Spain's PM approves again the two housing decrees: these are the changes compared with last week

The government has retained the backbone of the plan, including the protection against evictions, restrictions on short-term rentals and ten billion euros in loans, but the new texts contain several important differences from the version rejected on Friday.

The biggest change from the September proposal concerns the end of the temporary two per cent cap on rent increases, which the new version replaces with the limits set by ordinary legislation. There is also a crucial procedural change: the government has delayed the entry into force of the second decree on automatic extensions until Diputación Permanente expressly approves it, avoiding the risk of putting a short-lived measure on the rental market.

The most significant difference between the framework rejected last Friday and the new text approved on Tuesday concerns the rules governing rent increases.

The first decree contained an exceptional measure designed to limit rent increases until 31 December 2027. Under the system, if a proposed rent exceeded the cap set by the reference index, the landlord could not increase it. In other cases, if the parties failed to reach a new agreement, the law capped the annual increase at two per cent.

The new proposal instead allows tenants who are up to date with their rent to request a two-year extension when their contracts expire. During this additional period, rent increases will remain subject to the ordinary limits set by general housing legislation, rather than explicitly repeating the exceptional two per cent cap included in the previous version.

Sánchez has presented the new formula as a way of providing stability for tenants and ensuring that their contracts continue without introducing a fixed exceptional cap.

Sánchez's package gives a more prominent role to Casa 47, the state-owned housing company.

The prime minister has announced that the company will acquire thousands of properties from the Social Security property portfolio and add them directly to the public housing stock for affordable rent.

Casa 47 and the allocation of public properties already formed part of the architecture of the first decree approved last week. The new element is the emphasis Moncloa is now placing on this route, making the large-scale purchase of Social Security properties its main tool for rapidly increasing the supply of public housing.

The right of tenants who are up to date with their rent to extend their contracts for a further two years remains a central element of the main decree. However, the second royal decree approved on Tuesday, which changes the rules on automatic extensions once the statutory five- or seven-year period has expired, introduces a significant procedural change.

The version rejected on Friday required landlords to give six months' notice if they intended not to renew a tenancy and set a minimum compensation payment equivalent to 12 months' rent in certain circumstances.

The government has now decided to separate the measure's entry into force from its approval by Cabinet. The automatic renewal regime will not come into force unless Diputación Permanente first approves the decree.

With this tactical change, Moncloa aims to prevent a measure with such a significant impact from operating provisionally for a few weeks before lapsing, which could create legal uncertainty in the rental market.

Despite the changes to rent increases, most of the social protection measures contained in the first decree return unchanged.

The new text fully restores protection against court-ordered evictions and removals involving economically vulnerable people who have no alternative accommodation. The measure will remain in force until 31 December 2030.

The decree also retains the compensation scheme for landlords who suffer proven financial losses when a court suspends an eviction.

The government has likewise reinstated, without changes, temporary restrictions on residential property purchases by companies involved in real estate activities. The restriction will remain in force until the end of 2028, with specific exemptions where properties serve social or protected-housing purposes.

The government says the aim remains to prevent certain corporate purchases from further reducing the supply of affordable homes for people's main residences.

The package also fully restores another of the Housing Ministry's key regulatory measures aimed at preventing landlords from circumventing the rules governing the rental market: regulation of short-term and room-by-room lets.

The government wants to prevent these forms of tenancy from becoming a way to sidestep the rules that apply to main-home rentals.

The package also retains, without changes from the version approved in September, specific tax treatment for certain tourist flats and tax measures designed to encourage the development of protected housing.

The restored decree also maintains the original package of financial incentives and measures to help people buy homes.

Tenants will be able to claim income tax deductions based on their earnings and the amount they pay in rent. Landlords who offer their properties at affordable rents will continue to receive specific tax incentives.

As for measures designed to stimulate demand for home ownership, the government has reinstated a ten-billion-euro financing scheme providing interest-free loans of up to 50,000 euros for first-home purchases.

Sánchez has again stressed that the measure is not limited to young people but will also benefit households with members of different ages who meet the eligibility requirements.

The financial package also includes 280 million euros in public guarantees for construction and industrialised building, together with a further 400 million to support social housing providers.

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