SPAIN Law and Practice Contributed by: Marta González-Llera, Toni Barios, Jorge del Castillo and Rafael Baena, Cases & Lacambra
Rent review The Spanish Urban Lease Act regulates that res - idential leases can be reviewed every year and apply the corresponding increases or decreases to the rent, according to either the Consumer Price Index (CPI) or the Competitiveness Guar - antee Index (CGI), which are published by the National Statistics Institute, upon agreement by the parties. The CPI is the main index in Spain that reflexes the inflation. The Spanish government decreed that all reviews of rent on residential lease agree - ments, unless agreed otherwise by the parties, shall be made according to the CGI, which by definition cannot be higher than a 2%. Additionally, for the year 2024, the limitation to the rent review established by Royal Decree-Law 6/2022, of March 29 is still on force. See 6.5 Rent Variation for further detail. New Rent Maximum Under the Housing Act The Housing Act introduced some amendments and new provisions to the Urban Lease Act by virtue of which limitations are applied to the determination of new rents for dwellings leased in areas that are declared as stressed residential market zones. See 6.6 Determination of New Rent for further detail. 6.4 Typical Terms of a Lease The typical terms of a residential lease agree - ment are as follows. • The term of the lease may be freely agreed upon by the parties. For residential leases, however, the minimum term shall be of five years or seven years, depending on whether the landlord is an individual or a legal entity. • The rent is paid as agreed by the parties. In the absence of an agreement, the rent shall
be paid monthly, within the first seven days of each month. • The sublease and assignment of the agree - ment must be expressly agreed; otherwise, the tenant shall not be entitled to sublease or assign the contract. • Unless otherwise agreed, the landlord is obliged to perform the necessary repairs so that the tenant may continue carrying out the purpose for which the real estate was leased. Normally, the parties agree that the tenant must repair any damages to the property and perform any necessary actions to keep it in a good state of maintenance and repair. • In the event of sale, the tenant has a pre- emption right, but it is market practice that the right is expressly waived by the tenant. 6.5 Rent Variation It is standard practice that the parties agree to review the rent after a certain period. As stated in 6.3 Regulation of Rents or Lease Terms , rent variation in residential leases must be expressly agreed by the parties. Variation may only be set to happen annually. Additionally, the amendment of the Royal Decree-Law 6/2022, of 29 March, approved by the Housing Act, established that rents for hous - ing leases subject to the Urban Lease Act may only be increased by a maximum of 3% during the 2024 fiscal year. 6.6 Determination of New Rent The Housing Act introduced some amendments and new provisions to the Urban Lease Act by virtue of which limitations are applied to the determination of new rents in those dwellings leased in areas that are declared as stressed residential market zones.
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