Pedro Sanchez has vowed to push through a major package of housing reforms that could significantly change the rules for landlords and tenants.

The government had planned to approve its new housing Royal Decree-Law before the summer, but postponed the move until September after failing to secure sufficient parliamentary support.

Speaking to Cadena SER, Sanchez said negotiations with political parties were continuing and that the government is determined to secure enough votes.

Among the measures are the automatic extension of certain rental contracts until 2028 and an increase in VAT on tourist accommodation to 21%.

The package would also introduce tax incentives for some landlords in an attempt to encourage more properties onto the long-term rental market.

However, the legislation remains a draft and could change before it is approved.

Sanchez said its overarching aim was to bring down housing costs while providing greater security to both tenants and property owners.

‘Unfortunately, we have a complex Parliament,’ he said, arguing that while there was broad agreement that Spain needed to do more on housing, parties disagreed over how far the government’s intervention should go.

Some of the proposals are considered too interventionist by Junts, Sanchez said, while parties to the government’s left, including Sumar and Podemos, believe they do not go far enough.

‘We are working on this Royal Decree-Law, not [just] to approve it in the Council of Ministers, but to have it ratified in the Cortes Generales,’ Sanchez said.

The proposed decree could make significant changes to Spain’s Urban Leases Law (Ley de Arrendamientos Urbanos), with measures affecting room rentals, evictions, landlord tax incentives, extensions to tenancy agreements, repairs and the sale of rented properties among the issues under discussion.

The government delayed approving the package in July because of concerns it could suffer another parliamentary defeat.

Sumar is meanwhile attempting to secure the support of Carles Puigdemont’s Junts.

Culture Minister and Sumar spokesman Ernest Urtasun said negotiations had continued throughout the summer and that the objective was to take the decree to the Council of Ministers ‘as soon as possible’.

Podemos remains far more critical.

Its spokesman Pablo Fernandez said the party remained at a ‘sideral distance’ from Sanchez’s housing policy and described housing as the ‘main black mark’ of the current government.

Landlords could be punished for hiking rents

Under the previous draft that failed to garner support, landlords would receive progressively smaller income tax (IRPF) relief depending on how much they increase the rent when signing a new tenancy agreement.

The proposals, seen by Spanish newspaper El Periodico, would apply across Spain and mark a significant expansion of measures first introduced under the 2023 Housing Law.

At present, landlords can claim tax reductions of up to 90% if they cut rents by more than 5%, but only if the property is located in an officially designated ‘stressed housing market’ area.

Because most autonomous regions – particularly those governed by the Partido Popular (PP) – have refused to declare such areas, the incentive has been largely confined to Catalonia, Navarre and the Basque Country.

The new proposals would remove that geographical restriction, allowing landlords nationwide to benefit from tax breaks if they reduce rents, while introducing, for the first time, a sliding scale that cuts tax relief for those who increase them.