Rents are at an all-time high

It is currently very difficult to find a long-term rental property on the southern coast of Spain due to the high demand. Tenants are willing to take any property at any price, causing rents to skyrocket. Properties that become available for rent are taken within 24 hours on average. As a result, those who are considering moving to Spain may face the highest rents ever. 

In 2022, the national rent index increased by 8.7% compared to the previous year, while popular cities on the Costa del Sol such as Fuengirola, Benalmadena, and Mijas saw a more than double increase. Other settlements in the area saw even higher increases, with Marbella seeing a 21.7% increase, Malaga seeing a 23% increase, and Estepona seeing a 36.3% increase. According to experts, the main reason for the price increase is the lack of balance between supply and demand. Rents are expected to rise by another 5% or more in 2023.

WHAT FACTORS ARE BEHIND THE INCREASE IN RENTAL FEES?

  • GROWING DEMAND

Due to the increase in real estate prices, the economic crisis, and rising mortgage interest rates, many people have decided to postpone buying a home and opt for renting instead. As a result, an increasing proportion of the population now lives in rented accommodation. The average age of tenants has shifted towards an older generation as more middle-aged people, who would have previously owned their own homes, are now choosing to rent. With the rise in divorce rates, there are more people who cannot afford to buy a home. In coastal areas like the Costa del Sol, there has been an increase in demand due to more foreign sublet seekers who can work remotely or do not have to work and opt for this area as their place of residence.

  • THE RENT OFFER IS DECREASING 

Based on data from the real estate portal idealista.com, the number of apartments available for rent decreased by 25% last year. Despite 100,000 new apartments being completed each year, this is still only a small fraction of the number built before 2008. 

The government’s measure, introduced in the spring of 2022, which limits annual rent increases to a maximum of 2%, has had the opposite effect. Landlords are now asking for higher prices at the time of signing the contract. 

The new Housing Act’s price ceiling has also increased uncertainty. In some residential areas, rents cannot be raised above a certain level. Landlords have responded by saying they would rather not rent out their properties.

  • GOVERNMENT MEASURES THAT DO NOT SERVE THE INTERESTS OF LANDLORDS

Due to some recent government measures that limit landlords’ rights, more and more people are becoming concerned that their tenants may not pay rent and it may become difficult to evict them from the rental property. Consequently, those who decide to rent out their property are now asking for a minimum payment of half or a full year’s rent in advance and are also refusing to pay the agency commission, which is usually charged to the tenant.

  • SHORT TERM RENTAL IS MORE ATTRACTIVE TO OWNERS

Over the last 10 years, the number of short-term rental properties in the coastal zone has increased fourfold, with more and more tourist permits being issued. Property owners who don’t live in the area full-time are renting out their apartments for an average of 20-30 weeks per year, while living in it themselves for the remaining time. This option is becoming increasingly popular, leading to a decrease in the number of properties available for rent.

  • RENT OR BUY?

According to data from idealista.com, the cost of buying a home has increased significantly over the past year, resulting in families having to spend 23.5% of their income on it at the national level, compared to 20.1% a year ago. However, paying rent still requires a greater financial effort than paying a mortgage, as the cost of renting increased from 23.3% in the third quarter of 2021 to 24.2% by the end of October.

Overall, this is a great time for anyone considering moving or investing in property in Spain, including the Costa del Sol.

Apartments in the popular coastal area are in high demand, but the rental prices have never been higher. Renting is becoming more expensive, and the availability of real estate for long-term rental is decreasing.