Spain braces for significant rent increases as contracts expire

Friday 30 May 2025 - 17:20

By: Dakir Madiha

Spain braces for significant rent increases as contracts expire

Rental contracts signed in Spain during 2020 are set for renewal this year, raising concerns over substantial price hikes for hundreds of thousands of tenants. The phenomenon, dubbed the ‘great rent hike’ by the Spanish press, reflects the tumultuous shifts in the rental market over recent years, particularly in the wake of the pandemic.

The Spanish rental landscape has undergone a radical transformation, especially post-pandemic. An influx of short-term tourist rentals, coupled with a shortage of available housing, has propelled prices upward, compelling locals to allocate up to half of their income towards rent or, in some cases, abandon their neighborhoods entirely.

Looking ahead, the situation for renters could deteriorate further. Reports indicate that over 300,000 households in Spain will see their rental contracts, signed in the turbulent year of 2020, come to an end in 2025. This was a year marked by rushed renewals and a quest for security amid uncertainty.

In 2019, Spain’s Law on Urban Leases (LAU) was revised to extend the duration of rental contracts from three to five years, or seven years if the landlord is a company. As a result, contracts initiated after this amendment will begin to expire this year.

Spanish legislation mandates that rental contracts be adjusted for properties owned by individuals, who constitute the majority of landlords. Consequently, a significant number of tenants may face rent increases ranging from 20% to 30%, according to conservative estimates.

The potential for rent hikes varies widely among sources. While real estate platforms often report increases nearing 40%, experts like José García Montalvo of Pompeu Fabra University suggest that actual increases are unlikely to exceed 30%, based on tax records from the government.

Regardless of the exact figure, the consensus is clear: substantial rent hikes are imminent for low- and middle-income households across Spain. For many, relinquishing their tenancy may not be feasible, as the overall volatility of the rental market means that prices are rising nationally, making a 20-30% increase appear more palatable than the alternative.

Data from Idealista reveals a stark trend in rental prices. In April 2020, the average rental cost was €10.7 per square meter per month. By April 2025, that figure has surged to €14.3, representing an increase of 38.3%. This translates to an average monthly rent of €856 for an 80-square-meter property in 2020, escalating to €1,144 in 2025. In major cities like Madrid, Barcelona, and Valencia, as well as regions such as the Balearic and Canary Islands, rental prices have more than doubled in certain areas.

As Spain navigates these challenging economic waters, the looming ‘great rent hike’ presents a pressing concern for households across the nation, urging policymakers to reconsider the current state of the rental market.