Spain pushes through new housing law amid election turmoil and mounting protests

New property laws came into force last month as the housing crisis reached boiling point, with widespread protests and the announcement of a General Election.

The defeat of two housing bills on Friday 2nd October led to Spanish PM Pedro Sánchez calling new General Elections for 29th November, resulting in the suspension of parliament. The defeat of the bills, combined with outrage over the eviction of an 87-year-old woman in Madrid, also triggered large demonstrations in cities throughout Spain.

The following week, the government presented amended versions of the decrees to the Permanent Deputation, a standing committee of MPS which takes care of legislation while parliament is suspended, and managed to approve the first bill after winning the support of the Basque National Party.

The bill, which became law on October 7th, contains various measures aimed at tackling the housing crisis. Among them are:

• VAT of 10% on holiday rental apartments. As yet it remains unclear how this will be applied in the Canaries, which has its own tax regime and sets IGIC (VAT) within that framework.
• €10 billion of zero-interest loans of up to €50,000 aimed at firsttime house buyers.
• Restrictions on speculative property purchases by “vulture funds” and large property owners who buy properties at bargain prices. These will remain in force until 2030.
• A suspension of eviction proceedings for vulnerable people without alternative accommodation.
• Compensation measures for landlords who suffer losses when a court suspends an eviction.

Many of the measures have been on the table for years, but the Spanish government, which has governed in a minority since July 2025, has been unable to push them through parliament.

If the general election results in the formation of a new government, it is also likely that many of the measures will be repealed or changed.

Pedro Sánchez is hoping that the housing issue will rally support for his party, which is currently lagging behind the conservative PP in the polls. Surveys consistently show that a significant majority of Spanish voters favour measures such as rent caps, limits on holiday rentals and purchases by large investors.

In contrast, the PP favour a less regulated approach and claim that landlords are discouraged from entering the rental market by laws that favour tenants.