Congress has struck down the law decree that included the extraordinary extension of habitual residence rental contracts, a rule that had been in effect since its approval by the Council of Ministers on March 20 and which needed to be validated by the Chamber to continue producing effects.
The fall of the decree means that the main measures it incorporated are falling, among them the possibility of extending certain contracts for up to two additional years and the extraordinary limit of 2% to the annual update of rents.
The repeal also raises doubts about what happens to those who applied to benefit from the extension while the rule was in effect, a matter on which there is legal debate.
What measures fall
The first measure that falls is the possibility of extending by up to two additional years the rental contracts for habitual residence that would expire between March 20, 2026, and December 31, 2027.
That extraordinary extension allowed tenants to remain in the dwelling without needing to negotiate a new contract, but it ceases to apply after the repeal of the decree.
The extraordinary limit that set the annual rent increase at a maximum of 2% also expires. That limitation had been incorporated as a temporary measure and ceases to be in effect with the fall of the decree.
What happens with the extensions already requested
One of the main unknowns affects those who requested the extension during the weeks in which the decree was in force. During that period, various actors had encouraged tenants to request this extension in writing from their landlords.
FACUA maintained that this right could be requested while the rule was in force and the Ministry of Social Rights, Consumer Affairs and the 2030 Agenda also sent a letter to 541 real estate agencies and funds that manage 50 or more properties to remind them of the obligation to apply these extensions if they had been requested. However, the eventual legal scope of these requests remains open and it will be the courts that can resolve it.
The repeal also affects the extraordinary limit of 2% in the update of rents. From there, the update again depends on the applicable framework in each contract.
In contracts signed after May 26, 2023, the Housing Rental Reference Index (IRAV) published by the INE applies, which operates as a maximum limit in revisions.
In contracts signed before the entry into force of the Law for the Right to Housing, the references provided for in each contract, such as the CPI or the Competitiveness Guarantee Index, will continue to apply.
Sources from the Ministry of Housing told Europa Press that, in contracts prior to May 2023, the update will be made in accordance with what was agreed, using inflation or IGC as appropriate.
What remains in force in the Urban Leases Law
The fall of the decree extending rent extensions does not modify the ordinary terms provided for in the Urban Leases Law. For contracts signed since March 6, 2019, the minimum duration remains five years if the landlord is a natural person and seven if it is a legal entity.
If a shorter duration was agreed upon, the contract is automatically extended annually until these minimums are reached, unless the tenant waives it within the foreseen deadlines.
And, once those five or seven years have been completed, if neither party communicates their intention not to renew, the automatic extension for up to three additional years continues to operate under the terms provided for in the rule.