Spain: Automatic tenancy renewals, vulture funds flat ban

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Key takeaways

The Spanish Council of Ministers approved two housing decrees introducing automatic tenancy renewals.
The measures include a ban on evictions until 2030 and restricting property purchases by vulture funds.
Parliament has been asked to hold an extraordinary plenary session to approve the bills.

Spanish Government approves the automatic renewal of tenancies and bans vulture funds from buying flats.

The Council of Ministers has approved two decrees, one of which specifically concerns the automatic extension of tenancy agreements. The Government has asked Parliament to hold an extraordinary plenary session this Friday to approve the two bills.

On Tuesday, the Council of Ministers approved two housing decrees which provide, amongst other measures, for the automatic extension of tenancy agreements – as demanded by Sumar and the Tenants' Union – and prohibit the purchase of flats by vulture funds until 2028. They also regulate seasonal and room-by-room lettings. The Government has asked Parliament to hold an extraordinary plenary session this Friday to approve the two decrees, according to sources at the Ministry of Housing speaking to RTVE Noticias.

The first of the texts sets out most of the measures, including the ban on evictions until 2030 and the two-year extension of existing contracts due to expire before 31 December 2028. The second text specifically sets out the automatic renewal of contracts.

Details of the tenancy extension

The major stumbling block that has held up the agreement until the very last minute has been precisely this: the automatic and open-ended extension of tenancy agreements. It was the main demand of Sumar and the Tenants' Union – the organisation behind the protest camp at Puerta del Sol – which has succeeded in turning Maricarmen's eviction into a symbol of the struggle for access to housing.

Sumar's proposal involved automatic renewal and, in a sense, bringing them into line with permanent employment contracts. In other words, if the tenant pays the rent, there is no grounds for terminating the tenancy unless the landlord can cite a valid reason.

The PSOE, however, was not in favour of introducing a measure of this kind – in the draft submitted by the Ministry of Housing on Monday, the automatic extension was only envisaged until 2028 – because it could alienate the PNV and Junts parties from the agreement and, consequently, jeopardise the majority needed to pass the decree in the Congress. It now remains to be seen what the Government will negotiate with these two parties to secure their support.

Sumar had also called for the regulation of room-by-room lettings, a practice which the party believes encourages speculation and unfair terms, but which the socialist wing urged should be approached with caution, as it has become a gateway to housing for many people.

Restrictions on vulture funds

The second major issue that remained unresolved was the approach to be taken to ban, discourage or otherwise limit the purchase of property by vulture funds. This matter involves considerable legal complexity and, for the time being, the Government has not specified how it will be implemented. This issue, unlike the extension of contracts, did enjoy greater support amongst the political groups. In fact, it was one of the measures that Junts put forward to the Government during the negotiations.

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