Mark Stücklin
Spain has approved a controversial new housing decree imposing sweeping restrictions on landlords and a 10% VAT on holiday rentals from December. What does it mean for property owners?
On 12 November, the Permanent Deputation of the Spanish Congress approved Royal Decree-law 29/2026 by 35 votes to 34, confirming measures introduced by Prime Minister Pedro Sánchez’s government in October following the controversial eviction of an elderly tenant in Madrid.
This decree, in force since 8 October, includes restrictions on evictions involving so-called ‘vulnerable’ occupants until 2030, additional tenancy extensions, limits on rent increases, tighter regulation of seasonal and room rentals, restrictions on certain property investors, and new tax measures.
A second decree, which would have introduced automatic five- or seven-year extensions of residential tenancies and substantial compensation for landlords refusing to renew, was rejected by 35 votes to 34. If you want a deeper dive into the measures included in both bills click on learn more.
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Spain’s two housing decrees: What has been approved and what was rejected?
Updated 12 November 2026
The Spanish government introduced two emergency housing decrees in October 2026, widely known as the Maricarmen decrees. On 12 November, the Permanent Deputation of Congress approved the first by 35 votes to 34 but rejected the second by the same margin, with the votes reversed.
Here is a summary of the principal measures and what they mean for property owners and tenants.
Decree 29/2026 — Approved and in force
This decree came into force on 8 October and has now been ratified. It introduces the following measures:
- Eviction protections: Extends protections for vulnerable tenants and occupants without alternative accommodation until 31 December 2030, subject to conditions and exceptions, including for private owners with no more than two properties. Compensation mechanisms apply in certain cases.
- Rental contract extensions: Qualifying tenants with existing residential leases expiring before the end of 2028 can request extensions of up to two additional years. Existing statutory three-year extensions in designated stressed housing markets take precedence.
- Rent increases: Until 31 December 2027, annual rent increases are generally limited to 2% without a new agreement, or frozen where the existing rent exceeds the applicable reference-price ceiling.
- Seasonal and room rentals: Tighter rules require genuine justification for temporary tenancies and restrict their use to circumvent ordinary residential tenancy protections. Rent ceilings apply in designated stressed markets, including limits on the combined rent charged for individual rooms.
- Landlord obligations: Additional restrictions on charging tenants property taxes, agency fees and compulsory insurance, alongside stronger tenant rights concerning maintenance and preferential purchase rights.
- Property investment: Certain corporate investors and large landlords are prohibited from acquiring residential properties for less than 70% of their official valuation, subject to exceptions.
- Holiday rentals: A new 10% VAT charge applies from 1 December 2026 to furnished accommodation let for stays of 30 nights or fewer, even without hotel-style services. An exception applies to accommodation in the owner’s habitual residence.
- Property taxes: Municipalities are given powers to impose additional property-tax surcharges on qualifying vacant homes and tourist accommodation in designated stressed housing areas.
- Tax incentives: New income-tax deductions for qualifying tenants and revised tax reductions for landlords who meet certain conditions, including affordable rents.
- First-time buyers: A new €10 billion financing programme, called TU CASA, provides for interest-free loans of up to €50,000, subject to eligibility conditions, to help qualifying buyers purchase their first home.
Decree 28/2026 — Rejected
This separate decree proposed substantially greater security of tenure for residential tenants but was defeated before its scheduled commencement on 15 November.
Its principal proposals were:
- Automatic tenancy extensions: After the initial statutory rental period of five years for private landlords or seven years for corporate landlords, tenancies would renew for successive periods of the same duration unless either party gave the required notice.
- Longer notice periods: Landlords wishing to terminate at a contractual expiry would generally have to give six months’ notice, rather than four.
- Compensation for non-renewal: Landlords choosing not to renew would generally have to compensate the tenant with the greater of 12 months’ reference rent or one month’s reference rent for every year of occupancy.
- Exceptions: Compensation would not normally be payable where the landlord genuinely needed the property for personal or qualifying family use, the tenant was not habitually resident, the tenant had another suitable home locally, or certain other statutory conditions applied.
The rejection means these proposed changes will not take effect. Existing tenancy duration and termination rules continue to apply, subject to the separate extensions and protections introduced by the approved first decree.
What happens now?
Decree 29/2026 remains in force following parliamentary ratification. Decree 28/2026 has been rejected and will not take effect.
However, with a general election scheduled for 29 November, the future of Spanish housing legislation remains politically uncertain. A new government could amend or repeal the surviving measures.
Property owners should check how the approved changes affect their individual circumstances, particularly before renewing or terminating tenancies, arranging seasonal rentals or letting holiday accommodation.
Holiday rentals face 10% VAT from December
The biggest news for many owners from outside of Spain is that from 1 December 2026, furnished properties let for stays of 30 nights or fewer will generally attract VAT at 10%, even when the landlord provides no hotel-style services.
Until now, ordinary holiday lettings without hotel-style services have generally been exempt from VAT. The new law removes that exemption for short stays, with an exception for accommodation in the landlord’s own habitual residence.
This means that someone who owns a second home in Spain and rents it to holidaymakers for a week or two when not using it will normally have to charge VAT. The change also affects occasional landlords, not just professional holiday-rental businesses.
A €1,000 holiday rental would therefore cost €1,100 including VAT if the tax is added to the existing price. Alternatively, an owner keeping the advertised price at €1,000 would have to account for approximately €91 in VAT out of that amount.
The change applies to mainland Spain and the Balearic Islands, but not the Canary Islands, Ceuta or Melilla, which have different indirect-tax systems.
What will holiday-home owners have to do?
Owners whose lettings become subject to VAT will generally need to register their activity with the Spanish tax authorities using the relevant census declaration, usually Form 036, issue the appropriate invoices or records, and submit periodic VAT returns, normally using Form 303.
That could impose a significant administrative burden on owners who only rent out their properties for a few weeks each year. Non-resident owners will also need to establish who is legally responsible for accounting for the tax, particularly when bookings are handled through an agency or online platform.
There is also the question of whether owners can recover VAT on expenses relating to their rental activity, potentially offsetting part of the new tax liability.
The legislation establishes the 10% rate and its commencement date, but practical questions remain concerning existing bookings, advance payments, invoicing arrangements and the treatment of mixed personal and rental use. Owners should obtain professional tax advice before changing their procedures.
More hassle guaranteed
The government argues that its measures will improve housing affordability and discourage speculative investment. Critics warn that additional restrictions and taxes will discourage private investment and reduce the supply of rental accommodation.
Holiday rentals are an obvious political target, but taxing second homes used by their owners for part of the year is unlikely to make much difference to the supply of affordable housing where it is most needed.
With a general election scheduled for 29 November, the future direction of housing policy remains uncertain. A new government could reverse some of these measures, although the approved decree remains law unless changed.
Foreign owners should start thinking about any eventuality. The 10% VAT charge is scheduled to start on 1 December, and anyone offering short-term lets should review their pricing and tax arrangements before then.
