On 29 September, the Council of Ministers approved two housing decree-laws, but Congress repealed them on 2 October. Following the dissolution of Parliament and the call for a general election on 29 November, the Government has approved both texts again with a few changes. Royal Decree-Law 29/2026, which is the subject of this circular, has been in force since 8 October. Royal Decree-Law 28/2026 is awaiting ratification and is therefore not yet in force. It will take effect on 15 November 2026 only if the Standing Committee (Diputación Permanente) ratifies it, which is the expected outcome.

Royal Decree-Law 29/2026, in force since 8 October

  • Extraordinary extension of up to two years for all primary residence leases that expire before 31 December 2028. The tenant must be up to date with payments and must have been for the previous eight months. The landlord can avoid the extension by signing a new lease at a rent at least 5% lower, by showing a genuine need to use the property for themselves or their family (even if the lease did not provide for this), or by agreement between the parties.
  • 2% cap on rent increases. Until 31 December 2027, annual rent increases on primary residence leases cannot exceed 2% without a new agreement, and no increase is allowed at all if the rent already exceeds the applicable reference price index.
  • Seasonal rentals. The contract must state a genuine, verifiable reason for the tenant’s temporary relocation. If it does not, if it lasts more than twelve months without a documented reason, or if more than two consecutive contracts are signed between the same parties for the same property, the lease will be treated as a primary residence lease.
  • Room rentals. The total rent for all the rooms cannot exceed the rent for the whole property. In stressed housing market areas, the reference price index limits apply.
  • Advertising. Rental listings must include the reference price index, the maximum rent applicable in areas subject to rent caps and, where relevant, the landlord’s status as a large property holder.
  • Evictions of vulnerable households. Evictions are suspended until 31 December 2030 where no alternative housing is available, with compensation for small landlords. The authorities have two months to offer alternative housing or pay the outstanding debt. If they fail to do either, they automatically assume the debt.

Tax Measures

  • Landlords’ personal income tax: a reduction of up to 100% of net rental income if, as a landlord who is not a large property holder, you sign a new lease at a rent more than 5% lower. The reduction is 80% during the automatic extension if the reference price index is respected, and 70% if the property is rented to a public body or a third-sector organization.
  • Tenants’ personal income tax: a national deduction for rent paid on a primary residence is reinstated for taxpayers with a taxable base below €33,007.20.
  • Tourist apartments: 10% VAT from 1 December 2026 on rentals of apartments offering hotel-type services. In stressed housing market areas, local councils may apply a property tax (IBI) surcharge of up to 50%, 100% or 150%, depending on the number of tourist apartments the owner holds.
  • Renovations: from 1 December 2026, certain works on properties let as primary residences will be subject to 10% VAT instead of 21%.
  • Subsidized housing: VAT on construction is reduced to 4%.

Buying a Home

  • Companies and funds: until 31 December 2030, entities whose business is acquiring property may not buy homes for less than 70% of their appraised value, with some exceptions.
  • “Tu Casa” loans: interest-free public loans of up to €50,000 or 20% of the property’s value to buy a first home, with a term of up to 30 years, no age limit and a maximum resale price.

As for Royal Decree-Law 28/2026, we will wait until it is approved before issuing the corresponding circular.

The Civil and Real Estate Law Department will closely follow the progress of Royal Decree-Law 28/2026 and will keep you informed of any relevant developments. We remain at your disposal regarding any questions about how these measures may affect you.

Author:

David F Capo

Partner, Civil and Real Estate Law Department, addwill