Spanish landlords could face compensation equivalent to 12 months’ rent if they refuse to renew certain residential leases without a justified reason under a new package of housing measures approved by the government.
The measures form part of two royal decree-laws approved on September 29 as Spain seeks to address housing pressures involving rents, evictions, affordable housing and access to home ownership.
The first decree was published in Spain’s Official State Gazette (BOE) on September 30 and entered into force the following day, subject to provisions with different effective dates. A second decree dealing specifically with rental-contract stability is being published separately.
The package contains measures affecting rental contracts, rent increases, eviction protection, temporary rentals, tourist accommodation, taxation, investment in housing and first-time buyers.
Tenants could receive one year’s rent
One of the most significant measures concerns the end of residential tenancy agreements.
Under the government’s proposed framework, where a landlord refuses to renew a tenancy without a qualifying reason, the tenant could be entitled to compensation equivalent to 12 months’ rent for a comparable property.
The measure is intended to provide greater stability for people renting their main homes and reduce uncertainty when contracts reach the end of their initial term.
Landlords would be able to recover a property where there is a genuine and properly established need to occupy it themselves or provide it to certain family members.
The precise application of the measure depends on the type and circumstances of the tenancy concerned.
Existing tenants can request an extraordinary extension
The BOE also establishes an extraordinary extension for certain existing residential rental contracts.
Where the relevant statutory or contractual extension period ends before December 31, 2028, qualifying tenants can request an extension of up to two additional years.
Tenants must be up to date with their rent and must have remained current with payments during the previous eight months.
The landlord must generally accept the requested extension unless the parties agree different terms, enter into a new contract, or the landlord establishes a genuine need to recover the property for themselves or qualifying family members.
The extension can also be avoided where the parties agree a new tenancy with rent at least 5% below the existing rent.
Rent increases could be limited to 2%
The legislation also introduces an extraordinary limit on annual rent updates through the end of 2027.
Where the rent is already above the applicable maximum under the reference-price system, no increase is permitted under the measure.
In other cases, landlords and tenants can agree an increase. If they do not reach a new agreement, the annual increase cannot exceed 2%.
The restriction applies to qualifying residential tenancy updates falling between the decree’s entry into force and December 31, 2027.
Eviction protection extended
The first decree also contains measures extending Spain’s protections for vulnerable households facing eviction.
The government has extended the so-called social shield to December 31, 2030 for qualifying vulnerable people who do not have alternative accommodation.
The legislation also provides for financial compensation to private landlords in circumstances where an eviction is suspended under the applicable protection measures.
The measures come after heightened public attention around eviction cases, including the case of 87-year-old Maricarmen Abascal in Madrid.
Restrictions target some speculative property purchases
The new legislation also contains restrictions affecting certain acquisitions by companies and investment funds.
For specified purchases made for speculative purposes, restrictions can apply where properties are acquired for less than 70% of their assessed market value.
The provisions also cover acquisitions involving entire buildings, while exceptions apply in circumstances involving their use for social housing.
The measures are intended to address concerns over housing being acquired as an investment asset rather than being used to expand affordable residential supply.
New rules target temporary rentals
The legislation also changes the rules applying to temporary residential rentals.
A temporary rental agreement must identify the genuine reason for the tenant’s temporary stay.
The general maximum duration is 12 months, although the legislation allows the arrangement to continue where the underlying temporary reason remains valid.
Where a temporary tenancy lasts beyond 12 months without adequate justification, or where more than two consecutive temporary contracts are used between the same parties for the same property, the arrangement can be treated as a main-home tenancy from the beginning.
The measure is aimed at preventing temporary rental arrangements from being used to avoid protections applying to ordinary residential tenancies.
Tourist accommodation faces new tax measures
The package also introduces changes affecting tourist accommodation.
The legislation changes the VAT treatment of certain furnished apartments and homes where services associated with hotel accommodation are provided or where specified short-stay conditions apply.
It also allows municipalities to apply higher property-tax charges to residential properties used for tourist accommodation under the conditions established by the legislation.
The measures form part of the government’s broader effort to distinguish tourist accommodation from homes intended to meet ordinary residential needs.
Tax rules for landlords are changing
The package also changes the tax treatment of residential rental income.
For certain new residential rental contracts, landlords can qualify for different levels of tax reduction depending on factors including rent reductions, the location of the property, the tenant’s circumstances and whether the property is offered at an affordable rent.
The legislation provides for reductions of up to 100% in qualifying circumstances, while other situations attract lower reductions.
The exact percentage depends on the conditions specified in the new tax rules.
The measures are intended to use the tax system to encourage landlords to provide homes at more affordable rents.
First-time buyers offered interest-free financing
The government has also announced the Tu Casa financing scheme for eligible first-time buyers.
The programme is intended to help households that have stable employment and income but insufficient savings to meet the upfront costs associated with buying a home.
Eligible buyers could receive financing equivalent to up to 20% of a property’s value, subject to a maximum of €50,000.
The loans are intended to supplement private mortgage financing and would carry an interest rate of 0%.
The wider package also includes measures to increase Spain’s stock of public and affordable housing through the Casa 47 model.
VAT on publicly developed and protected housing is also being reduced to the super-reduced rate of 4%.
Parliament must consider the measures
The government has asked Spain’s Congress to hold an extraordinary session to consider the two royal decree-laws.
Although the first decree has been published in the BOE and has entered into force, royal decree-laws must go through the parliamentary ratification process.
The government’s request for an extraordinary session means the measures are now moving into the parliamentary stage.
The second decree dealing with rental-contract stability is being handled separately.
What the new Spanish housing measures include
Key measures include:
- Compensation equivalent to 12 months’ rent in specified cases involving unjustified non-renewal.
- Extraordinary extensions of qualifying existing residential leases for up to two additional years.
- A 2% ceiling on annual rent increases in specified circumstances where no new agreement is reached.
- Extended protection for vulnerable households facing eviction.
- Measures affecting certain speculative property purchases.
- New requirements for temporary rental contracts.
- Measures affecting tourist accommodation and its taxation.
- Changes to tax incentives for residential landlords.
- A new zero-interest Tu Casa financing scheme for eligible first-time buyers.
- A reduction in VAT to 4% for publicly developed and protected housing.
- Measures to expand Spain’s public and affordable housing stock.
The BOE makes clear that several provisions have specific eligibility requirements, exceptions and effective dates, so the measures do not apply identically to every landlord or tenancy.
Spain takes wider approach to housing pressure
The measures cover several different parts of Spain’s housing market, from rental security and eviction protection to taxation, temporary accommodation, tourist properties and home ownership.
For tenants, the package could provide greater protection around contract extensions and rent increases in qualifying circumstances.
For landlords, however, the legislation introduces additional obligations and restrictions, particularly around rent updates, tenancy extensions and certain forms of rental and property investment.
The eventual effect on Spain’s rental market will depend on how the measures are implemented, how landlords and tenants respond, and how the additional affordable and public housing supply develops.
The latest legislation therefore represents a broad intervention in Spain’s housing system rather than a single change to rental law.
Source: Spain’s Official State Gazette (BOE); Spanish Government; SUR in English.
