Spain’s government is preparing a new housing package that combines a sharp increase in VAT on tourist rentals with measures to extend and stabilise rental contracts, presented as part of its response to the country’s housing crisis.
Spain’s new housing push: why it matters if you own or rent
The Spanish Government plans to present an “important” housing reform package in July. According to El Economista, it is structured in two main blocks: measures to lower rental prices and stabilise contracts, and measures to mobilise more affordable housing.
The package is described as a broad royal decree-law that will include proposals supported by different political forces during the current legislature.
VAT on tourist flats in Spain set to rise to 21 %
For foreigners who own property in Spain, the standout proposal is a rise in VAT on tourist flats.
At present, many short-term rentals without hotel-style services such as cleaning or reception are generally exempt from VAT. Rentals that offer hotel-style services typically pay a reduced 10% VAT rate.
Under the new proposal, holiday rentals and tourist flats would be subject to the standard 21 % VAT rate, replacing the current system.
According to Libre Mercado, if the plan goes ahead, tourist flats would pay more VAT than hotels, a move the outlet portrays as favourable to the hotel lobby and more costly for clients and owners of tourist apartments.
New rules to stabilise Spain’s rental market
The first block of measures in the new package aims to lower rental prices, provide greater stability to contracts, and combat fraud.
El Economista reports that the package will include:
- An extension of rental contracts.
- The obligation for contracts to be in writing.
- Tax bonuses in personal income tax (IRPF) for landlords who reduce the price of rent.
The Government argues, as cited by the Majorca Daily Bulletin, that these reforms will make the rental market “fairer and more stable” and help ease pressure on housing affordability across Spain.
Increasing the supply of affordable housing
The second major block of measures focuses on mobilising more affordable housing, with both tax and administrative changes involved.
Key elements mentioned by El Economista and the Majorca Daily Bulletin include:
- Applying the standard 21 % VAT rate to tourist flats as part of the affordable housing strategy.
- Introducing administrative agility measures to speed up housing projects.
- Cutting red tape so that new housing can come onto the market more quickly.
These steps are intended to boost the supply of affordable homes and reduce pressure on housing costs across Spain.
Practical implications for foreign landlords and tenants in Spain
For owners who rent out their properties as tourist flats or short-term holiday rentals, the proposed VAT change is central:
- Tourist accommodation that is currently exempt or taxed at 10 % VAT would move to a 21 % rate.
- The measure is targeted at tourist flats and other tourist accommodation, rather than standard long‑term residential leases.
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