According to eldiario.es, Sumar ministers conditioned the start of an extraordinary Council of Ministers meeting on the inclusion of the rental extension measure, which was ultimately separated from a broader fiscal anti-crisis decree — already ratified by Congress — and placed in a standalone regulation still awaiting parliamentary approval. Second Deputy Prime Minister and Minister of Labor Yolanda Díaz publicly backed the measure and encouraged eligible tenants to request extensions without delay. Bustinduy framed the obligation in stark terms, arguing that without the cap, tenants could face rent increases of 40, 50, or 60 percent, or be forced out of their homes. „No one would understand voting against something very simple: that owners, including large owners, continue to receive their rents with complete normality, updated by 2%, and that millions of people do not find themselves faced with the dilemma of having their rent raised by 40, 50 or 60% and being thrown out onto the street.” — Pablo Bustinduy via LaSexta The ministry said the measure provides protection to more than 2 million tenants across Spain. Spain has faced sustained pressure on its rental market for several years, with housing affordability emerging as a central political issue. The government has pursued a series of interventions including caps on seasonal leases and restrictions on holiday rentals. In January 2026, Spain moved to tighten rental rules further with room rent caps and curbs on seasonal leases. A Barcelona plan to ban holiday apartment rentals by 2028 was upheld by a top Spanish court in March 2025.

Royal Decree-Law 8/2026 — key rental changes: Contract extension right (before: No extraordinary extension available at end of contract term, after: Tenants may request up to 2 additional years in annual renewals); Annual rent increase cap (before: No emergency cap in place, after: Increases capped at 2% during extraordinary extension period); Landlord obligation (before: Landlord could decline renewal at contract expiry, after: Landlord must mandatorily accept tenant's extension request)