The Bank of Spain reveals that homes entering the rental market for the first time are priced 16.6% higher than existing ones, accelerating the rent surge across the country.
The Bank of Spain has focused on a phenomenon that explains much of the rental price increase in recent years: homes rented for the first time — inherited, refurbished, or coming off the sales market — arrive with prices 16.6% higher than existing contracts. This gap, known as the 'entry premium', has surged by more than ten points in just four years, rising from 6.2% in 2020 to the current 16.6%.
The 'entry premium' fuels the upward rally
According to the regulator, demand pressure is so strong that landlords do not hesitate to set high rents, confident of finding tenants. The Canary Islands, with 55 consecutive months of increases, is one of the most affected regions, with an average price of €16.28 per square metre per month in May, 8% higher than the previous year.
The report dedicates a specific chapter to the housing crisis and compares the rents declared to the Tax Agency for newly rented homes with those of previous contracts. The conclusion is clear: the gap has intensified and shows no signs of moderation.
This so-called 'entry premium' has always existed, but the work of the Bank of Spain reveals that in just four years it has increased by more than ten points, from 6.2% to 16.6%.
Small landlords, big impact
The Bank of Spain identifies the market structure as one of the causes. 76% of landlords in Spain own a single rental property, and another 15% have two. Together, these groups control nearly 73% of the rental stock. Thousands of small landlords collectively set the upward trend, while large holders benefit from this dynamic without being its main drivers.
For years, many landlords avoided renting out for fear of non-payments, occupations, or property damage. However, the continuous increase in rents has compensated for those risks. According to the agency, this higher profitability has contributed to the rental housing stock growing by around 95,000 units per year. Additionally, the annual return — combining rental income and property appreciation — reached 9.5% between 2020 and 2024.
Canary Islands, fifth most expensive region
The Fotocasa Real Estate Index places the Canary Islands among the markets with prices above the national average, both in sales and rentals. In May, the average rental price in the islands was €16.28 per square metre, 8% higher than the previous year. The increasingly limited supply and tourist demand are driving prices up.
For the average tenant, the situation is becoming increasingly complicated. The entry premium not only raises new contracts but also pushes up the rest of the market, as landlords with old contracts tend to update prices when they can. The Bank of Spain warns that this dynamic could perpetuate the housing access crisis if measures are not taken to increase supply.
The next quarterly report from the agency, scheduled for September, will include a more detailed analysis of housing policies and their impact on the rental market.
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