The extension of rentals strains the negotiation of the housing decree

MadridNegotiation 'in extremis'. The Spanish government is finalizing at this hour the drafting of a housing decree-law to be approved this Tuesday at the Council of Ministers. ARA has accessed the draft that the PSOE and Sumar are working on and that 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 BNG have joined forces. Junts, for its part, considers that the draft decree-law "moves away" from a pact they could subscribe to, but agrees to keep talking.

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

• Protection against evictions when it concerns families in a situation of vulnerability. Until now, Junts had aligned 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 stopped 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 subsequently—there is no absolute veto on the purchase of housing by investment funds. In fact, Esquerra complains about this, for example, and 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 REITs that own rental apartments, taxation on a portion of the profits not distributed through dividends is being increased from 15% to 25%. Furthermore, the increase does not affect those REITs that manage offices, warehouses, or shopping centers, as is the case with the Catalan company Colonial. However, the increase provides for significant deductions provided that the properties are used for affordable rental. On the other hand, municipalities are empowered to increase the IBI (property tax) by double or even up to 150% on those residential properties that remain vacant or are used for tourist accommodation in stressed areas.
• Stabilize rental contracts. This is one of the main demands of the Tenants' Union, who want indefinite contracts, but Junts and the PNB do not view this measure favorably. According to the text, an extraordinary extension is established for annual periods up to a maximum of two additional years for primary residence contracts that expire before December 31, 2028. It does, however, set 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, the rental extensions were voluntary.
• Regulation of seasonal rentals in order to put an end to "fraud". It introduces changes to the Urban Leasing Act to prevent this modality from being used to bypass tenants' rights and price control. In this sense, the contract, for a maximum of 12 months, should expressly state the reason for the temporary displacement and it is the landlord who must demonstrate that this temporality exists.
• The VAT figure is introduced for tourist apartments, so that they are taxed as a "business". However, Esquerra, for example, asks that reduced rates not be considered.
• Tax bonuses 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 has 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 tax exemption of100% of the capital gain obtained from the sale of a property 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. The ministers from Sumar are even threatening to stand up the PSOE ministers at the Council of Ministers meeting. Sources from Esquerra also believe that a price cap is missing for room rentals, just as it has been established in Catalonia.
• It also includes a reduction in VAT for construction if it concerns housing intended to be permanently protected. An incentive for builders to get involved in the construction of new housing intended for social use.
• The Spanish government also recovers a promise: sanctions for those 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 municipalities in this regard. Specifically, a sanctioning regime is proposed when there is a failure to provide what is required by the so-called Digital Single Entry Point for Rentals regulated at a European level. The infractions may be very serious (up to one million euros, at a minimum), 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 area of housing" and "focus once and for all on the accessibility" of citizens to houses and apartments. However, he has not directly mentioned any measures beyond prioritizing residential apartments over tourist ones, as the socialists are working to try to gather the entire plurinational majority into a consensus.

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