The Spanish government announces a tax break for landlords who do not raise rents.

MadridThe Spanish government is starting the year by focusing on housing, and in particular, rental housing. In fact, it already did so in January 2025, when it announced a package of measures to mobilize affordable rentals in the StateOn Monday, Spanish Prime Minister Pedro Sánchez announced a series of proposals to further "intervene in the rental market" in Spain. The measures will be included in a royal decree-law to be approved "in the coming weeks," said Sánchez, who assured that they will benefit "the three million households that rent in Spain." To begin with, the Spanish government is reinstating tax breaks for landlords. The executive branch is proposing this approach as a solution to the renewal, due in 2026, of the more than 600,000 contracts signed in the first year of the pandemic, when market prices were much lower. The current scenario is entirely different, which could lead to a sharp increase in rental prices. Specifically, the central government is considering a tax credit of up to 100% on personal income tax (IRPF) for rental income for landlords who do not raise the price when the contract is up for renewal, whether in a high-demand area or not. "Everyone wins, landlords and tenants," Sánchez stated. This measure is similar to the one announced exactly one year ago. At that time, the proposal, which must be approved by the Ministry of Finance, was in line with the provisions of the state housing law for high-demand areas: that small landlords could receive a 90% income tax credit if they reduced the rent by 5% compared to the last contract, or a 70% credit if they offered a 5% reduction. Now, this would be applied outside of high-demand areas and would be strengthened, because the tax credit could reach 100%, according to Sánchez.

Sumar, the junior partner in the coalition government, had demanded an automatic extension of rental contracts due for renewal in 2026. In fact, according to calculations by the Ministry of Social Rights, Consumer Affairs, and Agenda 2030, some 630,000 contracts affecting 1.6 million people are due for renewal this year. However, the party led by Yolanda Díaz initially disagreed with the PSOE's approach: "Giving public money to landlords is a serious mistake. The PSOE's proposal will not have our support," Díaz warned.

Crusade against seasonal and room rentals

The second measure affects seasonal contracts. Sánchez announced that "stricter conditions will be established for a contract to be considered seasonal," although he did not provide details. He also anticipated the creation of a "sanctioning regime" for those who violate the state regulations on short-term rentals. In this regard, Catalonia has just passed its own law regulating this type of rental. It remains to be seen how the announcement fits with this rule.Furthermore, a stricter law against these rentals is already being processed in Congress.

Finally, the third measure targets room rentals with the intention of ending "their abusive use." Specifically, the Spanish government stipulates that the total rent for all rooms cannot exceed the rent for the entire property and that in areas declared to be under housing pressure, the rent control mechanisms included in the state housing law for standard rentals will be applied to these types of contracts.

The decree of measures comes at a time when Sánchez is seeking to set the agenda with the government's management to reinforce the message of a two-year term, that is, until the end of the mandate in 2027. Despite the weakness in Congress –The relationship with the investiture blog is at its lowest point.—Sánchez intends to push through measures that do not require the approval of the Spanish lower house.

Monday's decree, however, will have to go through Congress, and has already drawn criticism from parties like Podemos, as well as rejection from Sumar. "The solution to the brutal housing crisis is more tax breaks for homeowners. Enough is enough," said the leader of the purple party, Ione Belarra, via social media.