Spain's government negotiates housing decree with 21% VAT on tourist flats

The government's housing decree: 21% VAT on tourist flats and the eternal debate over effectiveness

Spain's government is negotiating against the clock a housing decree meant to be the crowning achievement of its term. Announced on 4 July 2026, the package includes, as its main novelty, the mandatory application of 21% VAT to tourist flats, a measure aimed at discouraging their use over regular housing. In addition, mechanisms for administrative streamlining and tax deductions to build affordable housing are being considered, as well as the regulation of short-term rentals, backed by the PNV (Basque Nationalist Party).

However, scepticism is the dominant note among analysts. The promise to build two million homes sounds like déjà vu, and past experience with reference rent indices in high-pressure areas shows that theory and practice rarely match. Barcelona is the perfect example: although in theory rented rooms should comply with the caps, in practice rooms are advertised for over 500 euros, double the reference index, with landlords managing entire buildings of rooms for rent.

The paradox is that, by penalising room rentals, there is a risk of further reducing the supply available to tenants with limited means. Measures such as speeding up evictions for non-payment or transferring public land to the State are presented as urgent, but run into a lack of political will.

The decree is caught between the demands of the governing coalition's partners: Sumar calls for an extension of rental contracts, Junts demands tax deductions. The result, a text that tries to please everyone, risks pleasing no one and, above all, failing to solve the underlying problem: the supply of affordable housing still fails to materialise.