After a few years of decline, in 2015 the price of rental housing in Spain began to grow, coinciding with the start of a recovery in the economy and in the real estate sector. However, the extent of the increase since then depends very much on the indicator employed, as can be seen in the following chart. In the high band, of note are the sharp rises recorded by the supply prices on real estate portals (Fotocasa and Idealista), growing by more than 60% between 2014 and mid-2023,¹⁵ which contrast with the rental prices recently published by the National Statistics Institute (INE) and the Ministry of Transport, Mobility and Urban Agenda (MITMA).¹⁶

According to the rental housing price index (RHPI), an experimental statistic published by the INE, the cumulative growth in rental prices between 2014 and 2021 was 13.0%. The largest rise occurred in 2019 (3.5%). In 2020, with the outbreak of the COVID-19 pandemic, rental prices were largely contained, caused by owners of properties transforming tourist apartments into traditional rented accommodation and also by the mandatory six-month extension of leases about to expire, maintaining the existing conditions,¹⁷ given the context of high uncertainty and the restrictions imposed on travel. Once the economy reopened, rental prices started to rise again in 2021 (1.6%). For its part, MITMA’s rental price benchmark index posted increases of around 23% between 2015 and 2021 in the three available indicators (median, 25th percentile and 75th percentile).

Official indicators, however, are only available up to 2021. Very useful in this regard is the rental price indicator produced by CaixaBank Research, which provides data with only a few days of lag after the close of each month and is calculated based on internal data on receipts paid for rent, duly anonymised and processed in aggregated form using big data techniques. According to this indicator, rental prices rose by 22.7% between 2017 and mid-2023.

Despite the differences between indicators, what is most relevant is that they all agree there has been a significant increase in rental prices since 2015. In addition, this growth has outstripped the increase in household income over the same period, creating some tension in the rental market in those areas most in demand and hitting lower-income households the hardest. In general, households living in market-rate rentals tend to have a relatively modest level of income: according to the 2022 Living Conditions Survey, households living in market-rate rentals had an average net income of €21,271 per year, 28.4% lower than the net income of households that own their main residence (€29,704). In addition, 44.8% of Spaniards residing in market-rate rental housing were at risk of poverty or marginalisation (the highest percentage in the EU) and 39.4% of them spent more than 40% of their disposable income on housing-related payments (compared to 21.0% in the EU).

A similar pattern can be observed across autonomous regions: rental prices posted significant increases between 2015 and 2021 (the latest data available from official sources) and this growth was greater than the wage increase in almost all regions. Only Asturias and Galicia had rent and wage increases that were more aligned. However, if we extend the period to 2023 using the CaixaBank rent index, even in these regions the increase in rental prices far outstrips the average wage increase.¹⁸

One factor behind the sharp increase in rental prices in recent years is the high demand for rented accommodation. While the number of households living in market-rate rentals had already been growing markedly in recent decades (about 73,000 households per year between 2004 and 2014), between 2015 and 2019 demand picked up strongly (122,000 new households per year on average).¹⁹ In fact, between 2015 and 2019 the increase in the number of households in market-rate rentals (610,000) far exceeded the net creation of households over the same five years (385,000) because of the decline in home ownership (–93,000) and below-market rent or free lets (–132,000). However, this trend was very different between 2019 and 2022: of the 454,000 new households, only about 5,000 were in market-rate rentals while the bulk were concentrated in home ownership (341,000).

As a result of these figures, the percentage of households living in market-rate rentals in Spain increased considerably between 2014 and 2019 (from 12.4% to 15.4%) but, since 2019, this figure has remained fairly stable at around 15% of all households.

The trend in the percentage of households living in market-rate rented accommodation is similar across all age groups (a rise between 2014 and 2019, stable between 2019 and 2022), with the exception of young households (aged 16 to 29). These households already had a high percentage of renting (47.4% in 2014) that has remained at these levels since then.²⁰ However, the number of young households renting their accommodation has declined in recent years as a result of demographic developments (cohorts are smaller because of the ageing population and low birth rate) and the later age at which they leave their parents’ home.²¹ In fact, the growth in households living in rented accommodation has been concentrated among households aged 30 to 44 (158,000 more between 2014 and 2022) and especially among those aged 45 to 65 (368,000).

The recent trends in the rental market have led to concern among a large part of the population due to their impact on whether young adults are able to set up their own home and the problems of affording housing, especially among low and medium-low income households. In this respect, one priority of public housing policies should be to promote an increase in the amount of social and affordable rental accommodation in Spain, since the current stock is very small.²²

The Right to Housing Act²³ includes some positive measures to achieve this goal, such as making subsidised housing permanent when it is developed on land classified as «reserved» (a minimum declassification period of 30 years is established for all other cases). This measure should help the public stock of housing in Spain to increase year after year, unlike what has happened in recent decades when subsidised housing mostly ended up being sold and was passed on to the free market after just a few years. However, the results of this type of measure will only be seen in the medium and long term. This Act also establishes tax incentives for owners who rent out their properties at affordable prices, a measure that may also help to contain the growth in rental prices. Ideally, all this would be complemented by measures to improve legal certainty for owners of properties, as well as a review of urban planning regulations to increase the availability of land.

The Act also provides some measures to impact prices, including rent caps and the possibility of limiting rental prices in stressed areas. Broadly speaking, the Act establishes that, for properties located in stressed areas that are owned by small-scale private landlords, the rent established in a new lease may not exceed the rent of the last lease in force within the previous five years. For properties owned by large-scale entities, the rent applied is the lowest out of the previous rent and the regulatory index, in any case this rent only being increased by 2% in 2023, 4% in 2024 and thereafter according to a revaluation index to be developed by the INE.

However, price regulation in other countries has produced very unsatisfactory results. In the short term, in such regulated areas there is usually a moderate decline in rental prices (focusing on rents that were higher) but, in the medium and long term, there tends to be a reduction in the supply of rented accommodation, an increase in rental prices in unregulated areas that are close to regulated areas, a deterioration in the housing (less investment in maintenance and renovation), and less residential mobility.²⁴

The first step to be able to regulate rental prices is to declare a residential area as stressed, a classification which is requested by each autonomous region. These stressed areas, which are designated as such for three years, must meet one of the following conditions: (i) the average burden to purchase or rent housing plus utilities exceeds 30% of the income of an average household, or (ii) the purchase or rental price of housing has recorded cumulative growth of at least 3 percentage points above the cumulative growth rate of the CPI over the previous five years.

According to calculations made using internal CaixaBank data based on bills for rent and utilities (water, electricity, gas) and on the wage income of households, we have estimated that, for Spain as a whole, only 12.3% of municipalities would have a rent burden of more than 30% but around 60% of households reside in these municipalities. Likewise, the percentage of municipalities with an average rent burden above 30% rises to nearly 50% of municipalities in the province of Barcelona and the Balearic Islands, and close to 40% in Madrid, Girona and Las Palmas de Gran Canaria.

Based on these data, we have constructed the map below which shows, for each province, the percentage of households residing in municipalities where the average rent burden is above 30%. Madrid, Barcelona, Álava, Girona and the Balearic Islands are the provinces with the highest percentages of population living in stressed areas.

Catalonia has been the first region to request the declaration of 140 Catalan municipalities as «stressed areas»²⁵ , in which it intends to apply the rent capping measures provided for in the Spanish Act, which has many points in common with Catalonia’s own Act 11/2020 that was in force in the region between September 2022 and April 2022. In any case, the application of this Act is subject to the will of the different regional governments and its longevity depends largely on which government emerges from the general election to be held on 23 July.