The Spanish government is currently drafting a new legislative package aimed at regulating short-term tourist rentals to curb rising housing costs and address tax evasion. While specific details remain under negotiation, the proposed measures include a potential increase in Value Added Tax (VAT) for tourist accommodations, stricter oversight of seasonal rental contracts, and new tax incentives for landlords who offer long-term, affordable housing.
Why is the government targeting short-term rentals?
The government aims to increase the supply of affordable residential housing by discouraging the conversion of long-term properties into tourist lets. According to government communications, the surge in short-term tourist accommodation is identified as a primary factor in the current housing price crisis. The administration is seeking a “major parliamentary agreement” to finalize a decree that balances property rights with the need for accessible housing in high-demand “stressed” areas.
How would a 21 percent VAT change affect owners?
Currently, Spanish tax law distinguishes between tourist apartments that offer “hotel services”—such as regular cleaning or reception—and those that do not. Properties providing such services are subject to a 10 percent VAT rate, while those that do not are subject to 0 percent VAT.
Reports indicate the government is considering a shift to a 21 percent VAT rate for tourist accommodations. This change would represent a significant financial adjustment for small landlords and businesses that currently operate under the 0 percent threshold. The goal is to harmonize the tax treatment of tourist lets with other commercial activities and reduce the incentive for landlords to prioritize short-term tourists over long-term local tenants.
What are the proposed changes to seasonal and room-by-room rentals?
The 2023 Housing Law left a regulatory gap regarding seasonal rentals, which are often used for students or temporary workers. Many landlords have utilized these contracts—frequently capped at 11 months—to bypass the price controls and mandatory lease extensions required for primary residence rentals.
The new legislative proposal seeks to:
- Close Loopholes: Establish a clear legal framework to distinguish between genuine temporary housing needs and disguised residential tenancies.
- Mandatory Documentation: Require all tenancy agreements to be formalized in writing to combat fraud.
- Enhanced Protections: Retain the possibility of granting exceptional extensions to tenants in specific, vulnerable circumstances.
Will there be tax incentives for landlords?
To encourage the transition of properties back into the long-term rental market, the government is exploring tax relief options. Previous proposals included a 100 percent personal income tax bonus for landlords who renew existing contracts without increasing rent. While the exact structure of the new incentives is still being negotiated, the objective remains the same: to make long-term leasing more financially attractive than the short-term tourist model.
Key Takeaways for Property Owners
- Legislative Status: The package is in the drafting phase, with legislation being prepared for July 2026.
- Scope: The measures target both small-scale landlords and professional businesses operating in the tourist rental market.
- Objective: The primary government goal is to increase affordable housing supply by curbing the growth of short-term tourist lets.
- Regulatory Focus: Future rules will likely focus on closing the “seasonal rental” loophole that currently exempts many properties from standard residential housing protections.
Government spokesperson Elma Saiz has described the forthcoming legislation as “an ambitious piece of legislation,” though she has declined to provide specific details while negotiations continue. Property owners are advised to monitor official announcements, as any final decree will require parliamentary approval before implementation.
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