Spain’s Housing Decrees Rejected: What the Current Rental Rules Mean for Property Owners

Spain’s proposed September 2026 housing reforms have been rejected by Congress. We explain what did not change, the rental rules that apply now, why the Government wanted to reform them, and what property owners in Benahavís and the wider Costa del Sol should watch next.

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Spain’s September housing reforms did not become permanent changes to the country’s rental laws.

That is the most important point following the extraordinary vote in Congress on 2 October 2026.

The Government approved two Royal Decree-Laws on 29 September. The first contained a broad package covering residential tenancies, seasonal and room rentals, evictions, taxation, tourist accommodation, investment purchases and housing supply. The second proposed a much more extensive system of automatic renewal for ordinary residential rental contracts.

Both were published in the BOE and briefly entered into force. However, under the Spanish Constitution, a Royal Decree-Law must subsequently be validated by Congress if it is to remain in effect.

Congress rejected both measures on 2 October. The BOE subsequently published the formal resolutions recording their repeal.

What Actually Happened?

The distinction between Government approval and permanent law caused considerable confusion during the final days of September.

On 29 September, the Council of Ministers approved two Royal Decree-Laws. Real Decreto-ley 26/2026 was published on 30 September and entered into force on 1 October. Real Decreto-ley 27/2026, dealing principally with the longer-term renewal of residential tenancies, was published on 1 October.

For a short period, therefore, these were not merely political proposals. They were published Royal Decree-Laws.

But that was never the end of the constitutional process.

Congress voted on both measures on 2 October. The first decree was rejected by 178 votes to 172. The second was rejected by 184 votes to 166.

The BOE published the Congressional resolutions repealing both decrees on the same day.

For anyone deciding what rules apply to a rental property now, the practical conclusion is straightforward: the September changes should not be treated as the continuing law.

Current Law: How Long Does a Normal Residential Tenancy Last?

The existing framework under Spain’s Ley de Arrendamientos Urbanos — the LAU — therefore remains fundamental.

For an ordinary rental of someone’s habitual home, the parties can agree the initial contractual term. However, where that period is shorter than five years, the tenant generally has the right to annual extensions until the tenancy has lasted five years.

Where the landlord is a legal entity rather than an individual, the corresponding minimum period is seven years.

Once that five- or seven-year period has expired, the existing LAU provides a further renewal mechanism. If neither party gives the required notice, the tenancy can continue through annual extensions for up to another three years.

At this stage, the landlord normally needs to give at least four months’ notice of an intention not to renew, while the tenant normally gives at least two months’ notice.

There are additional rules and exceptions — including circumstances in which an individual landlord may recover a property for their own permanent residence or that of qualifying close family members — so the individual contract and circumstances still matter.

What Happened to the Proposed Two-Year Extension?

The separate extraordinary two-year extension contained in the first September decree has also fallen.

That proposal was intended to protect tenants whose existing residential contracts were approaching expiry before the end of 2028. In qualifying circumstances, a tenant could have requested an additional period under the existing contractual conditions rather than immediately having to negotiate a new tenancy at the prevailing market rent.

The Government’s reasoning was clear: in markets where rents have risen substantially during an existing tenancy, reaching the end of the protected contractual period can expose a household to a sudden increase if it has to compete for another home at current market prices.

For landlords, however, such an extension would also have restricted when a property could return fully to the open rental market.

Following the Congressional rejection, this new general two-year extension does not form part of the continuing national rental regime.

That does not mean that no extraordinary extensions exist under Spanish law. The existing LAU contains separate provisions for qualifying vulnerable tenants and for homes situated in formally declared stressed residential market areas. Those existing provisions should not be confused with the rejected September proposal.

Current Law: What About Seasonal Rentals?

Seasonal rentals have not suddenly become ordinary residential tenancies because of the September debate.

Under the existing LAU framework, the legal distinction depends fundamentally on the purpose of the occupation. A habitual residential tenancy satisfies the tenant’s permanent housing need. A genuinely temporary arrangement has a different purpose and can fall within the regime for use other than habitual housing.

This is important on the Costa del Sol, where furnished properties may be occupied for several months by people working temporarily in the area, studying, spending part of the year in Spain or needing accommodation for another genuinely temporary reason.

The rejected decree would have introduced a much more prescriptive national framework, including specific requirements around the justification for temporary occupation and, generally, a period between 31 days and 12 months. Repeated temporary contracts could also have been reclassified as habitual residential tenancies in defined circumstances.

Those new September provisions no longer apply.

That does not mean an owner can safely turn a permanent residential tenancy into a seasonal one simply by writing “11 months” on the contract.

The genuine purpose of the occupation remains important. Owners using temporary contracts should therefore continue to document the reason for the temporary stay carefully and obtain appropriate advice where the distinction is uncertain.

Current Law: What About Renting Individual Rooms?

The proposed national reform of room rentals has also fallen.

The Government wanted to address a perceived loophole whereby a property that might otherwise be subject to residential rental protections or price restrictions could instead be divided contractually into several separately rented rooms.

Under the rejected framework, room rentals would have been brought much closer to conventional residential protections and, where rental-price controls applied, the combined rent from the rooms could not have been used to circumvent the maximum rent applicable to the dwelling as a whole.

That new national regime does not now apply.

Room rentals remain an area where the legal treatment can depend on the structure and purpose of the arrangement, the contract and any applicable regional rules. Owners should therefore not assume either that every room letting is automatically governed in exactly the same way as a whole-property LAU tenancy or, conversely, that renting by the room provides a simple way around residential rental legislation.

For the typical Benahavís villa or second home this may have limited practical significance. It is more relevant to investors using room-by-room models in larger urban rental markets.

Current Law: Who Pays for Repairs?

This is another area where it is particularly important to distinguish the rejected reform from the law that applies now.

Under the current LAU, the landlord is responsible for repairs necessary to keep the property in a habitable condition for its agreed use, unless the damage is attributable to the tenant.

The tenant must notify the landlord of necessary repairs as soon as reasonably possible.

Where urgent work is required to prevent imminent damage or serious inconvenience, the tenant can, after notifying the landlord, arrange the necessary repair and seek reimbursement.

However, small repairs resulting from ordinary wear through normal use remain the tenant’s responsibility.

The September decree would have gone further. It introduced a procedure under which a tenant could formally require qualifying repairs, submit a reasonable quotation and, after a defined period without an adequate landlord response, arrange the work and deduct properly documented costs from future rent.

That new mechanism was expressly removed when Congress rejected the decree.

Current Law: What Happens if a Rented Property Is Sold?

Tenants already had preferential purchase rights before the September package.

Under Article 25 of the LAU, a tenant can have rights of tanteo and retracto when the rented home is sold. Broadly, tanteo can give the tenant an opportunity to purchase on the notified terms before the sale, while retracto can operate in qualifying circumstances after a transaction where the required process was not correctly followed.

Under the restored current rules, the parties can also agree in the tenancy contract that the tenant waives the preferential acquisition right. Where that has been agreed, the landlord must still notify the tenant of the intention to sell at least 30 days before completion.

The rejected September decree would have strengthened tenant acquisition rights, particularly in certain combined sales and investment transactions, and removed the ability to contractually waive the right in the way currently permitted.

Those changes no longer apply.

Nevertheless, anyone selling a tenanted property should still have the existing Article 25 position checked before agreeing the transaction. The rejection of the decree did not abolish the tenant purchase rights that already existed.

Current Law: What Happens With Evictions?

The rejection of the September decree does not mean that Spain suddenly has no protection for vulnerable tenants facing eviction.

Existing extraordinary protections remain in force under separate legislation.

Measures already adopted earlier in 2026 allow qualifying economically vulnerable tenants without an alternative home to request the suspension of certain eviction or repossession proceedings until 31 December 2026. The legislation also contains safeguards allowing the court to consider the circumstances of the landlord, including specific protection for landlords owning two or fewer homes.

The September decree proposed going considerably further, including new protections extending in some circumstances to 2030 and a different system governing vulnerable households, institutional owners and compensation for qualifying landlords.

Those September extensions have fallen with the decree.

The practical position is therefore not “evictions are banned” and equally not “all eviction protection has disappeared”. Existing procedures continue, with additional protection available in defined vulnerability cases.

Current Law: What VAT Applies to Tourist Rentals?

The rejection of the September decree is particularly important for owners of tourist accommodation.

The Government had previously discussed applying 21% IVA to tourist apartments. The September decree instead introduced a wider 10% IVA treatment for qualifying furnished tourist accommodation.

That new tax treatment has now fallen.

The pre-existing VAT distinction therefore remains.

A straightforward tourist rental where the owner essentially makes the accommodation available without providing services typical of the hotel industry is generally exempt from IVA.

Where the owner provides hotel-type services — such as periodic cleaning during the stay, regular changes of bed linen and towels, continuous reception-type services or similar hospitality services — the accommodation is generally subject to IVA at 10%.

Cleaning and linen changes simply at the beginning and end of a guest’s stay do not, by themselves, normally turn the letting into hotel-type accommodation for this purpose.

Owners should remember that taxation is only one part of the holiday-rental framework. Andalucía tourism rules, the national short-term rental registration system, community-of-owners requirements and municipal planning controls can apply separately. Our Touristic Licences in Spain guide explains the wider position.

Current Law: What About IBI?

The September decree also proposed changes to the way municipalities could use IBI surcharges as part of housing policy.

Those changes have been repealed.

Spain already allows municipalities, in defined circumstances, to impose IBI surcharges on residential properties considered permanently vacant. The applicable rules include statutory conditions and require implementation through the relevant municipality.

The rejected September package would have changed and expanded that framework, including provisions relating to vacant housing and tourist accommodation.

Those additions should not now be treated as part of the current IBI regime.

For an owner in Benahavís, the practical position therefore remains dependent on the existing national legislation and the fiscal ordinances actually adopted by Benahavís Town Council. There is no new September national tourist-rental IBI surcharge that should simply be added to an owner’s calculations.

What About Stressed Housing Areas?

This is one part of the housing debate that did not begin with the September decrees and did not disappear when they were rejected.

A zona de mercado residencial tensionado — stressed residential market area — is a formal designation under Spain’s 2023 Housing Law.

It does not simply mean an area where homes are expensive, rents are high or demand exceeds supply.

The competent housing authority must formally declare the area through the statutory process. Once that happens, particular provisions concerning rents, contract extensions and large landlords can apply.

Benahavís is not currently a formally declared stressed residential market area.

That is significant because some of Spain’s strongest existing rental controls only operate in formally designated stressed areas. They should not automatically be applied to a Benahavís property simply because the municipality has a high-value property market.

The September package would have added further measures connected to stressed areas. Those additions have been rejected, but the underlying stressed-area framework created by the 2023 Housing Law remains.

Why Did the Government Want to Change the Rules?

Understanding why the reforms were proposed is still useful, even though they were rejected.

The Government’s central argument was that the existing rental framework does not provide sufficient security for households in areas where market rents have risen sharply.

A tenant may spend five, seven or more years in the same home under the LAU protections and then face a very different rental market when that protected period eventually ends. The proposed extensions and automatic-renewal system were intended to reduce that sudden loss of security.

The Government also argued that some seasonal and room-rental arrangements were being used to avoid rules intended for ordinary residential tenancies. Its proposed reforms therefore tried to distinguish genuine temporary accommodation from contracts that were temporary principally in name.

The repair proposals were intended to address situations where necessary work was not carried out promptly. The eviction provisions sought to prevent vulnerable households without alternative accommodation from losing their homes while also creating compensation mechanisms for some affected private landlords.

The tax measures were designed to encourage more homes into conventional residential use and discourage long-term vacancy or certain forms of speculative ownership.

Those objectives were politically contested, as were the methods chosen to pursue them.

Opponents argued, among other concerns, that greater restrictions and longer compulsory tenancy periods could discourage private owners from offering homes for long-term rent, reducing supply rather than increasing it. There were also disagreements over how the proposals treated small private landlords compared with institutional owners and over whether the financial cost of protecting vulnerable households should fall on private property owners or the public sector.

Congress did not have to decide that Spain has no housing problem in order to reject these particular solutions. The votes mean that these two legislative packages failed to secure sufficient parliamentary support.

What Does This Mean for Benahavís Property Owners?

For most Benahavís owners, the immediate consequence is less dramatic than the headlines surrounding the September package may have suggested.

If you own a conventional long-term rental, the established LAU framework remains the starting point. You do not suddenly have a new indefinite five- or seven-year renewal obligation created by the September decree.

If you use genuine seasonal contracts, the rejected 31-day-to-12-month national regime does not now govern those contracts. Nevertheless, the real purpose of a temporary tenancy remains important and artificial use of seasonal contracts should not be regarded as risk-free.

If you rent individual rooms, the new national room-rental price regime has not survived.

If your property needs repairs, the existing LAU allocation of repair responsibilities continues rather than the proposed September deduction procedure.

If you sell a rented home, existing tenant purchase rights still need to be considered, but the September expansion of those rights has fallen.

If you operate a straightforward holiday rental without hotel-type services, the September decree has not created a new blanket 10% IVA charge.

And because Benahavís is not currently a formally declared stressed housing area, rules that depend specifically on that designation should not be assumed to apply here.

Does This Change the Outlook for Benahavís Property Prices?

The rejection of the decrees does not provide a sensible basis for predicting a general rise or fall in Benahavís property values.

The proposed reforms would have been most directly relevant to properties purchased primarily for rental income, particularly where an investment model depended on frequent contract turnover, room-by-room letting or tourist accommodation.

Benahavís has a much broader market.

International purchasers, second-home owners, lifestyle buyers and purchasers of high-value primary residences form an important part of local demand. For those buyers, privacy, views, security, golf, community, build quality, location and the scarcity of comparable properties can be more important than the rules governing a conventional residential tenancy.

Regulatory uncertainty can nevertheless influence investor confidence and rental strategy. For that reason, what happens next in Madrid remains relevant even though the September decrees themselves have fallen.

We have looked separately at the relationship between rental restrictions and values in our article on whether Costa del Sol property prices fall when communities restrict short-term rentals.

What Happens Next?

The Congressional vote closes this particular legislative episode, but probably not the wider attempt to reform Spain’s housing rules.

Junts, whose votes were important to the defeat of the Government’s proposals, has already presented an alternative housing text as a possible starting point for further negotiations.

That proposal takes a materially different approach in several areas. Among other things, it proposes that an extraordinary extension of an ordinary residential tenancy should be agreed between landlord and tenant rather than imposed automatically, alongside different fiscal and housing measures.

That alternative text is not current law either.

It is a political proposal that could form part of future negotiations.

The Government could therefore return with another Royal Decree-Law, negotiate a different package capable of securing parliamentary support, pursue individual measures through ordinary legislation, or leave some of the proposed reforms aside.

Until something new is actually approved and survives the necessary parliamentary process, property owners should distinguish carefully between proposals being negotiated in Madrid and rules that legally apply to their property.

What Should Property Owners Do Now?

There is no reason for a Benahavís property owner to rewrite a tenancy agreement simply because of the September decrees.

Instead, owners should base decisions on the legislation that actually applies to their property and intended use.

A long-term landlord should understand the existing LAU duration and notice rules. An owner using seasonal accommodation should ensure the temporary nature of the arrangement is genuine and properly documented. Anyone selling a tenanted home should establish whether existing preferential acquisition rights apply.

Holiday-rental owners should continue to consider the separate tax, tourism, registration, community and planning requirements that apply to their activity rather than assuming that the rejection of the housing decrees removed those existing obligations.

Above all, owners should be cautious about headlines describing the next housing proposal as though it were already law. The events of the past week demonstrate why the distinction matters.

Related Reading

Spain’s Holiday Rental Tax Changes

What Spain’s changing treatment of tourist rentals could mean specifically for property owners and buyers in Benahavís.

Do Property Prices Fall When Tourist Rentals Are Restricted?

We examine what can happen to Costa del Sol property values when communities restrict or prohibit short-term rentals.

Can Owners Request a New Vote on Short-Term Rentals?

How Andalucía’s community voting rules work and whether an earlier decision on tourist rentals can be reconsidered.

Sources and further reading: This article has been updated following the Congressional votes of 2 October 2026 and the subsequent BOE resolutions repealing Real Decreto-ley 26/2026 and Real Decreto-ley 27/2026. The current-law sections have been checked against the consolidated Ley de Arrendamientos Urbanos, existing housing legislation and Agencia Tributaria guidance on tourist-rental IVA. Official legal developments can be followed through the BOE, the Congreso de los Diputados and La Moncloa.

Important: This article reflects the legal position as of 3 October 2026. The September housing decrees were briefly in force before being rejected and repealed on 2 October. Questions concerning any act, notice or contractual step taken during that short period may require individual legal advice. Rental law also depends on the date and terms of the contract, the identity of the landlord, the use of the property and other individual circumstances. This article provides general information only and does not constitute legal, tax, financial or property valuation advice.