Landlords with more than ten properties will need to lower rents in areas with high demand pressure. | Gemma Andreu

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Spain's coalition government has agreed a draft law that would allow regions to order landlords with more than ten properties to lower rents in areas with high demand pressure, a source at junior coalition partner Unidas Podemos said on Tuesday.

The law would also include tax incentives to encourage landlords with fewer houses to cut rents too, the source added.

The Socialist Party and far left party Unidas Podemos, which comprise the ruling coalition, agreed a draft budget on Tuesday after weeks of bickering, having eventually found common ground on housing, the most disputed issue.