The Spanish Tenancy Law (LAU) in 2026: Ley 29/1994, Contract Types, Duration Rules and the RDL 8/2026 Cap That Came and Went

Spain’s residential rental market runs on a single statute: the Ley de Arrendamientos Urbanos (LAU), formally Ley 29/1994 of 24 November, in force since 1 January 1995 and most recently reformed by Ley 12/2023 (the Housing Law) on 26 May 2023. It sets the minimum lease duration at 5 years for individual landlords and 7 years for corporate landlords, caps annual rent updates to the INE’s IRAV index (2.44 per cent for June 2026), requires a one-month security deposit, and defines the grounds on which a landlord can terminate early. A short-lived decree, RDL 8/2026, imposed a 2 per cent cap and a 2-year extraordinary extension from 22 March 2026, but Congress derogated it on 30 April 2026, restoring the IRAV framework. The government announced a broader housing package on 29 June 2026 that would raise IVA on tourist lets to 21 per cent and bring temporada contracts under residential safeguards, though no decree has been published in the BOE as of late July 2026. Whether you are a non-resident owner planning to let a Costa del Sol apartment long-term or a tenant signing your first Spanish lease, the LAU is the framework that governs what you can and cannot agree.

What is the LAU and which tenancies does it cover?

The Ley de Arrendamientos Urbanos (Ley 29/1994, BOE-A-1994-26003) regulates the leasing of urban properties in Spain, splitting all tenancies into two categories under Article 1: arrendamiento de vivienda (residential leases for permanent housing, Title II) and arrendamiento de uso distinto de vivienda (non-residential leases, Title III, including seasonal, commercial and professional use). The distinction matters because residential leases carry strong tenant protections, mandatory minimum durations and rent-update rules that non-residential leases largely do not.

Article 2 defines a residential lease as one whose primary purpose is to satisfy the tenant’s permanent housing need. Article 3 defines everything else, explicitly listing seasonal use (verano, or summer lets), industrial, commercial, artisanal, professional, recreational, care, cultural or teaching purposes. Article 5 excludes certain tenancies from the LAU entirely: housing tied to employment (porters, caretakers, military housing), agricultural tenancies, university residences, and tourist lets (viviendas de uso turistico), which fall under their own regional tourism regime rather than the LAU.

This exclusion is why short-term holiday rentals on the Costa del Sol are regulated through the VFT (vivienda con fines turisticos) framework and the community-voting rules under the Decreto-ley of February 2025, not through the LAU. If you rent your property to tourists, the LAU’s residential protections do not apply. Our guide to Costa del Sol short-let rules covers that separate regime in detail.

How long can a residential lease last in Spain?

The LAU’s duration rules are its most important provision for landlords and tenants. Article 9 sets a statutory minimum duration that overrides whatever the contract says:

• 5 years if the landlord is an individual (persona fisica)
• 7 years if the landlord is a legal entity (persona juridica, such as a company)

If the parties agree a shorter term, say one or two years, the contract auto-extends in annual increments until it reaches the statutory minimum. The tenant, but not the landlord, can prevent the extension by giving 30 days notice before each extension date. Once the minimum term is reached, Article 10 provides a tacit extension of up to 3 additional years in annual increments, unless the landlord gives 4 months notice of non-renewal or the tenant gives 2 months notice.

There is one exception for individual landlords: Article 9.3 allows the landlord to recover the property after the first year if the contract expressly states the landlord needs it for themselves, a first-degree relative, or a spouse in cases of separation or divorce. The landlord must give 2 months notice. If the property is not occupied within 3 months of the termination date, the tenant can demand reinstatement or compensation of one month’s rent per remaining year up to 5.

A tenant can also leave early. Under Article 11, the tenant can withdraw after 6 months have elapsed, giving 30 days notice. The contract may include a penalty of one month’s rent per remaining year, calculated proportionally for partial years. This early-withdrawal right is mandatory and cannot be contracted out of. Our guide to rental contract types explains how the habitual, temporada and tourist regimes interact.

How is rent updated under the LAU in 2026?

The rent-update mechanism changed fundamentally with Ley 12/2023. For contracts signed before 26 May 2023, the parties could agree to update rent annually using the CPI (Indice de Precios al Consumo), with temporary caps of 2 per cent in 2023 and a 3 per cent transitional cap in 2024 under the interim measures. For contracts signed after 26 May 2023, rent updates are governed by Article 18 read together with the Disposicion adicional undecima added to the LAU by Ley 12/2023. That additional provision directs the INE to define a reference index, the IRAV (Indice de Referencia para la Actualizacion de Arrendamientos de Vivienda), which is set as the “limite de referencia a los efectos del articulo 18” (the reference limit for the purposes of Article 18).

A critical default rule in Article 18.1 is easily missed: “En defecto de pacto expreso, no se aplicara actualizacion de rentas a los contratos.” If the contract does not expressly provide for a rent-update mechanism, no annual increase may be applied at all, regardless of which index is available. The update right arises only from an explicit contractual clause, not from the statute. This catches many landlords off guard: a silent contract means a frozen rent for the entire minimum term.

The IRAV is designed as a ceiling, not a floor. It is calculated as the minimum of several CPI-based measures, including the annual rate of the CPI, the annual rate of core CPI (IPC subyacente), and the adjusted average of these rates against a medium-term expected inflation parameter, moderated by a coefficient. The INE publishes it monthly, with the figure referring to the preceding month. As of June 2026, the IRAV stands at 2.44 per cent annual variation, published by the INE on 15 July 2026. The CPI for June 2026, published the same day, was 3.2 per cent annual variation, and core inflation (IPC subyacente) was 2.9 per cent. The IRAV sits below both because it takes the minimum of the CPI, core CPI and the adjusted average, which is the point of the index: to keep residential rent increases below general inflation. This means a landlord with a post-May-2023 contract that includes an update clause can increase rent by at most 2.44 per cent at each annual review date. If the parties agree a lower update or no update, that stands. Our dedicated guide to Spanish rent increase rules covers the IRAV calculation and the cap history in more detail.

In stressed zones (zonas de mercado residencial tensionado) declared by an autonomous community under Ley 12/2023, additional restrictions apply: initial rent cannot exceed a reference price set by the Ministerio de Vivienda, and large holders (gran tenedores, defined in general terms under Article 3.k as owners of more than 10 residential properties or more than 1,500 square metres of residential space) face tighter caps. A detail many guides miss: the declaring autonomous community can tighten the large-holder definition for its own zone. The Q1 2026 resolution (BOE-A-2026-9175) shows Pasaia lowering the threshold to more than 5 properties and Mondragon to 5 or more, while Zestoa keeps the general 10-property test. The same resolution confirms that all three municipalities apply the Article 17.7 second-paragraph limit on properties with no prior rental contract in the last five years. As of the first quarter of 2026, only the Basque Country has declared stressed zones. No Andalusian municipality has been declared, meaning the Costa del Sol rental market operates without the additional price and prorrogation restrictions.

The RDL 8/2026 episode: a 2 per cent cap that lasted 37 days

A short-lived decree, Real Decreto-ley 8/2026 of 20 March (BOE-A-2026-6545), imposed two extraordinary measures on the residential rental market from 22 March 2026:

1. A 2 per cent cap on rent updates: Article 2 limited the annual rent update to 2 per cent in the absence of an agreement between the parties. For large holders (gran tenedores), the 2 per cent cap applied in all cases, regardless of any agreement. This replaced the IRAV mechanism temporarily.
2. A 2-year extraordinary extension: Article 1 allowed tenants of contracts ending before 31 December 2027 to request an extraordinary extension of up to 2 additional years, preserving the essential terms and conditions of the original contract.

The decree was enacted in response to the economic consequences of the Iran war and the inflationary pressure on energy prices. Congress voted to derogate it on 28 April 2026 (BOE-A-2026-9359), with the derogation taking effect on 30 April 2026 per the BOE record. The RDL was in force for 37 days, from 22 March to 30 April 2026. Several competitor guides still present the 2 per cent cap as current law, but it is no longer in force. The standard IRAV framework under LAU Article 18 applies again.

Period	Applicable rent-update mechanism	Legal basis
Before 26 May 2023 contracts	CPI (or agreed index)	LAU Art 18 (pre-reform)
2023-2024 transitional caps	2 per cent (2023), 3 per cent (2024)	RDL transitional measures
After 26 May 2023 contracts	IRAV (2.44 per cent, June 2026)	LAU Art 18 (reformed by Ley 12/2023)
22 March to 30 April 2026	2 per cent cap (all contracts)	RDL 8/2026 Art 2 (BOE-A-2026-6545, derogated)
From 1 May 2026	IRAV (2.44 per cent, June 2026)	LAU Art 18 (reformed), IRAV framework restored

How does DGT consultation V0385-26 clarify the IVA treatment of tourist rentals?

The boundary between the LAU’s residential regime and the tourist-let regime is fiscal as well as legal. A binding consultation from the Dirección General de Tributos, V0385-26 (25 February 2026, SG de Impuestos sobre el Consumo), clarifies when a tourist rental becomes subject to IVA and when it remains exempt under Ley 37/1992 Article 20.Uno.23.

The consultation establishes two principles. First, certain preparatory and maintenance activities do not constitute hotel services and therefore do not trigger IVA: telephone support, pool cleaning, plant watering, entry and exit cleaning, linen changes at check-in and check-out, and technical repair assistance. A landlord who provides only these services keeps the rental IVA-exempt. Second, optional on-demand services that the guest can choose to purchase separately, such as breakfast, meals or mid-stay linen changes, are treated as independent prestaciones: the rental itself stays exempt while the services are subject to IVA at 21 per cent. The key distinction is whether services are bundled into the accommodation price or genuinely optional with a separate charge.

The practical consequence for a Costa del Sol landlord is that a standard tourist let, where the guest books the property and the owner arranges cleaning between stays, remains IVA-exempt. Only if the owner provides periodic cleaning and linen changes during the stay, reception services, or similar hotel-type services does the 10 per cent reduced IVA rate apply under Article 91.Uno.2.2. And only the proposed July 2026 housing decree, if it passes, would move short tourist stays to the general 21 per cent rate. Our guide to tourist rental VAT covers the IVA framework in detail.

Why does the RDL 8/2026 precedent matter for the July 2026 housing decree?

The RDL 8/2026 derogation is not just a historical footnote. It is the political-risk precedent for the housing package the government announced on 29 June 2026, after the Consejo de Ministros. That package, planned as a royal decree-law for July, proposes three measures that would directly affect LAU landlords on the Costa del Sol:

1. IVA on tourist flats raised to 21 per cent: The IVA exemption under Article 20.Uno.23 of Ley 37/1992 would stop applying to short tourist stays. The most likely mechanism, drawn from Proposicion de Ley 122/000196 registered in May 2025, would end the exemption for stays of 30 nights or fewer in municipalities of 10,000 or more inhabitants, moving those lets to the general 21 per cent rate. Hotels and hostales would stay at the 10 per cent reduced rate.
2. Temporada and room rentals under residential safeguards: Seasonal (arrendamiento de temporada) and room rentals (arrendamiento de habitaciones) would receive the same written-contract and guarantee requirements as ordinary residential tenancies under LAU Title II, closing the workaround some landlords use to avoid the 5-year minimum.
3. Extraordinary contract extension: An extension mechanism for existing contracts, similar to the RDL 8/2026 Article 1 extension that Congress struck down.

As of late July 2026, no decree has been approved or published in the BOE. The procedural status matters: anything published before BOE publication is a political plan, not a tax obligation. The parliamentary arithmetic is the same that sank RDL 8/2026 in April 2026: the PP, Vox and Junts voted against (177 to 166), and the government needs at least Junts’s support or abstention. The Ministry of Consumer Affairs expects validation before the end of August 2026. For a non-resident landlord, the immediate implication is that temporada contracts and tourist lets continue under the current rules until the BOE publishes the decree, and any contractual structure built around the LAU Title III exemption should account for the political risk that the framework may change.

What is the security deposit (fianza) and how does it work?

Article 36 of the LAU requires a mandatory cash security deposit, the fianza, at the point of contract signing:

Tenancy type	Legal deposit	Additional guarantees
Residential (vivienda)	1 month’s rent	Up to 2 months’ rent (Art 36.5, since RDL 7/2019)
Non-residential (uso distinto)	2 months’ rent	Permitted by agreement

The landlord must deposit the fianza with the relevant autonomous community’s housing authority within one month of the contract signing. In Andalucía, this is the Instituto de Fomento de Andalucía (IFA) via the deposit registry. The deposit is returned to the tenant at the end of the lease, less any deductions for unpaid rent or damage beyond normal wear and tear, within a period set by the autonomous community (typically 1-2 months after the tenant vacates and returns the keys).

A common misconception, even among Spanish landlords, is that no additional guarantee can be demanded for residential leases. That was the position before March 2019. The RDL 7/2019 reform (BOE-A-2019-3108, in force 6 March 2019) rewrote Article 36.5 to allow additional guarantees up to two months’ rent for residential leases during the statutory minimum term (5 years for individuals, 7 for companies). The legal text reads: the value of any additional guarantee “no podra exceder de dos mensualidades de renta” (cannot exceed two monthly rent payments). This means a landlord can lawfully ask for the one-month fianza plus up to two further months as a bank guarantee or similar, capped at a total of three months. Beyond the minimum term, the cap falls away and the parties may agree any form of additional security. Non-residential leases have always permitted additional guarantees by agreement without a statutory cap.

What is a seasonal (temporada) contract and when is it valid?

A contrato de temporada is a non-residential lease under LAU Article 3, used for temporary accommodation that is not the tenant’s permanent residence. Common legitimate uses include work assignments, study periods, medical treatment, or a defined holiday period. The key distinction from a residential lease is that a seasonal contract has no statutory minimum duration, no mandatory extension, and no residential tenant security. Its duration is tied to the temporary need it serves: if no term is specified, either party can terminate it under Codigo Civil Article 1566.

However, Spanish courts apply a substance-over-form test. If a seasonal contract is used to house someone who is in fact living there permanently, a court can reclassify it as a residential lease under LAU Title II, triggering the 5-year minimum and all tenant protections. Indicators courts look at include the length of the let, whether the tenant has registered on the padron (empadronamiento) at the property, whether they have moved their main belongings there, and whether the contract states a genuine temporary purpose. The Supreme Court has repeatedly held that the declared purpose must match the actual use; a temporada label alone does not defeat residential protection.

The July 2026 housing decree, if enacted, would narrow the temporada workaround significantly by extending residential safeguards to seasonal and room rentals. Until then, the current LAU Title III regime applies. Some landlords on the Costa del Sol use temporada contracts as a workaround to avoid the LAU’s residential protections, particularly to let to tourists without registering as a VFT. This carries significant legal risk: if the actual use is tourist accommodation, the property should be registered under the VFT regime, and an unregistered tourist let can attract fines from EUR 25,000 under Andalucía’s enforcement scale. Our guide to renting out property as a non-resident covers the decision between long-term, seasonal and short-term regimes in detail.

On what grounds can a landlord terminate a residential lease?

Article 27 of the LAU lists the grounds on which a landlord can terminate a residential lease early, before the minimum term or extension expires:

1. Non-payment of rent or the deposit (fianza) or its update
2. Unconsented subletting or assignment of the property
3. Deliberate damage to the property or unauthorised works requiring landlord consent
4. Nuisance, illegal or dangerous activities carried out in the property
5. The property ceasing to be the tenant’s primary residence (Article 7)

For non-payment, the most common ground, the landlord initiates the express eviction procedure (juicio verbal de desahucio). The process begins with a formal requirement to pay or vacate. If the tenant does not respond within the deadline set by the court, the landlord can obtain an eviction order and enforce it. Our guide to the express eviction process covers the 2026 timeline and landlord rights in detail.

The landlord cannot terminate for convenience during the minimum term. The early-termination right under Article 9.3 (personal need) applies only after the first year and only if the contract expressly includes that clause. A tenant’s early withdrawal under Article 11, by contrast, is always available after 6 months with 30 days notice.

How does the LAU interact with tax obligations for landlords?

A non-resident landlord letting Spanish residential property under the LAU must declare rental income through the Modelo 210 non-resident tax return, filed quarterly. The IRNR (Impuesto sobre la Renta de No Residentes) rate is 19 per cent for EU/EEA residents on net rental income after deductions, and 24 per cent for third-country residents (including UK post-Brexit and US) on gross income with no deductions. Our guide to non-resident income tax covers the rates, deductions and filing mechanics in detail.

The LAU itself does not set tax rates, but the rent-update cap (IRAV) directly affects the taxable base: a capped rent means a capped gross income figure on the Modelo 210 return. Community fees (cuotas de comunidad) that the landlord pays are deductible for EU-resident landlords but not for non-EU landlords, which is relevant if the property is in a building governed by the community of owners framework under the Ley de Propiedad Horizontal.

What did the 2023 reform (Ley 12/2023) actually change?

Ley 12/2023, the Housing Law (BOE-A-2023-12203, in force 26 May 2023), made several material changes to the LAU:

Area	Before Ley 12/2023	After Ley 12/2023
Rent update index	CPI (with temporary 2 per cent cap)	IRAV (INE reference index, Article 18)
Corporate landlord minimum	7 years	7 years (unchanged)
Tacit extension	Up to 3 years	Up to 3 years, plus extraordinary extensions for vulnerable tenants (Article 10.2) and in stressed zones (Article 10.3)
Large holder definition	Not defined	More than 10 residential properties or 1,500 sqm (Article 3.k), tighter rules in stressed zones
Stressed zones	Did not exist	Autonomous communities can declare them, triggering price caps and extension rules
Social housing	Not defined at state level	Defined: vivienda social and vivienda de precio limitado

The reform did not change the 5-year individual landlord minimum, the 6-month tenant withdrawal right, or the one-month fianza. Its main effect on most non-resident landlords is the shift from CPI to IRAV for rent updates, which tends to produce lower annual increases than the old CPI mechanism.

Stressed zone declarations as of Q1 2026

Only the Basque Country (Pais Vasco) has declared stressed zones under Ley 12/2023. The Secretaria de Estado de Vivienda publishes a quarterly resolution in the BOE listing all declared zones. As of the first quarter of 2026 resolution (BOE-A-2026-9175, 23 April 2026), the declared Basque municipalities include Bilbao, Vitoria-Gasteiz, Donostia-San Sebastian, Irun, Barakaldo, Galdakao, Errenteria, Zumaia, Lasarte-Oria, Astigarraga, Usurbil, Hernani, Lezo, Tolosa, Pasaia, Zestoa and Mondragon (Arrasate). The Q4 2025 resolution (BOE-A-2026-2448, 30 January 2026) added Hernani, Lezo and Tolosa. The Q1 2026 resolution added Pasaia, Zestoa and Mondragon. Each declaration lasts three years from publication.

No Andalusian municipality has been declared a stressed zone. This means Costa del Sol landlords and tenants operate under the standard LAU framework without the additional price caps, large-holder restrictions or extraordinary extension rules that apply in the Basque Country. A non-resident owner letting property in Marbella, Estepona or Sotogrande is not affected by stressed-zone rules.

What should a landlord or tenant check before signing a Spanish lease?

Before signing, both parties should verify the following:

• The property’s legality: check that the property has a licencia de primera ocupacion (habitability certificate) and is not in an AFO (asimilado a fuera de ordenacion) status that restricts use. An independent lawyer should confirm this in the due diligence phase.
• The landlord’s title: request a nota simple from the Registro de la Propiedad confirming the landlord owns the property and there are no encumbrances that could affect the tenancy.
• The contract type: confirm whether the lease is residential (Title II) or seasonal (Title III), and that the stated purpose matches the actual intended use. A mismatch can trigger reclassification.
• The rent-update clause: check whether it references the IRAV (required for post-May 2023 contracts) and specifies the review date. The IRAV for June 2026 is 2.44 per cent. The RDL 8/2026 2 per cent cap no longer applies.
• The deposit: confirm the one-month fianza will be deposited with the autonomous community’s housing authority, not held informally by the landlord. Check whether the landlord is also asking for an additional guarantee (permitted up to two months under Article 36.5 since the RDL 7/2019 reform).
• The community rules: if the property is in a building with a comunidad de propietarios, check whether the community has restrictions on letting that could affect the tenancy.