What happens when a city in Spain is declared a ‘stressed’ rental zone?

The cities of A Coruña, San Sebastián, and Pamplona, along with 20 other municipalities in Navarre have been officially declared ‘stressed’ rental zones recently, bringing the total number across all regions to 301.

Other municipalities have also requested to be declared stressed areas, including Santiago de Compostela in Galicia. The regional minister for urban development and housing in Asturias, Ovidio Zapico, also said they were working on declaring 16 stressed areas in six municipalities in the region before the end of the year.

In Spain more than 8.28 million people live in areas where the rental market is strained.

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The declaration of ‘stressed areas’ was an integral part of the Housing Law or Ley de Vivienda, which came into force in 2023

A stressed area is defined as one where there is a high risk of insufficient housing supply for its population. In order to be declared as such, it must meet one of two pieces of criteria:

• The first is when the average cost of rent or mortgage for homes plus related expenses exceeds 30 percent of the average salary of the population in the area.
• The second is if in the previous five years, the purchase or rental price has experienced an accumulated increase of three points above the Consumer Price Index (CPI).

If an area is approved to become a ‘stressed’ area then this can mean rent caps are introduced, tenants will be able to get extensions to contracts and tax deductions for landlords will be implemented.

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Rent caps

The rules are:

• If landlords already rent out their apartments or have done so in the last five years, the rent cannot exceed the the previous amount in a new contract. Additional expenses are also not allowed to be added to the contract, such as community fees or property tax.
• Landlords can only update the rent annually according to the CPI or the cap set by the government. The only cases in which the rent can be increased further is if energy efficiency improvements have been made to the property or a rental contract has been signed for more than 10 years. In these cases, the rent can be increased by a maximum of 10 percent.
• If landlords are going to rent out an apartment for the first time, they will have to adhere to the Reference Price Index published by the municipality where the property is located.
• If landlords own more than five properties in the same stressed area, whether they have previously rented out the property or not, they will have to stick to the rental prices to the Reference Price Index.

Extensions

Tenants will be able to request extensions after the end of their rental contracts in stressed areas. They can be requested for a maximum of three consecutive years afterwards.

Tax deductions

The general tax deduction for landlords for new long-term rental contracts in these areas will be reduced from 60 to 50 percent.

There will also the following tax benefits:

A 90 percent incentive tax if landlords reduce their rent by at least five percent within a stressed area.

A 70 percent reduction for those owners who rent their homes to young people between 18 and 35 years old or do so through the incentivised or protected affordable housing programmes.

A 60 percent reduction for those owners who have renovated their property at some during the two years before renting it out.

Catalonia was the first region to declare ‘stressed’ zones after the Housing Law came into force and now in 2025 has a total of 271.

Official data from the Ministry of Housing, show that rents for new contracts have dropped by 3.7 percent on average in 140 of these municipalities that adopted the declaration. In Barcelona they fell by 6.4 percent in the first 12 months since the measure has been in effect.