The Council of Ministers will approve a royal decree-law this Tuesday that reduces tax benefits in the IRPF for landlords who raise rent in new contracts. The measure, which is national in scope, directly affects Seville, where rental prices have continued to rise.
The central government is finalising a royal decree-law that introduces a tax penalty system for landlords who increase the rent in new contracts. The measure, expected to be approved this Tuesday by the Council of Ministers, establishes a descending scale of tax benefits in the IRPF based on the increase applied, and will affect all of Spain, with particular impact in cities like Seville, where the upward pressure on rents is notable.
According to the draft accessed by this newspaper, the new regulation modifies the regime of reductions on the net rental income. Unlike the 2023 reform, which limited tax advantages to areas declared as tense residential markets, the new text extends coverage to the entire national territory. Thus, Seville, which has not been declared a tense area by the Junta de Andalucía, now falls under the umbrella of the penalty.
The scale establishes that if the new rent increases by up to 5% compared to the previous contract, the applicable reduction will be 40%. From there, the percentage decreases: between a 5% and 10% increase, the reduction is 30%; between 10% and 15%, 25%; between 15% and 20%, 20%; and if the increase exceeds 20%, the landlord can only deduct 15% of the net income. On the opposite side, maintaining or lowering the rent will allow a reduction of 50%, which can reach 100% if re-rented to the same tenant with a discount greater than 5%.
The measure does not affect annual updates during the term of the contract, but rather the price the landlord sets when signing a new lease. The Treasury will compare the new monthly rent with the last rent of the previous contract to determine the corresponding bonus. In a city like Seville, where the average rent has experienced notable increases in recent years, many landlords will face a decision between moderating prices or seeing their tax advantage reduced.
With this system, a landlord who raises the rent by more than 20% can only deduct 15% of the net income, a penalty that could reduce the supply of rental housing in cities like Seville.
The Junta de Andalucía, governed by the PP, has not declared any tense residential market areas to date, which had limited the scope of previous bonuses. With the new regulation, Seville and Málaga—two of the Andalusian cities with the highest upward pressure on rents—are now directly under the umbrella of the tax penalty. The aim is to discourage abusive increases when signing a new contract for a property that was already rented.
Tense areas do not disappear but remain as an extra to further increase bonuses. If the landlord reduces the rent by more than 5% in one of these areas, the reduction can reach 95%. In Andalucía, as there has been no prior declaration, the maximum incentive for now will be 70% for reductions exceeding 5% across the territory. This difference could reactivate the debate on the advisability of the Junta requesting the declaration of tense areas in cities like Seville.
For the tenant in Seville, the measure offers a horizon of some restraint in rents, although experts warn that, without a parallel increase in supply, the deflationary effect may be limited. Additionally, there is a risk that some landlords may choose to sell the property or allocate it to seasonal rental to avoid the penalty, which would reduce the supply of stable housing. The success of the measure will largely depend on how the housing stock in Seville reacts.
The royal decree-law is expected to be approved this Tuesday and will come into force the day after its publication in the Official State Bulletin. Landlords planning to formalise a new rental contract must take into account the new tax scale when setting the price, if they wish to maintain the current bonuses.
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