Spain's housing decree leaves land prices untouched

The housing decree sidesteps land and leaves the price where it was

The Council of Ministers approved two housing royal decrees last Tuesday, and in their 96 pages there is not a single measure that changes what it costs to obtain, hold or leave unused the right to build. The thesis defended before its approval was verifiable: if the text did not include a levy on serviced but unbuilt land, the power to have the IBI (local property tax) tax land and buildings separately, a uniform capture of rezoning windfalls, or building deadlines with consequences, the underlying problem would remain intact. Four out of four.

The Royal Decree-Law 26/2026, titled "urgent measures to protect the social function of housing and expand the supply of affordable housing", regulates contract extensions, seasonal and room rentals, raises VAT on tourist flats to 21% and approves tax breaks for landlords who lower the rent. The second, 27/2026, split so that each coalition partner could vote on it separately, turns the annual extension into full five- or seven-year periods and raises the tenant's compensation to twelve monthly payments if the landlord does not renew. Neither law adds a single buildable square metre.

What the Land Law says and why it does not touch the price

The reform of the Ley del Suelo (Spanish Land Law) travels inside the first decree, but its scope is procedural: it organises planning, it does not alter the economics of the right to build. Article 10 updates coefficients and little else. The power to regulate land lies with the regions, management is municipal and taxation depends on the Treasury, so the Ministry of Housing has barely any room. Separating land and construction in the IBI would require touching the state law on local government finances; a levy on idle plots could be created by the state and collected by the Treasury, although the map of plots would be drawn by local councils. The missing lever is not in Housing.

The classic argument is that there is plenty of land. Ministry data qualify this: the study Sectores residenciales en España 2025 records 1,069 large development areas in 400 municipalities with capacity for some 2.47 million homes; 64.4% have not even started being serviced and only 276 have serviced land available, with 489,186 homes pending. There remain 19 fully serviced areas without a single brick, with capacity for 36,398 homes. In areas at an advanced stage, construction has taken an average of 18.5 years to complete.

Why holding an idle plot still costs nothing

The mechanism is almost an accounting one. The developer calculates how much they can pay for the plot by subtracting construction, financing, taxes and their margin from the sale price. Any additional payment capacity of the buyer —guarantees, tax advantages for the tenant, housing savings accounts— raises what that plot can bear. If the supply of buildable land does not react, the subsidy is capitalised into the price. The idea goes back a long way: David Ricardo wrote that rent is not paid for land because grain is expensive, but the other way around. Read carefully, it does not deny that land is the problem; it says where to look to know who keeps the rent.

Some argue that rezoning is enough. Rezoning grants the right to build, but does not oblige its use; if waiting is free, the owner of new land has the same incentive as the owner of old land. The important nuance is that the centre is not manufactured: what is manufactured is access to it, with more height where there is already demand, recycled inner land and transport. Without that, a new development area twenty kilometres away is supply on paper.

The self-renewing contract and the political standoff

The second decree changes the length of the contract: after five years (seven if the landlord is a legal entity), the tenancy is extended in full periods, and a landlord who does not want to continue must give six months' notice and pay at least twelve monthly payments calculated on the reference price of an equivalent home. The first tackles non-payment: if economic vulnerability is proven, the Administration has two months to offer a housing alternative or pay what is owed, with the eviction procedure halted; if it does not, it is subrogated into the debt and there is no eviction while the vulnerability lasts.

On the political flank, Sumar's draft that would have allowed the expropriation of homes from tenants over 70 with fifteen years in them never made it to the BOE (official state gazette): the PSOE was against it. The economic reasoning it raised still stands: any protection that kicks in when crossing a threshold manufactures behaviour just before the threshold, as peine with the rotation of seasonal tenants before becoming permanent. The 68-year-old tenant with fourteen years in the flat is the one left without renewal.

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Congress rejected both decrees: the first by 172 to 178, with PP, Vox, Junts and UPN against; the second by 166 to 184, with PNV and Coalición Canaria added. As soon as the repeal is published in the BOE, the extension with subrogation, the 2% cap, the extraordinary extension and Tu Casa cease to be in force. Land was indeed discussed in the plenary session, but to release it. The prediction, with reservations: as long as the sixty-year-old property owner carries more weight at the ballot box than their thirty-year-old child's rental, no government will touch what really sets the price.