Spain’s rental market crisis: where did 150,000 homes go?

A staggering 150,000 residential properties have vanished from Spain’s long-term rental market since 2023, leaving many Spaniards struggling to find affordable housing. Experts suggest the controversial Housing Law, combined with landlords’ pursuit of higher profits and legal uncertainties, has fueled this exodus, exacerbating the country’s ongoing housing crisis.

A housing market in turmoil

Spain’s housing crisis has become more acute in recent years, especially in the post-pandemic period. Rising demand, limited supply, and the proliferation of short-term tourist rentals have driven rents to unprecedented levels. On average, Spaniards now spend 47 percent of their salaries on rent, while wages have grown by just 7.4 percent over the past three years.

The Housing Law, introduced in May 2023, aimed to address affordability issues by capping rents in "stressed" housing markets where prices exceeded the Consumer Price Index (CPI) by five points or where rent consumed more than 30 percent of family income. However, critics argue the law has backfired, reducing the supply of long-term rental properties and driving landlords to seek alternative revenue streams.

The numbers behind the crisis

According to data from real estate platform Idealista, Spain’s rental stock has dropped by 17 percent overall since the law's enactment. A separate study by the Rental Observatory of the Fundación Alquiler Seguro estimates that up to 150,000 properties will have exited the rental market by the end of 2025. In cities like Barcelona, Córdoba, and Palma, the situation is even worse, with rental stock plummeting between 35 and 66 percent. Demand, meanwhile, continues to rise, creating fierce competition for the remaining properties. In Barcelona, for example, 61 families now compete for every available rental listing.

Landlords’ flight to profit

Many landlords, spooked by rent caps and tenant protection measures, have removed their properties from the market entirely. Ferran Font, research director at Pisos.com, explains that some owners fear tenant defaults, legal complications, or property damage. Others see more lucrative opportunities in short-term tourist rentals like Airbnb, where earnings can exceed long-term rental income by up to 400 percent. In cities like Málaga, seasonal rentals have surged by 25 percent year-on-year and now account for 14 percent of Spain’s overall rental market. In Barcelona, nearly half of all available properties are classified as seasonal rentals.

Some landlords are also exploiting loopholes in the Housing Law by offering temporary contracts or renting out individual rooms. These strategies allow them to bypass price caps while increasing profits. Meanwhile, some property owners have opted to sell their homes instead, taking advantage of high property prices and avoiding the risks associated with long-term tenants.

A law with unintended consequences

While the Housing Law aimed to make renting more affordable, it seems to have had the opposite effect in many regions. By capping rents in Catalonia and the Basque Country, the government inadvertently signaled to landlords in other areas that similar measures could follow. This has led to widespread uncertainty, prompting many landlords to exit the long-term rental market altogether.

Font highlights another key issue: "Many landlords prefer to leave their properties empty rather than risk legal battles or non-payment." A Fotocasa survey found that nearly 3 percent of Spanish homeowners keep their properties vacant, citing fears of tenant disputes and difficulties in reclaiming their homes in the event of default.

The road ahead

Spain's housing crisis appears to be the result of a complex interplay of factors: rising demand, insufficient supply, legal uncertainties, and the lure of higher profits from short-term rentals. While critics blame landlords for prioritizing profits over affordable housing, others point to the Housing Law’s unintended consequences as a major driver of the current crisis.

As the country grapples with these challenges, policymakers must strike a delicate balance between protecting tenants and ensuring market stability. Without significant changes, Spain’s long-term rental market could continue to shrink, leaving renters with even fewer options.