If they haven't already come up for renewal, five-year rental contracts signed during the worst months of the pandemic are about to. José Miguel Artieda, president of the API estate agents association in the Balearics, warns tenants they could be facing rent increases of between fifty and seventy per cent.
The pandemic affected the rental market in various ways. In some instances, landlords were willing to reduce rents. Otherwise, prices didn't go up and market activity slowed down. Artieda notes that "the number of transactions dropped drastically", but in spite of cases where landlords reduced rents, the general market prices didn't come down - "unlike what happened in other parts of Spain".
As mobility restrictions eased, so prices started to go up again, and Artieda points to the fact that Mallorca became more attractive to foreigners, who were wanting to work remotely.
At the same time, properties which had been intended for long-term rental became short-term; others were converted into illegal holiday lets. Artieda says this trend intensified in 2023 because of Spain's housing law, which gives protection to vulnerable individuals who cannot be evicted even if they fail to pay rent.
"Many landlords are afraid that tenants will stop paying rent or that the property will be occupied, and this has led to many properties leaving the rental market; this has resulted in higher prices due to increased demand and decreased supply."
He stresses that not all tenants may be faced with big increases. There are landlords who will limit rent increases if they have a good tenant, as "they seek peace of mind and guarantees". "If tenants are good, landlords prefer to limit the increase in order to keep them."