Renewing a tenancy: when the landlord must extend and how much the rent can rise

Extension: what the law says

Residential letting is governed by the urban tenancies act — Ley 29/1994 (LAU).

Compulsory extension to 5 or 7 years

The parties are free to agree the term. But if it is shorter than five years — or shorter than seven where the landlord is a legal entity — then on the expiry date the contract extends compulsorily in yearly periods until the tenancy reaches five or, as the case may be, seven years. There is one exception: the tenant gave notice at least 30 days before the end of the contract or of any extension that they do not wish to renew (art. 9.1 LAU). A contract with no stated term is deemed to be for one year — with the same right to yearly extension (art. 9.2).

When an individual landlord may refuse to extend

After the first year, and only where the contract expressly records that the home may be needed by the owner, they may take it back for themselves, for first-degree relatives or for a spouse on divorce. Notice must be given at least two months in advance, stating the reason (art. 9.3).

Tacit renewal after 5 or 7 years

Once the compulsory term is exhausted and neither party has given notice that they do not wish to renew, the contract extends compulsorily in yearly periods for up to three more years. The notice periods differ: the landlord must give at least four months, the tenant at least two. A tenant may leave a year already under way on one month's notice (art. 10.1 LAU).

Two extraordinary extensions

• Vulnerability. At the end of the compulsory or tacit extension the tenant may request an extraordinary extension of up to one year on the same terms. A report or certificate from municipal or regional social services, issued within the last year, is required. Where the landlord is a large property holder (as defined in Ley 12/2023), they are obliged to accept it (art. 10.2).
• Stressed residential market area. Where the home is in an area declared stressed and the declaration is in force, the tenant may require an extraordinary extension in yearly periods for up to three years on the previous terms, and the landlord must accept it. Exceptions: the parties agreed other terms, a new contract was signed with the applicable rent limits, or the landlord gave notice of needing the home under art. 9.3 (art. 10.3).

The extended contract remains subject to the same legal and contractual regime as before (art. 10.4).

Raising the rent: what is allowed and what is not

Once a year, and only if the contract says so

During the term of the contract the rent may be revised only on the date each year of the contract is completed, and only on the terms the parties agreed. If there is no express indexation clause, no indexation applies at all (art. 18.1 LAU). The rule works both ways: either party may seek the revision.

The ceiling — and an important caveat

Where the parties agreed a revision mechanism without naming an index or method, the rent is revised by the annual change in the index named in the law. A ceiling is also set by law — but here an honest caveat is due: we checked the consolidated text as it stood on 25 May 2023, and in that version the ceiling is the change in the consumer price index at each revision date (art. 18.1). After 2023 the rules on indexing rents were amended by separate legislation, so this page does not state which index or ceiling is in force in 2026 — that is the first thing to confirm with a lawyer if you have been sent an increase.

The new rent applies from the following month

The revised rent may be demanded from the month following the one in which the interested party gave the other written notice stating the percentage applied. At the tenant's request, a certificate from the National Statistics Institute is attached. Notice given as a note on the previous month's receipt is valid (art. 18.2).

Increases for improvement works — not before five years

Improvements carried out by the landlord after five years (seven for a legal entity) entitle them to raise the annual rent — but by formula: the statutory interest rate at completion plus three points, applied to the capital invested, and capped at 20% of the rent then payable. Subsidies are deducted from the capital. The increase applies from the month following written notice with the calculation and copies of the cost documents (arts. 19.1 and 19.3 LAU). Works agreed between the parties are possible at any time, but they do not interrupt or reset the compulsory and tacit extension periods (art. 19.4).

A new contract in a stressed market area

The rent under a new contract may not exceed the last rent of a habitual-residence tenancy in force in the same home in the last five years, with the indexation clause of the previous contract applied. Charges that were not in the previous contract may not be passed on either. That figure may be exceeded by at most 10%, and only in four cases: refurbishment completed in the previous two years; works with certified primary-energy savings of 30%; certified accessibility works; or a contract signed for ten years or more, or with a tenant's option to extend on the same terms for ten years or more (art. 17.6 LAU). Where the landlord is a large property holder the rule is stricter: the rent may not exceed the limit under the system of reference price indices (art. 17.7).

Step by step

• Count how long you have been renting. Up to five years (seven with a company), the extension binds the landlord — "the term in the contract has ended" is not, by itself, an argument.
• Check whether the contract has the owner's-need clause. No clause, no right to take the home back before five years are up.
• Count the notice periods. You leaving: 30 days before the end of a rental year. Landlord stopping tacit renewal: four months. You stopping it: two.
• Sent a rent increase? Check three things: has the yearly date arrived; is there an indexation clause in the contract; is the notice in writing with the percentage stated. Any one missing and the demand does not stand.
• Do not pay an increase retroactively. The new amount applies from the month after the notice.
• If you are in a vulnerable position, or the home is in a declared stressed area — ask about the extraordinary extension: up to a year in the first case, up to three years in the second.
• Keep everything in writing — notices, receipts stating the rent, correspondence about renewal. Those documents are what the deadlines are later counted from.

Common misconceptions

"A one-year contract means I move out in a year"

No: until five years are reached (seven with a corporate landlord) the extension binds the landlord, and the choice is yours.

"The landlord can raise the rent whenever they like"

Only on the anniversary of the contract, and only if the contract contains an indexation clause.

"They told me verbally they won't renew — that's enough"

The law sets notice periods: four months for the landlord once the compulsory term is exhausted, two for the tenant.

Official sources

• Ley 29/1994 de Arrendamientos Urbanos — consolidated text, BOE
• Ley 12/2023 on the right to housing — BOE

This is an informational explainer, not legal advice. It is based on the texts of the laws in force but does not take the circumstances of your case into account. Decisions on your situation are for a lawyer to make.

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