Spain's rental law bars rent hikes and tax changes reward rent freezes

Under Spain's Urban Lease Law (LAU), a landlord may not raise the rent during the term of a contract unless an annual update clause is expressly written. The law also sets a minimum lease duration of five years for private owners and seven years for companies, and provides automatic renewal rights for tenants. When a contract includes an update clause signed after 26 May 2023, any increase is limited to the Reference Index for Housing Rentals (IRAV) published by the National Statistics Institute (INE).

A forthcoming Spanish tax decree will adjust the income‑tax (IRPF) treatment of rental income. Landlords who raise the rent at contract renewal will face reduced deductions, ranging from 40% for modest increases to 15% for hikes over 20%. Conversely, owners who keep the rent unchanged can deduct up to 50% of the net rental income, with larger deductions possible for rent reductions. The measures aim to discourage rent increases and encourage price stability in the housing market.