New rental law in Spain: less rental supply and higher prices

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rental supply


MADRID – Since the introduction of the new Spanish Housing Act in May, the regular rental supply in Spain has plummeted by as much as 30%. Meanwhile, demand for long-term rental properties continues to rise by 11%.

This is evident from recent data from the Federación Nacional de Asociaciones Inmobiliarias (FAI). At the same time, rents are skyrocketing, with an average increase of 9.2% in the past year. According to José María Alfaro, the president of FAI, “pressure on rental prices is expected to increase further due to the ongoing imbalance between supply and demand.”

Landlords are tightening requirements

A quarter of rental agencies surveyed by note that landlords are tightening requirements for potential tenants. Nearly 20% are increasing rents to dampen growing demand and out of fear of defaults.

Also read: These are the changes in the new Rental Law in Spain

Shift to temporary rental

Another striking consequence is that 15.4% of owners are shifting their property to the temporary rental market. Furthermore, 13% also opt for the sales market. Nearly 10% of homeowners choose to manage their property themselves to avoid estate agent fees. In addition, 6.33% withdraw their home from the market after the expiry of the current rental contract.

More interested in renting than buying

It is remarkable that interest in renting is increasing more strongly than interest in buying. While 40.6% of agencies report an increase in demand for regular rental properties, only 10% note a growing interest in home purchasing.

Real estate agents feel the pain

The report also shows that the number of rental transactions via real estate agents has fallen by 28.8%. Nearly 50% of agencies have experienced a decline in their rental portfolio, and 16.7% have had to discontinue their rental business completely.

The new rental legislation in Spain raises many questions and leads to significant shifts in the rental market. As demand increases, supply thins, resulting in rising prices and stricter conditions. This imbalance puts pressure on both tenants and landlords and appears to be a trend that will not reverse quickly.

Also read: Heavily criticised new Housing Law in force in Spain

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