Spain's small landlords withdraw thousands of properties from traditional rental market over government decrees

According to data released by the National Federation of Estate Agents' Associations (FAI) - which represents over 600 agencies nationwide - regulatory uncertainty has impacted more than 5,758 property listings over the past ten days alone. Real estate agents report that 4,235 properties have been either completely withdrawn or diverted away from traditional residential leasing, while 1,523 pending rental contracts have been frozen.

The market volatility follows the coalition government's attempt to push through emergency housing legislation via two separate decree-laws. The first - spearheaded by the Socialist Party (PSOE) - included a ban on evictions until 2030, new regulations on holiday lets and room rentals, and a two-year extension of existing tenancy agreements expiring before 2028. The second decree - championed by coalition partner Sumar - included measures that effectively made standard lease agreements open-ended, aligning with demands from tenants' unions.

Neither text secured majority backing in Congress, sparking one of Spain's largest recent social mobilisations and prompting the calling of an early general election for 29 November. Despite failing in parliament, the government has decided to reissue the decrees and approve them through the Diputación Permanente (parliamentary standing committee).

"Legal uncertainty is driving an exodus of private property owners," FAI reported, noting that an average of 3.78 rental properties per agency are being withdrawn, resulting in a direct loss of 2,067 long-term listings over the ten-day period amongst the 547 agencies that reponded to the survey.

Rather than risk open-ended tenancies or eviction blocks, private property owners are opting to put their homes up for sale or convert them into alternative, unregulated rental formats. Over half of surveyed estate agencies confirmed that landlords have moved an average of 2.26 properties per agency from rentals to the sales market, representing more than 1,224 properties nationwide.

At the same time, an average of 1.76 properties per agency - representing 944 homes total - have been reallocated to seasonal leases or room-by-room rentals to bypass traditional housing regulations. Under the proposed PSOE decree, seasonal lets would eventually require formal justification or face automatic reclassification as traditional tenancies.

Agencies also report an average of 2.75 pending tenancy agreements put on ice per branch due to regulatory ambiguity. FAI warns that total rental transactions could fall by 25 to 30 per cent in the coming weeks as small property owners halt new contracts or permanently exit the residential rental sector.

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