Spain: Transformation of the residential market in 2025

New Government Entity and PERTE

The Spanish government has proposed the creation of a state-owned enterprise dedicated to the promotion, development, and management of housing. This entity will oversee the entire residential real estate cycle, including land development, construction, and rental administration.

As currently envisaged, this public entity is expected to manage an initial portfolio of approximately 3,300 housing units and 2 million square meters of residential land. Additionally, 13,000 housing units from the Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria (SAREB) will be transferred to this new public enterprise, with the ultimate objective of reaching a total of 40,000 units. This will present a series of opportunities for construction companies willing to develop these state-driven projects.

Also, as a new initiative, the Spanish government has announced the creation of a strategic project called the PERTE for Housing. This project aims to drive innovation and modernization in the industrialized and modular construction sector, enabling faster and more cost-effective homebuilding in Spain which will essentially reduce the existing high costs aiming to reduce strains upon construction for developers and investors, and alleviate high resulting prices on consumers.

Enhancing Access to the Rental Market and Tax Incentives

To address the challenges faced by young individuals in securing affordable housing, the Spanish government also intends to introduce a system of public guarantees for landlords who lease properties to tenants under the age of 35 at reasonable rental rates. This initiative is designed to incentivize property owners to offer rental agreements at moderate prices while facilitating access to housing for younger generations.

A property renovation programme will also be launched to convert empty properties into social housing. Economic aids will be granted to those who renovate a property to make it available for social housing for at least 5 years.

Also, the Spanish Government intends to propose to the Spanish Parliament the approval of a 100% exemption of the personal income tax for landlords who rent their homes according to the Reference Price Index, without the need for them to be in areas of high demand.

Simplification of administrative procedures

On 28 December 2024, the Law 7/2024 came into force, regulating important amendments with the aim, among others, of making planning development in municipalities more flexible. Furthermore, the procedure for the approval of special action projects (proyectos de actuaciones especiales) has been simplified and administrative procedures to obtain licences have been simplified, increasing the number of cases in which a responsible statement (declaración responsable) can be used instead of an planning licence and, therefore, significantly reducing administrative deadlines and thus making real estate investment more attractive by reducing administrative deadlines.

In conclusion, Spain's housing market is set for notable changes with the introduction of new initiatives. As these measures are implemented, they are expected to reshape market dynamics and improve accessibility, making it essential to observe how they will influence the sector as 2025 unfolds.

Authored by Carlos Sanchez, Andres Candela, and Pelayo San Martin.