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Primary residence
Property let to satisfy the tenant's permanent housing need. Most protective regime, with the mandatory 5- or 7-year extension.
Minimum 5 years (7 if landlord is a company) plus 3-year tacit extension.
2026 guide, LAU + Housing Law
Spanish Urban Lease Law (LAU) in 2026: what investors need to know
A clear, jargon-free walkthrough of Law 29/1994 as updated by Housing Law 12/2023. Written for anyone managing one or more rental properties in Spain.
Last reviewed: 19 May 2026, against the consolidated LAU text (Law 29/1994) in the BOE.
Spain's Urban Lease Law (Ley de Arrendamientos Urbanos, LAU) is the main framework governing residential, seasonal and non-residential leases in the country. It was enacted in 1994 (Law 29/1994) and has been amended several times since, the most consequential reform coming through Law 12/2023 on the right to housing.
For an investor with one or several rental flats in Spain, understanding the LAU is non-negotiable: every clause of the contract, every annual rent update and every early-termination cause is governed by this law. This guide covers what matters most in 2026, focusing on the points that move the needle on net yield and day-to-day management.
LAU at a glance
The numbers and timeframes investors look up most often, updated for 2026.
| Main statute | Law 29/1994 on Urban Leases, amended by Law 12/2023 on the right to housing. |
| Minimum term (residential) | 5 years if the landlord is an individual; 7 years if the landlord is a company. Mandatory extension. |
| Tacit renewal | Three additional years, unless the tenant gives notice or the landlord invokes a statutory cause. |
| Legal deposit | One month for residential, two months for non-residential. Additional guarantees capped at two months. |
| Rent indexation | Capped at the INE Reference Index for 2025-26 (replacing the general CPI). Stricter caps apply in stressed zones. |
| Tenant exit notice | Tenant may leave after six months giving 30 days' notice. Pro-rated indemnity if the contract foresaw it. |
Figures provided as a reference. Always check with a lawyer or gestor for a specific contract.
What changed with the 2023 Housing Law
Law 12/2023, known as the Right to Housing Law, came into force on 26 May 2023 and amended several key articles of the LAU. For investors, the most material changes affect rent indexation, stressed-zone caps, and agency fees.
These changes remain fully in force in 2026 and should be reviewed before signing any new contract or updating an existing one.
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CPI replaced for annual rent updates
For 2025 and 2026, the annual rent update cannot exceed the INE Reference Index (instead of general CPI). In practice this usually means more moderate increases for new contracts.
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Stressed residential market zones
Spain's autonomous communities can declare specific areas as stressed zones. In them, the price of a new contract is capped at the previous contract's updated rent, and large holders are subject to the official index system.
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Management and agency fees
Estate-agency fees and contract-formalisation costs are now borne by the landlord, not the tenant. This directly affects first-year net yield.
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Extraordinary one-year extension
The tenant may request an extra 12-month extension at the end of the contract if they document a vulnerable situation. Individual landlords cannot oppose it except in specific statutory cases.
The three contract types under the LAU
Each type has its own rules on term, deposit and obligations.
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Seasonal lease
Temporary use: holidays, work relocation, studies. The cause must be stated in the contract. No mandatory extension.
Term freely agreed. No forced extension. Two-month deposit.
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Non-residential use
Retail, offices, warehouses. Mostly discretionary regime: parties freely agree on price, term and conditions.
As freely agreed. Two-month deposit by default.
Contract term and extensions
In a residential lease signed in 2026, the tenant has the right to stay for 5 years (7 if the landlord is a company) even if a shorter term was agreed. Once that period elapses, unless one of the parties gives notice at least 4 months ahead (landlord) or 2 months ahead (tenant), the contract is automatically extended on a yearly basis up to 3 additional years.
The tenant may withdraw from the contract from the sixth month onwards with 30 days' notice. If the parties so agreed, an indemnity equal to one month's rent per year of remaining contract may be required.
Rent updates and stressed zones
The annual rent update can only be applied if it has been explicitly agreed in the contract, and never above the legal cap in force. Since 2024, that cap is the Reference Index published monthly by the INE, replacing the general CPI used until then.
In practice, for 2025-26 the index has hovered close to 2% annually, well below the 3-4% the CPI sometimes reached. This narrows the landlord's room to push the rent up and is worth modelling when projecting long-term yield.
If your property sits in a stressed zone
In areas declared as stressed residential market zones (parts of Barcelona, San Sebastián, several Catalonian municipalities), the new contract's rent cannot exceed the previous contract's updated rent. If you are a large holder (more than 5 or 10 properties depending on the community), the official price index system also applies.
Statutory causes for termination
The LAU lists specific causes that let the landlord terminate the contract before the agreed term or statutory extensions. Including them expressly in the contract is best practice.
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Non-payment of rent or assimilated amounts
Missing even a single monthly payment, or any amount the tenant agreed to pay, opens the door to termination through an eviction lawsuit.
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Failure to pay or update the deposit
If the deposit was never handed over at signing, or has not been updated on renewal, the landlord may terminate.
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Subletting or transfer without consent
The tenant cannot sublet or transfer the property without the landlord's explicit consent.
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Wilful damage or troublesome activities
Unauthorised works, unhealthy, noisy or illegal activities carried out on the property.
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Deductible rental expenses
What you can subtract from rental income on your Spanish tax return, for each contract signed under the LAU.
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Calculate now arrow_forwardFrequently asked questions about the LAU
Which version of the LAU applies in 2026? expand_more
Law 29/1994 on Urban Leases, as amended by Law 12/2023 on the right to housing. Contracts signed after 26 May 2023 are governed by the updated version; earlier ones keep the conditions agreed under the law in force at signing.
How long does a residential lease last in 2026? expand_more
The tenant has the right to stay for 5 years if the landlord is an individual and 7 years if the landlord is a company. After that, the contract is tacitly extended yearly up to a further 3 years, unless one party gives notice.
What is the legal cap on rent updates? expand_more
For 2025-26 the rent cannot increase by more than the INE Reference Index, which replaces the general CPI. The update only applies if expressly agreed in writing in the contract.
What happens if my property is in a stressed zone? expand_more
The new contract cannot exceed the previous contract's updated rent. If you are a large holder (more than 5 or 10 properties depending on the autonomous community), the official price index also applies. Stressed zones are declared by the regional governments.
Who pays the estate-agency fees since 2023? expand_more
Agency fees and contract-formalisation costs are paid by the landlord, not the tenant, under the new article 20 LAU introduced by the 2023 reform.
Can the tenant leave before the 5 years are over? expand_more
Yes. From the sixth month onwards they can withdraw with 30 days' notice. If the parties agreed to it, the tenant owes an indemnity of one month's rent per remaining year of contract.
How much deposit can be requested legally? expand_more
One month's rent for residential leases, two months for non-residential. Additional guarantees (bank guarantee, deposit) can be agreed up to two extra months.
What is the extraordinary one-year extension? expand_more
An additional extension of up to 12 months the tenant can request at the end of the contract if they prove a vulnerable situation. Individual landlords must accept it unless one of the statutory exceptions applies.
Can I recover the property for my own use or a family member's? expand_more
Yes, but only after the first year, and only if expressly stated in the contract. The tenant must be notified at least 2 months in advance and the need must be documented.
Where can I read the full updated LAU text? expand_more
The official consolidated text is published in the BOE (Spanish Official Gazette). The Law 12/2023-amended version is referenced as Law 29/1994 with its subsequent updates.
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imotrack centralises contracts, deposits, rent updates and expiry dates. Stay compliant with the law without paper trails or spreadsheets.
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