Spanish Markets Report – Aug 2026 Part 2 – Legal Changes & Regulatory Influences

PART 2 – LEGAL CHANGES AND REGULATORY INFLUENCES

Tourist Rental Regulation

• The most visible legal development continues to be the tightening of tourist rental controls.
• The days of casually placing a property on Airbnb and hoping nobody notices have disappeared as the multi-listing sites have been obliged to take responsibility for allowing only legal adverts or face huge fines.
• Registration systems, digital reporting requirements, licence controls, increasing enforcement and soon the imposition of IVA (VAT) are transforming holiday lettings into a regulated activity.
• And remember that renting a room carries the same registration responsibilities as renting out a whole apartment.

Communities of Owners

• Communities of Owners continue to gain greater influence over tourist rental activity, with 60% of neighbours’ approval being required for new licences.
• Buyers must increasingly investigate not only planning and licensing requirements but also community rules and restrictions.
• These do affect demand. as some buyers require the rental income to pay for the property’s running costs, whilst others look for ‘no licence’ decisions to avoid the conflict that can occur between the daily lifestyle and attitudes of short-term tourists and those of residents.

Housing Affordability and Political Intervention

Door of a house with a green Mallorcan shutter in a state of abandonment, with a for sale sign written in Spanish.

• Housing remains politically explosive and dogma driven.
• Most current initiatives are targeted at:
  – Rental availability.
  – Tourist accommodation.
  – Housing affordability.
  – Investor activity.
• Whether these measures increase housing supply remains open to debate only amongst politicians, as others can see the real life detrimental effects being the opposite of what the politicians state they are trying to achieve.
• “We told you so”, is a common refrain as many countries have tried similar actions to Spain’s National and Community Governments without success.
• Instead of increasing supply, they have increased uncertainty and reduced it.

Implications for Property Values

• The principal influence of regulation appears to be on rental income assumptions, not on capital values.
• Quality property in desirable locations continues to appreciate because demand exceeds supply.
• However, buyers who previously justified high prices through anticipated holiday rental income are now forced to make more conservative assumptions.
• That may eventually act as a moderating influence on values.

Tenant’s Right of First refusal if the property is to be sold

• The Urban lease law states that a long-term tenant has a right to acquire a property at the price being offered by a third party, unless that is specifically excluded and agreed by both parties when the lease is created.
• This applies even if a property has been acquired by a bank foreclosing as that does not extinguish the tenant’s rights.
• It’s one of the reasons for a bank prohibiting leasing of the property when granting a mortgage or making removal of that right in a lease granted by the borrower an absolute condition of the mortgage.
• As houses with a long-term tenant are likely to sell on the open market at a price lower than one with vacant possession, due to the uncertainties of getting vacant possession or increasing rents, the tenant can obtain the property at a ‘below market value’ price.

New Andalucian Housing Law

• This came into effect in December last year. However, the national Government has objectedto some of its terms so it may be repealed in whole or part. Another case of ‘snakes and ladders’.
• The principal effects for property buyers are –
• Measures against Squatting – Becoming a Squatter puts individuals outside the social housing opportunities. Access to any protected/social housing will be prohibited if the person has been convicted of a crime of trespassing or squatting.
• It is unknown whether that includes ‘inquiokupa’ who are individuals who rent a property and then don’t pay the rent and refuse to move out.

Tax on Net not Gross rental income

Property tax changes in Spain

• The EU has been successful in obliging the Spanish tax authorities to accept all proper expenses on renting a property before tax is calculated for all owners and not only EU citizens.
• Previously UK and other owners had to pay tax on the gross income from a property.
  Now the tax will be on the Net income after allowable expenses.
• That will make a significant difference for some property owners dependent on the income for living expenses and covering annual running costs.

A New Building Code (CTE) is to come into force by the end of this year

• Again, EU pressure is obliging the Government to increase the requirements of builders to include more environmental features to reduce energy use and CO2 creation.
• Sector analysts anticipate the requirements could increase the cost of building an average house by as much as 18,000€ euro.
• However, the owner of the new house will have the benefit of lower annual running costs and so should be able to afford the increase in price as long as the mortgage industry takes running costs of the house into their calculations of loan relative to income.

What is ‘Short-term’ Rental and how does it differ from ‘Tourist’ Rental and ‘Long-term’ Rental

• Since July 1, 2025, it has been mandatory to register all rentals with a duration of less than one year, including seasonal rentals, even if they are not for tourist use.
• Rentals more than a year do not require registration as they are deemed to be for habitual use and regulated by the Urban Rental Laws.
• ‘Short-term’ is any rental agreement for less than one year that is not for a primary residence, such as rental agreements for seasonal work placements, studies or healthcare.
• ‘Tourist’ rental definitions, where the same person rents for a period, are not National and can differ in the 17 National Communities e.g maximum of 60 days in Andalucia, whilst in Valencia it’s only 10 days. Some Provinces and even Municipalities have their own definitions.

Responsibility for Repairs of Private Terrace problems affecting others in a Community building.

• A recent legal judgement has clarified that where damage is being caused to community or private neighbour’s property, it may not be the private owner’s duty to carry out and pay for the required repairs.
• The Provincial Court’s ruling stated that the fact that a terrace is private does not mean that all its elements are the owner’s responsibility.
• The terrace is part of the roof of a building, for which the community has responsibility. In this case it was shown that the problem was not due to deficient routine maintenance of the terrace, but rather to the deterioration of the waterproofing membrane located beneath the paving.
• The leaks originated “from a defect in the waterproofing membrane of the ‘roof’“ and held that the Community was therefore liable for the repairs.
• If it had been proven that the terrace owner’s actions had caused the deterioration then the owner would have been responsible.

Tax deductions for energy efficiency improvements

House energy efficiency rating

• Good news about tax!!! The deductions for works reducing the amount of energy used allow for deductions of between 20%, 40% and 60% of the expense depending on the work carried out.
• Works aimed at reducing the demand for heating and cooling, now have a deadline of December 31, 2027.
• It’s a win-win situation as the works reduce the costs of running the home and also the tax reduction provides more disposable income.