Rejected on Friday, back on Tuesday: Where are we with Spain’s rental rules?

Spain’s controversial housing measures are back on the table just four days after Congress voted them down, giving renters and landlords another reason to pay attention to what happens in the coming weeks.

The government has circumvented normal congressional process due to calling an election and re-approved the two housing royal decree-laws rejected by Congress on Friday, with changes described as technical rather than a major rewrite.

Because Parliament has now been dissolved ahead of the November 29 general election, the measures have gone to the Diputación Permanente of Congress for approval rather than returning to a normal parliamentary vote.

That creates a very different situation from Friday. The first and larger housing decree could have enough support in the smaller parliamentary body to pass, while the separate decree covering automatic rental renewals faces a much harder battle.

But, what does it mean for renters in Spain?

For people renting their main home, the most important measures are:

• Up to two extra years: Certain existing habitual-home rental contracts due to end before December 31, 2028 could qualify for an extraordinary extension of up to two years, provided the tenant meets the conditions, including being up to date with rent payments.
• Limits on rent increases: Annual rent updates covered by the measure would be limited until December 31, 2027. Where the rent is above the applicable reference-price limit, no increase would be allowed; otherwise, without a new agreement, the increase could not exceed 2 per cent.
• Seasonal rentals face tighter rules: Temporary contracts would need a genuine, provable reason for the tenant’s temporary stay. Contracts lasting more than 12 months without proper justification, or more than two consecutive temporary contracts between the same parties for the same property, could be treated as ordinary permanent-home rentals.
• Room rentals: The rules would prevent landlords from charging more collectively through separate room contracts than they could charge for the property as a whole.
• Eviction protection: Measures aimed at protecting vulnerable households from eviction would be extended to 2030, subject to the conditions set out in the decree.

What about landlords?

Property owners would also be affected.

• Landlords offering qualifying properties at reduced rents could benefit from tax incentives, with the size of the tax reduction depending on factors including the rent charged and the circumstances of the tenant and property.
• Owners would also face tighter rules around temporary rentals, while the government wants greater transparency over who qualifies as a large property owner.
• For landlords in areas officially designated as stressed housing markets, the package also reinforces restrictions on rents and requires large property owners to have their status certified through the Property Registry.
• One of the most controversial proposals would make landlords pay compensation when they choose not to renew certain rental contracts. Under the separate rental-stability decree, a landlord ending a qualifying contract after the minimum five-year period for private owners, or seven years for companies, could have to pay the tenant at least 12 months’ rent for a comparable property. Exceptions would apply, including certain cases where the owner needs the home for themselves or close family members. The measure was rejected by Congress last Friday but has now been brought back by the government and still needs parliamentary approval.

What about people wanting to buy?

The package is not simply a renters’ measure.

• It also includes measures designed to make buying a first home easier, including public interest-free financing, together with measures intended to increase the supply of affordable and protected housing.
• Another part of the package targets property investment companies. Entities involved in acquiring property would face restrictions on buying homes below 70 per cent of their market valuation, with exceptions for certain affordable-housing projects.

And what is happening with the automatic renewal proposal?

This is where renters and landlords need to watch the parliamentary vote particularly closely.

A separate decree would introduce much stronger protection for tenants when their ordinary rental contract reaches the end of its existing legal period. The proposal would allow contracts to be automatically renewed for further periods, with additional protection for tenants where a landlord ends a contract without a justified reason. That decree is not in the same position as the main housing package.

The government has a potential 35-34 majority in the Diputación Permanente for the first decree, but the parties supporting the second decree currently fall short because the PNV also voted against it in Congress. The government is therefore expected to face a much tougher fight over automatic rental renewal. So, watch this space.

Why Friday’s defeat did not end the story

Friday’s vote might have looked like the end of the government’s housing plans. It was not. With the general election now called and the full Congress dissolved, the government has found a route to bring new versions of the measures back before the Diputación Permanente.

For renters, that means the two-year extension and rent-update restrictions could return, while landlords need to watch the rules on temporary lets, rent incentives and large property owners.

The big question now is not whether the government has abandoned its housing measures. It is which parts will survive the next parliamentary vote. Prime minister Sánchez said, “We haven’t thrown in the towel.”