Spain’s rental market 2020-2025: why prices exploded and supply collapsed

Spain’s rental market is going through the biggest mismatch between supply and demand in its recent history. Since March 2020, more than 60% of the long-term rental supply has vanished and prices have climbed up to 40% nationwide, with peaks of 90% in Barcelona. Here are the official numbers behind a post-Covid scenario that nobody saw coming.

Five years in figures

• Supply: idealista reports a 61% drop in long-term rental stock between 2020 and 2026. The Observatorio del Alquiler reports an additional loss of 33,418 homes in 2025 alone (-4.7%).
• Prices: +40% cumulative in 5 years according to idealista, +27% according to Fotocasa’s index. Over the last decade, Fotocasa reports a +94% cumulative rise.
• Demand pressure: on average 135 interested tenants per listing nationwide (Observatorio del Alquiler, Jan 2026). In Palma de Mallorca, more than 240.
• National average rent: €1,184/month at the end of 2025, +5.9% YoY (after +11.3% the previous year).
• Madrid and Barcelona: supply has dropped 73% in Madrid and 90% in Barcelona since 2020.

Why has supply collapsed?

The Bank of Spain warned in its 2023 Annual Report about a structural affordability problem. Several factors have reinforced each other after Covid:

• Shift to tourist and seasonal rentals (Airbnb-style and short contracts) to bypass the new Housing Law.
• Legal uncertainty for landlords: stressed-area regulation, rent caps and tougher eviction rules have pushed small landlords out.
• Almost no new build-to-rent stock entering the market.
• Rising demand: record immigration, new household formation and foreign demand (retirees, digital nomads).
• Expensive mortgages (2022-2024) pushed many would-be buyers into the rental market.

Consequences: record prices, fierce competition

The national average sits around €14/m²/month. The biggest rises since 2020:

• Valencia: +83%
• Málaga: +73%
• Madrid: +62%
• Palma de Mallorca: +58%
• Barcelona: +50%

Average households now spend more than 40% of their income on rent in most of the country, well above the 30% recommended threshold.

What about non-resident owners?

If you are a non-resident with a property rented out in Spain, renting has never been more profitable, but tax obligations have never been stricter. The Spanish Tax Agency cross-checks data with banks, land registries and online platforms.

Modelo 210 — Rental income

• Tax rate: 19% for EU/EEA residents, 24% for the rest of the world.
• EU/EEA residents can deduct expenses: mortgage interest, IBI, community fees, insurance, utilities, 3% depreciation, repairs and professional fees.
• Quarterly filing (Jan, Apr, Jul, Oct).

Modelo 210 — Capital gain / loss on sale

• The buyer withholds 3% of the sale price (Modelo 211) as a non-resident income tax pre-payment.
• The seller files a specific Modelo 210 within 4 months after the sale.
• If there is a loss, or the final tax is below the 3% withheld, you can claim a refund.
• Properties acquired before 1995 may benefit from abatement coefficients.

Why SpainTaxForm specialises in rentals and capital gains

At SpainTaxForm we are specialists in the two most complex Modelo 210 scenarios for non-residents: rental income and capital gain/loss on property sales.

• 100% online, in 12 languages, no travel to Spain required.
• Automatic calculation of taxable base, deductions and tax rate based on your country of residence.
• Real-time validation of IBAN, NIE/NIF, cadastral reference and payer data (including multiple tenants).
• Generation of the official .210 file following the latest AEAT specification, ready to submit.
• For sales: we manage the 3% refund claim when applicable, with prior estimation and express consent.
• Email support in your language and centralised download of all your filings, year after year.

In today’s overheated market, where rental yields are at record highs but tax enforcement is tighter than ever, working with a specialist is the difference between full compliance and avoidable penalties.

Sources

• 1idealista — Rental supply down 61% since 2020, prices up 40% (Mar 2026)
• 2idealista — 5 years of post-pandemic rentals (Mar 2025)
• 3idealista — Rentals up 10.3% YoY at the end of winter (Apr 2025)
• 4Observatorio del Alquiler — 2025 close: €1,184 average, 135 interested per listing
• 5Fotocasa — Rental price rises in Spain over the last 10 years (+94%)
• 6INE — National Rental Housing Index (table 24079)
• 7INE — Rental Housing Price Index (IPVA), technical project
• 8Bank of Spain — Annual Report 2023, Chapter 4: housing market
• 9Forbes Spain — Rental supply down 61% since 2020, prices up 40%
• 10Spanish Tax Agency — Modelo 210 IRNR (official site)