Property owners withdrew more than 4,000 apartments from Spain's long-term rental market in ten days, according to the Federation of Real Estate Associations (FAI). New decrees have prompted landlords to sell their properties, switch to seasonal or room-by-room letting, or leave the rental business altogether. Agencies report delays in signing contracts and forecast a 25–30% drop in transactions over the coming weeks.

Long-Term Rental Supply Declines in Spain

Around 89% of surveyed real estate agencies noticed changes after the announcement of the new restrictions. Property owners have increasingly been reluctant to enter long-term leases, citing fears of non-payment and difficulties evicting tenants. The remaining 11.1% of respondents have not yet encountered similar problems.

In Spain, 2,067 apartments have already been withdrawn from the long-term rental market, while another 1,224 were put up for sale. Owners of 944 properties opted for seasonal or room-by-room letting. The signing of 1,523 contracts was suspended. In total, agencies recorded 5,758 such cases over ten days.

Table 1. How the use of apartments changed over ten days

Withdrawal of properties from long-term letting was reported by 78.1% of surveyed agencies, delays in contract signing by 72.4%, and an increase in homes listed for sale by 56.6%. FAI president José María Alfaro attributes this reaction to the risk of unpaid rent and complicated procedures for repossessing property. He advocates developing housing measures with landlords and industry representatives rather than relying on rushed decisions.

How Rental Rules Are Changing in Spain

On October 6, the Spanish government adopted two decrees that parliament had previously rejected. The first has been in force since October 8: rental agreements expiring by the end of 2028 may be extended by another two years, subject to the required conditions. Property owners also face restrictions: through the end of 2027, rent increases without a new agreement between the parties cannot exceed 2%, while indexation is prohibited in certain cases.

For seasonal letting, the temporary purpose of the tenant's stay must be documented, such as study or work. If the parties repeatedly sign short-term contracts, the arrangement may be reclassified as a long-term tenancy. Restrictions on property purchases in Spain prevent certain categories of large investors from acquiring properties for less than 70% of their market value. Other provisions address room rentals and protections against eviction for vulnerable tenants.

The second decree, No. 28/2026, is due to take effect on November 15, subject to parliamentary approval. The new lease-extension procedure provides for a further five years if notice of termination is not given in time, or seven years when the landlord is a company; unjustified refusal may result in compensation for the tenant. Parliament will consider the decrees on November 12, with snap elections scheduled for November 29.

Housing Shortage and Rental Rates in Spain

Housing problems emerged long before the legislative changes in October. The number of long-term rental listings on Idealista fell from 902,664 in 2018 to 510,091 in 2025, a decline of 44%. Over those seven years, the number decreased by 137,411 in the Community of Madrid and by 124,582 in Catalonia.

In September 2026, average asking rents in Spain rose by 5.6% over the year to €15.1 per sq. m per month. The figure fell by 0.4% in the third quarter. Apartments in Madrid were listed at €23.4 per sq. m (+4.8% year on year), compared with €20.1 in Barcelona (−0.8%) and €19.6 in Palma (+7.3%).

Table 2. Asking rents in Spanish cities, September 2026

Rental demand in Spain continues to increase. In Q3 2026, a listing on Idealista received an average of 43 inquiries from prospective tenants in Spain — 16% more than a year earlier. Barcelona recorded 92 responses per property, Palma 67, Madrid 49, and Valencia and Málaga 40 each. These figures represent tenant inquiries, not signed contracts.

Rental Yields and Investment Outlook

Average rental yields in Spain fell to 6.2% in Q3 2026 from 6.9% a year earlier. In Madrid the figure stood at 4.3%, and in Barcelona at 4.4%. Idealista calculates gross yields based on asking prices, excluding taxes, repairs and vacant periods. The estimate covers July–September, before the new decrees were adopted.

International Investment analysts note that the new rules could make apartments intended for long-term letting less attractive to investors. Limits on rent indexation and mandatory lease extensions make it harder for landlords to increase income as maintenance costs rise. Major-city markets, where gross yields have already fallen to 4–5%, are particularly exposed.

Putting apartments up for sale increases the options available to buyers but reduces the stock intended for permanent residence. If restrictions remain in place, some capital may move into other market segments or countries, while the number of homes available for long-term letting continues to fall. For tenants, this could intensify competition for available properties, especially in large cities.