End of rental extension: Hundreds of euros in rent hikes

Burofax notices before the law: Renewed rentals with sharp increases

The extraordinary rental extension, designed to prevent evictions, is producing the opposite effect: contracts expire, are renewed, and return with skyrocketing rents. In Elena’s building, landlords began sending burofaxes months before the expiration. The choice was binary: leave the apartment or accept 1,300 euros with utilities separate, compared to the 1,070 euros with utilities included previously paid. Many neighbors left. Their properties reappeared on real estate portals with monthly prices hundreds of euros higher.

Why has contract end become a hidden rent hike?

While the old contract remains active, the rent is frozen and the landlord cannot reflect market rates. Upon expiration, the most profitable route is not to update but to not renew and start fresh. The new contract concentrates all the increases deferred over previous years. Some summarize it bluntly: these are not evictions, it is the natural end of the contract. The distinction matters because the tenant leaves without a court order, feeling pushed out.

On the other side is the inverse reading: the legal insecurity for landlords did not originate from this law, it has been entrenched for years and explains why fewer landlords want to bind themselves to long-term tenants. Strikingly, both versions describe the same outcome, a shrinking supply just when more people need to rent.

Sell, rent by academic term, or leave empty: Supply retreats

The first documented effect is not a price hike, but a disappearance. According to a forum user, a rental manager states that 70% of landlords have asked them to remove their properties from the market to decide whether to sell or switch to short-term rentals. This is not an ideological withdrawal; it is an exit through the back door seeking less friction.

The gaining formula is academic term rentals for foreign students, with parents signing as guarantors in contracts stretching up to nine pages. Those practicing this do not hide it: the law, they say, offers no protection. The result is that housing intended for residents is converted into short-term rotation, and stable tenants compete for fewer units with more paperwork.

Landlord figures: 8,400 euros in rent and 5,000 margin

The other side of the issue is the calculation. A landlord puts figures on the table: 8,400 euros annually paid by the tenant, of which only about 5,000 remain after expenses, excluding extraordinary costs and normal wear. Added to this are 1,200 euros for property tax and community fees. With these accounts, renting no longer makes sense, and the property lies empty, waiting for a child to use it someday.

This is the core of the problem and its most opaque part. The full breakdown, item by item, is where it is decided whether the landlord is exaggerating or if the business has truly collapsed, and where the tenant sees the ground beneath their feet when negotiating a renewal.

Default insurance, payslips of 2,250 euros, and separate rooms

Requirements have tightened as much as prices. The debate holds that default insurance does not cover the landlord if the candidate cannot prove 2,250 euros net per month in Segarro or 2,550 net in Móstoles. In the latter municipality, a fully furnished apartment with elevator and garage is offered for 850 euros. The bottleneck is not the price, but the paycheck.

Hence, intermediate formats appear: some list 140 rooms for rent in Leganés and 172 in Móstoles. Apartments not rented whole are split into rooms. And comparables do not always help: some argue that a garage space worth 20,000 euros yields 200 per month with little risk, though others manage garage rentals between 50 and 80 euros and note that no asset is safe when an unknown person enters.

What changes with the housing law and its three-year extension

With the rule still unfolding, doubt has shifted to the articles. A clause allowing tenants to extend contracts for up to three years without corresponding increases is pointed out. The question running through all conversations is how long one is bound: previously three years, then five, and no one knows how much longer. In Madrid, the Tenants’ Union advises neighbors who have decided to stay paying current rates until the landlord sits down to negotiate.

With supply retreating, requirements rising, and the fine print still hot, the question is not how much rent will rise. It is what needs to happen for putting a property back on the long-term rental market to stop seeming like a bad business.