The extension of rents strains the negotiation of the housing decree

MadridNegotiation in extremis. The Spanish government is finalizing at this hour the preparation of a housing decree-law to be approved this Tuesday at the Council of Ministers. ARA has accessed the draft on which the PSOE and Sumar are working and which they must agree upon with the partners of the plurinational majority so that the legislative package ends up being approved in the Congress of Deputies as well. However, the pact within the left-wing coalition itself is not a done deal at this moment: according to the draft, the Ministry of Housing, led by the PSOE, incorporates the extension of rental contracts until 2028, but not indefinitely as requested by Sumar and the rest of the forces to the left of the socialists, who this Monday formed a common front to adopt the demands of the Tenants' Union. Esquerra, EH Bildu, Podemos, Sumar, Compromís, and the BNG have joined forces. Junts, for its part, considers that the draft of the decree-law "moves away" from a pact that it could sign, but calls for continued talks.

Below, we break down the measures of the draft decree-law, which may evolve in the coming hours:

• Protection against evictions when it concerns families in a situation of vulnerability. Until now, Junts had aligned itself with the PP and Vox to overturn the ban on evictions for vulnerable families, as it requests distinguishing between large landlords and small ones. The draft establishes that evictions will be halted when the owner of the property is a vulture fund. Conversely, the eviction will not be suspended if the owner is a vulnerable person in the event of stopping the receipt of rent or if they are the owner of only one or two properties. For Junts, however, this distinction is not sufficient.
• Limitations on housing speculation. To begin with, in the draft currently being negotiated –it may evolve later– there is no absolute veto on the purchase of housing by investment funds. In fact, this is what Esquerra complains about, for example, which is calling for clear regulation on the matter. There are, however, new levies: the Spanish government is reviving the 2025 proposal regarding SOCIMIs (REITs). Specifically, for those that own rental apartments, the taxation on a portion of the profits not distributed through dividends is increased from 15% to 25%. Furthermore, the increase does not affect SOCIMIs that manage offices, warehouses, or shopping centers, as is the case with the Catalan firm Colonial. However, the increase provides for significant deductions as long as the properties are intended for affordable rent. On the other hand, municipalities are empowered to double the IBI (property tax) or even increase it by up to 150% on residential properties that are vacant or used for tourist accommodation in high-demand areas.
• Stabilize rental contracts. This is one of the main demands of the Tenants' Union, which wants indefinite contracts, but Junts and the PNV do not look favorably upon this measure. According to the text, an extraordinary extension is established for annual periods up to a maximum of two additional years for habitual residence contracts that expire before December 31, 2028. But it sets conditions: that the tenant must be up to date with payments for the last eight months. It also establishes the possibility of signing a new contract if the rent is lowered by 5%. In the proposal that Miriam Nogueras's party submitted to the Spanish government, rental extensions were voluntary.
• Regulation of seasonal rentals to put an end to the "fraud". It introduces changes to the urban leasing law to prevent this modality from being used to circumvent tenants' rights and price control. In this sense, the contract, for a maximum of twelve months, should expressly state the reason for the temporary displacement, and it is the landlord who must prove that this temporality exists.
• The figure of VAT is introduced for tourist apartments, so that they are taxed as a "business". However, Esquerra, for example, asks that the reduced rates are not taken into account.
• Tax benefits for tenants, and also for landlords who lower their rent prices. Junts requested this type of incentive, but the left does not accept tax exemptions for landlords, and they made this clear in this Monday's press conference. Among those included in the draft decree law is a 100% reduction in personal income tax (IRPF) on the income received by the landlord for a rental if a new contract is made under the reference price index. Or a 100% tax exemption on the capital gain obtained from the sale of a home made to public entities or public companies for social housing.100% of the capital gain obtained from the sale of a home made to public entities or public companies for social housing.
• Room rentals. There is no regulation on this, and it is what Sumar and also Esquerra are asking to be included. Sumar ministers are even threatening to stand up the PSOE ministers at the Council of Ministers meeting. Esquerra sources also believe that a price cap on room rentals is missing, just as it has been established in Catalonia.
• A VAT reduction on construction is also included if it concerns housing intended to be permanently protected. An incentive for builders to get involved in the construction of new housing for social use.
• The Spanish government is also recovering a promise: the sanctions for digital platforms that do not comply with the information regarding the advertisement of a short-term or tourist rental. For example, Airbnb or Booking. The regulation recognizes the powers of the autonomous communities and local councils in this regard. Specifically, a sanctioning regime is proposed when the so-called single digital window for leases regulated at a European level is breached. Infringements may be very serious (up to one million euros, at least), serious (500,000), or minor (100,000 euros).

The Spanish Prime Minister, Pedro Sánchez, who has met with the President of the Generalitat, Salvador Illa, in Barcelona, has called to "act in the field of housing" and "put the focus once and for all on the accessibility" of citizens to houses and apartments. However, he has not directly mentioned any measure beyond prioritizing residential apartments over tourist ones, as the socialists are working to try to gather the entire plurinational majority in a consensus.

Who will certainly not be there are the PP and Vox. The President of the Community of Madrid, Isabel Díaz Ayuso, has even said that they are "sectarian whims" and has urged the Spanish government to evict the mobilization at Puerta del Sol.