Spain’s Government has approved fresh housing measures combining a tax change for short holiday lets with interest-free loans of up to €50,000 for first-time buyers.
Holiday-let owners on the Costa Blanca face a significant tax change after the Spanish Government approved a housing package introducing 10% VAT on qualifying short-term accommodation rentals.
The legislation covers furnished apartments and homes rented to the same tenant for no more than 30 nights, with an exception involving the landlord’s main residence. The VAT changes are scheduled to take effect on 1 December 2026, subject to the decree surviving parliamentary scrutiny.
For owners and accommodation businesses operating in destinations such as Torrevieja, Orihuela Costa, Guardamar and Benidorm, the measure could affect pricing and administration. Whether visitors ultimately pay more will depend on how operators incorporate the tax into their charges.
Prime Minister Pedro Sánchez announced the package on Tuesday, 6 October, after the Cabinet approved two housing decrees. They revive measures rejected by Congress the previous Friday, with some changes and additional funding. The Government is now seeking their validation through Parliament’s Permanent Deputation.
One of the main initiatives is a €10 billion financing line, managed through the Instituto de Crédito Oficial, offering interest-free loans of up to €50,000 to people purchasing their first home.
The financing mechanism can cover up to 20% of the property’s value, within the €50,000 ceiling, alongside private mortgage finance. These are repayable loans rather than grants.
The package also includes €280 million in guarantees to encourage industrialised housing construction and €400 million to support social-housing providers. Other measures seek to regulate seasonal and room rentals, tackle speculative purchases and encourage affordable accommodation.
For Costa Blanca tenants, the proposals include an extraordinary extension of up to two years for qualifying rental contracts. A separate decree contains broader changes to contract renewals, but Sánchez said this second measure would take effect only after validation by the Permanent Deputation. The two proposals therefore should not be treated as having identical approval status.
The announcements follow Sánchez’s decision to call a snap general election for 29 November, after the earlier housing package failed to secure parliamentary support.
Sánchez acknowledged that the measures would not resolve the housing crisis alone, arguing that Spain also needs substantially more public and affordable rental housing.
For the Costa Blanca, the immediate issues are how the holiday-let tax will operate and when eligible buyers can access the new financing. The longer-term test will be whether the package helps increase the supply of homes available to permanent residents.
