Spain’s Housing Decree Caps Rent Rises at 2 Percent Until 2027
Spain's Congress ratified a housing decree with a 2 percent rent increase cap, a ban on cheap bulk purchases and new tax rules. Here are the main measures.
On Thursday, Nov. 12, the Standing Committee of the Congress of Deputies ratified one of the two housing decrees the Spanish government approved in October, according to The Local Spain. The vote follows the rejection of an earlier pair of decrees, protest encampments in cities across Spain, a general strike on Nov. 11 and a snap election called for Nov. 29.
The committee rejected the second decree, promoted by Sumar, which dealt with automatic renewal of rental contracts and would have required landlords to compensate tenants when ending a contract.
Rents, extensions and evictions
Landlords cannot raise rents on homes priced above the market index. For homes below the index, the maximum increase between Oct. 8, 2026 and Dec. 31, 2027 is 2 percent.
All contracts expiring before December 2028 can request an extraordinary two-year extension if certain requirements are met, The Local Spain reported. The same applies to contracts submitted under the earlier decree, which lapsed a month after approval when Congress rejected it. Exceptions apply when the landlord needs the home to live in or for a first-degree relative.
If a regional government cannot offer alternative housing to a vulnerable tenant who cannot pay the rent, it must take over the rent payments to prevent eviction. It has two months to provide alternative housing or pay the landlord the outstanding debts and legal costs, and the situation is reviewed every 12 months.
Room rentals and temporary contracts
Room rentals now fall under standard residential leases, with a five-year contract from private landlords and seven years from companies. The total rent for all rooms cannot exceed the rent for the whole property, and in high-demand areas price caps apply.
Temporary rentals need evidence of why the tenant needs a short stay. The contract must run for at least one month and at most twelve. A contract that breaks these terms, or whose renewals pass the one-year limit, is treated as a standard residential lease.
Buying a first home and building new ones
The Tu Casa (Your Home) project gets a new €10 billion budget through the Official Credit Institute (ICO), the state lending body. Loans cover 20 percent of a property’s value, capped at €50,000, whichever is lower. Buyers repay the loan after paying off their mortgage, up to 30 years after receiving the aid, at 0 percent interest.
The government will also allocate €280 million in loan guarantees to boost housing construction until 2040, with shorter repayment periods than usual, and €2 billion through the ICO for public and private loans for social or affordable rental housing. A €400 million social impact fund is being set up to promote housing development. Homes in Social Security assets will be transferred to Casa 47, the state-owned public housing company, and join the public affordable rental stock.
Investors, tourist flats and taxes
Until 2030, the decree bars companies from buying properties for less than 70 percent of market price, with exceptions for homes meant for affordable rental or for vulnerable or socially excluded people. Companies that follow codes of good practice are also exempt, but they may not evict vulnerable people. The aim is to stop quick speculative purchases of occupied or dilapidated homes.
Tourist apartments rented for less than 30 nights face 10 percent VAT, except when the owner rents out their primary residence. Local councils can add surcharges to the IBI property tax on tourist apartments in high-demand areas and on empty properties.
Real Estate Investment Trusts face a special 25 percent tax on undistributed profits from residential rentals. It is reduced or removed if a significant share of their properties is designated as affordable rentals.
Tenants with taxable income of up to €33,007 can deduct 10 percent of the rent for their primary residence from income tax. Landlords get tax benefits if they reduce rents, keep the same tenants, rent for the first time at affordable prices or offer properties for social programmes. Those who rent more than five percent below market price qualify for a tax credit of up to 100 percent.
What’s at stake in the election
The Partido Popular’s new manifesto sets out 249 measures for “national reconstruction”, according to The Local Spain, including repeal of the current Housing Law and of this decree. It would also scrap two rental market measures: “stressed” rental zones and the price reference index.
Source: The Local Spain
