Dear Clients and friends.
Just back from the holidays and catching up.
A round-up this month of one firm deadline, one national moment worth pausing on, and two stories from the property market that affect anyone who owns, rents out, or is thinking of buying in Spain.
DEADLINE REMINDER
Your Non-Resident Tax: 31 December Is the Real Cut-Off but you must not leave it until the very end. Most of you have already done it , but for those that have not ….
If you own a property in Spain that you don’t rent out — a holiday home you use yourself — you are still liable each year for Spain’s “imputed income” tax on that property, declared via Modelo 210. This surprises many owners, who assume that paying their local IBI (council tax) is enough.
It isn’t; Modelo 210 is a separate, and entirely independent, obligation to the Spanish Tax Agency.
For income accrued in 2025, you have the whole of this calendar year to file — but that window closes on 31 December 2026. Filing late brings surcharges that only grow the longer the return goes unfilled.
- Tax base: generally 1.1% of your property’s cadastral value (2% if that value hasn’t been revised in the last ten years).
- Tax rate: 19% for tax residents of the EU/EEA (Irish clients, for example) — but 24% for everyone else, which since Brexit includes our British clients, as well as our clients from the USA, Canada and Australia.
Our advice: don’t leave this until the last week of December. Send us your NIE, cadastral reference and purchase details now and we can have your Modelo 210 filed within days — well ahead of the deadline and any last-minute rush.
A NOTE ON RECENT EVENTS
Ceuta: A Difficult Few Days for Spain
Many of you will have seen the news at the end of July, when an unprecedented number of people — Spain’s own estimates put it at around 80,000 over two days — crossed irregularly into Ceuta from Morocco, mostly by swimming around the border breakwater. It was the largest single episode of its kind and tragically over 140 people have died.
The causes are genuinely tangled
There are still around 10.000 to 15.000 illegal immigrants in Ceuta and the problem is far from over. (Remember that population of Ceutas is only around 80000 so as many came in as actually live in the city ) There is a big political debate in Spain regarding if this was an immigration issue or Morocco exercising a hybrid war tactic on Spain. (In relation to their historical claim over the cities of Melilla and Ceuta )
FOR LANDLORDS
The Squeeze Continues: What the Tenant Protections Mean for You
If you let out a property in Spain, 2026 has brought the rental market’s transformation under the 2023 Housing Law (Ley 12/2023) into sharper focus, and it’s now one of the most common concerns clients raise with us . It is affecting both our clients who have rented out their properties and also clients that have inherited a property that was rented out , stopping the from selling the recently acquired property.
- Zonas tensionadas (stressed market areas): where declared, a new contract generally cannot exceed the rent under the previous one, and annual increases now follow a new reference index (IRAV) rather than the CPI. Where there’s no previous contract, the SERPAVI reference index sets your ceiling.
- “Gran tenedor” status: if you (or, more relevantly for some clients, your Spanish company) own ten or more urban properties nationally — or as few as five within a tensioned zone — tighter caps and extra obligations apply.
- Slower evictions: even straightforward non-payment cases now typically require a prior mediation step and, where the tenant claims vulnerability, a social-services report before a court will authorise the eviction. This can add months, so getting the paperwork right from the very first notice matters more than ever.
- Occupation risk: “okupación” remains a genuine concern nationally — well over 80,000 households are estimated to be affected at any one time — which is exactly why we’re firm about ID checks, deposits and contract terms before you ever hand over the keys.
- The right of the tenant to remain up to five years on any contract that has been signed for one year or more. (The govermment almost changed this to sever years but it was turned down by parliament
It isn’t all one-directional, though: landlords in tensioned zones who lower rent on a new contract, or let to tenants aged 18–35, can claim IRPF reductions of up to 90% on the rental income — worth modeling before you assume a lower headline rent is a worse outcome. (Better than nothing but in general the situation is gettin worse for landlords )
Our advice: talk to us before you sign a new lease, raise a rent, or send a non-payment notice. Under the current rules, the sequence and wording of your paperwork now largely determines how much room you have if things go wrong.
PROPERTY MARKET
Prices Up, Transactions Cooling — An Unusual Combination
The Spanish property market in 2026 is behaving in a way that catches a lot of long-time observers off guard. National average prices reached roughly €2,800–2,900 per square metre by June — an all-time high, up around 7–9% on a year earlier and the fastest annual growth since 2007. Ten consecutive quarters of rises now. And yet, transaction volumes, while still historically solid, are showing real signs of cooling and selectivity in several markets — Madrid’s transactions, for instance, fell nearly 20% year-on-year in January alone.
What makes this different from 2007 is the cause. That crash followed a credit-fuelled construction boom and an oversupply of housing. This time, the driver is the opposite problem: a genuine, structural shortage. Spain is estimated to be short of somewhere between 700,000 and 800,000 homes, with roughly 120,000 new households forming each year against only around 90,000 new homes being built — a gap of some 30,000 homes annually that simply keeps compounding.
That combination — fewer people able to transact, but prices still climbing, because there genuinely isn’t enough stock to go around — is what’s producing the affordability squeeze you’re asking about. A typical 90m² home now needs somewhere in the region of €71,000–€81,000 up front between deposit and purchase costs, which is putting ownership further out of reach for many local buyers and pushing more of them into an already-tight rental market, which in turn keeps rents (and the political pressure around them) climbing too.
So what happens next? Most forecasters (Bankinter, Solvia and others among them) expect prices to keep rising through 2026 and into 2027, with growth concentrated precisely in the areas we work in most — the Mediterranean coast, the islands, and the larger cities — because that’s exactly where the supply shortage is most acute. A 2008-style crash looks unlikely to most analysts for the simple reason that this isn’t a credit bubble; nobody is over-lending, and nobody is over-building. But that also means there’s no obvious mechanism to bring prices back down on its own. The more realistic pressure valves are new housing supply actually catching up (which has been promised for years without materializing at scale), further political intervention if affordability becomes untenable, or a genuine shift in interest rates or foreign demand. None of those looks imminent.
For clients buying: don’t expect to “time” a correction in the areas we cover — being mortgage- or funds-ready and moving decisively on the right property matters more than waiting. For clients selling: you’re negotiating from real strength, but the increasing complexity around due diligence, energy certificates and, where relevant, tenant status means the process itself is taking longer even when the outcome is good.
Michael Davies
Lawyer.
MOJÁCAR – ALMERÍA · MARBELLA
This newsletter provides general information only and does not constitute individual legal or tax advice. Rules referred to may vary by region and by individual circumstances — please contact our office before acting on anything above. © Davies Abogados.
