Spain's Sánchez rolls out public loans so buyers can afford a home

Pedro Sánchez's government has revived its two housing decrees with a public loan line of up to 50,000 euros at 0% for home purchases, along with new mandatory extensions for rental contracts. The measure aims to make housing more accessible, although experts warn that injecting money into a market with a shortage of supply could push prices up even further.

The Council of Ministers has re-approved the two housing Royal Decree-Laws that Congress rejected the previous Friday. **Pedro Sánchez** defended the measure with a phrase that sums up his stance: «It is imperative to intervene in the housing market». The texts keep the essence of the ones that lapsed and introduce new elements, including a public financing line for buyers and tighter rules for landlords.

## 0% loans for a house deposit

The programme is called **«Tu Casa»** and consists of a public loan for the purchase of a first home, open to citizens of all ages. The mechanism finances up to **20% of the property's value**, with a maximum of **50,000 euros**, at an interest rate of **0%** and with no fees. The term can reach **ten years** and includes a grace period that can last as long as the private mortgage, capped at **30 years**.

The official logic is that public money should help those who cannot afford the deposit. The problem, analysts point out, is that in a market where homes are scarce, increasing purchasing power through public financing can boost demand without automatically producing a single additional home. In other words, more money chasing the same properties usually translates into higher prices.

## Extended leases and contracts that never end

While making credit easier for buyers, the government is tightening the rules for landlords. The first decree extends tenants' contracts by **two years** for those who are up to date with payments, until **31 December 2028**. The second establishes that, once the contract's minimum terms have been met, the extension can be renewed successively if neither party gives notice of their wish not to continue.

In practice, this brings rentals close to an indefinite duration, a model reminiscent of Spain's old rent control system. For the owner, recovering their property becomes harder: if there is no formal notice from either party, the contract continues. Landlords warn that this reduces the incentive to put homes on the rental market, which in the medium term could shrink the available supply even further.

## The effect of injecting money where supply is lacking

The combination of both measures poses a paradox. On the one hand, purchase demand is stimulated with cheap loans. On the other, rental supply is discouraged through mandatory extensions. If demand rises and supply does not grow, the predictable result is higher prices for both buying and renting.

Critics of the measure argue that the underlying problem is not a lack of financing, but a lack of land and new housing. Without building more, any demand-side aid is diluted into higher prices. The government, for its part, insists that intervention is necessary to protect tenants and make access to a first home easier.

## Key points

- **Public loan of up to 50,000 euros at 0%** for the deposit on a first home, capped at 20% of the property's value.
- **Term of up to ten years** and a grace period that can reach 30 years, linked to the private mortgage.
- **Two-year extension** for tenants who are up to date with payments, until 31 December 2028.
- **Successive extensions** of rental contracts if neither party gives notice of termination.
- **Pedro Sánchez** defends that «it is imperative to intervene in the housing market».