Radical Housing Decrees Defeated As Snap Election Talk Grows

Spain’s government rushed two emergency housing decrees into law early week, only for Parliament to reject both on Friday. Their fleeting existence says more about the politics surrounding Spain’s housing crisis than about serious attempts to solve it.

On Tuesday 29 September the Spanish government approved two emergency royal decree-laws on housing. By Friday 2 October both had been rejected by Congress and ceased to have effect. Their brief existence — scarcely more than a day in force — looks more like an exercise in political positioning than durable housing policy.

The ‘Maricarmen’ trigger

The catalyst was the eviction of María del Carmen Abascal, known as Maricarmen, an 87-year-old woman with a 50% disability from a flat in Madrid’s affluent Retiro district. She had lived there since 1956 under a Franco-era rent-controlled “renta antigua” contract originally signed by her father.

After successive family transfers of the tenancy, the 1994 Urban Leases Act limited the second transfer — hers, following her mother’s death in 2005 — to two years except in cases of disability of at least 65%. The courts ultimately confirmed that her protected tenancy had expired. She nevertheless remained in the property paying roughly €500 a month, far below market rents in the area, while successive owners sought to recover possession.

In 2018 she was given the opportunity to buy the flat for €247,000 under her statutory right of first refusal but could not afford to do so. The property was subsequently acquired by its current owner and, after years of litigation and several postponed attempts, the courts eventually allowed the eviction to proceed. The human story was uncomfortable, but the legal position was clear: the owner was entitled to recover possession.

The image of an elderly woman being removed from her home of 70 years inevitably generated intense media coverage in Spain and abroad. Much of the international reporting reduced a complicated legal history to the more compelling story of a vulnerable pensioner being evicted by property investors. For the government and parties to its left, the timing could hardly have been more politically useful.

The proposed legislation was quickly christened the “Maricarmen decrees” and presented as urgent protection to ensure that “another Maricarmen does not happen”.

What the decrees would have done

The measures were deliberately split into two packages. The first, broader decree extended the anti-eviction “social shield” for qualifying “vulnerable” households without alternative accommodation (pretty much every household facing eviction) until the end of 2030. It also allowed two-year extensions for certain rental contracts expiring before the end of 2028, restricted specified property acquisitions by investment companies, tightened the regulation of seasonal and room rentals, and introduced various fiscal measures and incentives.

There were also some measures aimed at increasing access to housing, including reduced VAT on public and protected housing construction and a proposed state-backed interest-free loan scheme to help first-time buyers finance deposits.

The second decree was much more controversial. It would have introduced automatic renewal of habitual residential tenancies after the normal statutory period, making it substantially harder or more expensive in many circumstances for landlords to recover possession simply because a contract had reached its end. It did not literally create lifetime tenancies, as some reports suggested, but it would have moved a significant part of the rental market much closer towards indefinite occupation.

Splitting the legislation was an obvious parliamentary tactic. The government knew the second decree would be particularly difficult to get past more centrist parliamentary allies, so separating it offered a better chance of saving the broader first package.

It failed. The first decree was defeated by 178 votes to 172, with the PP, Vox, Junts and UPN voting against. The second lost by 184 to 166, with the PNV (Basque nationalists) and Coalición Canaria also joining the opposition. Junts, a centre-right Catalan nationalist party (now being called fascists) that has repeatedly opposed similar interventions in the rental market, rejected both. Its decision was denounced by parties on the left, but it was hardly an unpredictable position.

Spain’s real housing problem

Behind all this political theatre lies a very real housing crisis, but one that is highly concentrated geographically.

There is no general shortage of homes across Spain. Large parts of the depopulated interior have more housing than they know what to do with. The acute shortages are in Madrid, Barcelona, other major cities and provincial capitals, and some coastal areas where population and employment are growing fastest.

The Bank of Spain estimates that the cumulative gap between new households and new housing completed between 2021 and 2025 was around 700,000 to 750,000 homes. In the most pressurised rental markets, dozens and sometimes scores of prospective tenants can compete for every property advertised. I wouldn’t be surprised if, in Barcelona, there are more than 100 prospective tenants for every long-term flat that becomes available.

That is fundamentally a supply-and-demand problem. Rapid population growth, including immigration, has added substantially to demand, whilst planning constraints, bureaucracy, construction costs, shortages of suitable land and years of inadequate building have prevented supply from keeping pace.

The current Socialist-led government has been in office since 2018, during which time the shortage has become progressively worse. Its response has increasingly concentrated on regulating the existing housing stock and shifting protection towards sitting-tenants rather than making it substantially easier and more attractive to create new homes.

There is a legitimate argument for protecting tenants, but protecting the tenant already occupying a flat does nothing for the many people competing to rent the next one. If increasing regulation persuades some landlords to sell, leave properties empty or switch away from conventional long-term letting, those looking for somewhere to live are left competing for an even smaller pool.

The defeated decrees contained some supply-side measures, but their political centre of gravity was unmistakably further regulation of landlords, investors and existing rental contracts. They would not have come close to filling Spain’s housing deficit.

Politics over policy

It cannot be proved that the government introduced the decrees expecting them to fail. But it certainly knew parliamentary support was uncertain, particularly given the previous positions of Junts and other parties on property rights and rental regulation.

The Maricarmen affair nevertheless presented an exceptional political opportunity. Here was an elderly woman being evicted from the home she had occupied since childhood, a property investor on the other side, wall-to-wall media attention and widespread public frustration over housing costs.

The government could rapidly introduce measures under the banner of protecting ordinary people from speculators and “vulture funds”, whilst forcing its opponents to vote them down. Defeat itself could then become part of the political message: we tried to protect tenants; they stopped us. Fascists!

The episode also arrived when the government was struggling with other political difficulties, including events in Ceuta and accumulated scandals. Whether it forms part of preparations for a snap general election remains speculation, though the possibility is now being openly discussed in the Spanish press. At the very least, the Maricarmen affair gave the governing coalition an opportunity to change the political conversation and put housing — an issue on which public frustration is intense — centre stage.

The message for property owners and investors

It would be an exaggeration to say that they abolished private property rights, even temporarily. Landlords retained important rights under both texts and ordinary second homes were not threatened with confiscation.

The more serious concern is what the episode says about regulatory risk. Significant changes affecting evictions, rental contracts, landlords and residential investment were introduced almost overnight under emergency powers, only to disappear again when Parliament rejected them little more than a day later.

For anyone considering putting capital into Spanish housing for long-term rental, that matters. Property is an illiquid investment made with a time horizon measured in decades. Investors need reasonable confidence about the rules under which they will be allowed to rent, recover and eventually sell their property.

The political forces behind these measures have not gone away, and some of the proposals could return through normal parliamentary legislation if there is no early election. Calls from parts of the left for even greater intervention in privately owned housing, including second homes (confiscation), only add to the uncertainty.

That does not mean foreign owners should rush for the exit. But anyone thinking of investing in Spanish residential property to become a landlord would be wise to price political and regulatory risk considerably higher than before. Existing owners considering whether to keep, rent or sell should also keep a close eye on where housing policy goes next.

Spain undoubtedly has a serious housing problem. But repeatedly rewriting the rules governing the existing stock does not create another home. Until policy concentrates much more seriously on increasing supply where people actually want to live, Spain risks protecting an ever-smaller number of sitting tenants whilst making it progressively harder for everyone else to find somewhere to live.

Thinking of selling?

For existing owners, none of this is a reason to panic, but it is a reason to think about where Spanish housing policy might be heading. Property rights, particularly in the rental market, are becoming increasingly politicised, some parties on the radical left are advocating much more aggressive intervention in privately owned and second homes, and the Prime Minister himself has proposed using a tax of up to 100% of the purchase price to deter non-EU non-residents — including British buyers — from buying homes in Spain.

If you own a property in Spain that you might sell in the next few years, this changing political and regulatory backdrop is another factor to weigh up when deciding whether to sell sooner rather than later. If you are starting to think along those lines, get in touch to find out how I can help you understand your options and plan the sale properly before you make any decisions.