Expats in Spain see private home rental charges soar

Expats living in Spain are seeing rentals on private homes soar, with government ministers believing the increases are due to continue.

Record rents are being charged for properties in the Balearics and Catalonia, with rents in the rest of the popular expat destination due to catch up in the near future. According to a report from the Property and Land office, during the third quarter of this year average rents stood at eight euros per square metre, still 1.5 euros less than in the 2007 property boom. After the 2008 crash, the entire Spanish property market collapsed, and has only recently begun to recover.

The average prices quoted don’t include Catalonia and the Balearics, where rentals are now at 12.30 euros per square metre and 9.7 euros per square metre respectively. Rental in Catalonia have increased by over 17 per cent over the past year, and are now the highest in the country, whilst charges in the Balearic islands of Ibiza, Mallorca and Majorca are up by 9.6 per cent since last year. At the other end of the scale, Spain’s cheapest regions for rentals are Castilla La Mancha at five euros per square metre, Murcia at just under six euros, Rioja at 5.4 euros and Galicia at 5.6 euros.

At the same time, house prices across Spain are continuing their rise from the depths of 2008, but are still some 27 per cent lower than in 2007. Overall average values have increased by 6.1 per cent, and are expected to continue to rise. However, both rental charges and house prices may well be impacted by the political unrest in Catalonia following the controversial independence vote and the government’s reaction. Foreign investors in particular are expected to stay away until the situation becomes clearer.

The Catalonian crisis has also affected the share prices of several major real estate companies in the region, with Colonial falling by 6.4 per cent and Merlin Properties seeing a drop of 6.3 per cent. Would-be expats looking for permanent or second homes as well as investors looking to take advantage of the possibility of capital gains in the not too distant future are likely to put a hold on their decisions, and those looking to enter the buy-to-let market may face an increase in local regulations pertaining to holiday lets.