Housing Price Shock in Mallorca: How Renters Are Affected by Large Increases

Five-year contracts from 2020 are expiring, and landlords can often raise rents freely. Key question: Who will be left if increases of 50–70% occur? Analysis, everyday scenes and concrete counterproposals.

Key question: Who will remain living in Mallorca if landlords legally add 50–70%?

It is early morning in Palma. At the Plaça de Cort a baker opens his door, taxi drivers shake the rain from their wipers, and young parents push prams past renovated facades that suddenly feel prohibitively expensive. A quiet worry is spreading in many households on the island: the rental contracts signed in 2020 with five-year terms are about to expire – and with them the pandemic-era protections.

Critical analysis: Why increases are possible now

The legal situation allows landlords, after the end of such fixed-term contracts, much more extensive adjustments than the annual indexations; legally this is sound, but politically sensitive. The combination of increased demand, more remote work, the conversion of housing into holiday rentals and many owners' fear of rent defaults has severely tightened the market in recent years. The result: those who previously paid around €900 could soon face significantly higher demands – cases with 50 to 70% increases are being reported.

Another driver was the incentive to rent apartments short-term to travelers: owners who see higher returns remove apartments from the traditional rental market. At the same time, legal changes and protections for particularly vulnerable tenants have unsettled many landlords; some have weighed property tax, management costs and risks against potential losses – and chosen to exit long-term renting.

What is missing in the public debate

The debate often focuses on headlines and individual cases. Important points are being neglected: a transparent inventory, reliable figures on conversions to holiday lets and a clear list of which zones are truly "tight." A day-to-day perspective is also missing: which professions are particularly affected? How do school routes, mobility costs and commuting change if families are pushed to the outskirts?

Everyday scene: A breakfast in Sant Jordi

In Sant Jordi, at the square opposite a pharmacy, a nurse sits with her coffee and reads her landlord's rent notice. She works nights at the hospital, does three shifts a week and is now facing an increase that almost eats up her monthly income. Beside her an older couple discuss whether to pack up and move to the countryside. Such conversations are now common in the neighborhood – no longer about hypothetical developments, but about imminent decisions.

Concrete solutions

The situation calls for more than outrage. Concrete options include:

1. Transparency requirements: A public register that records excerpts of rental contracts, changes of use (long-term to short-term) and vacancies would reduce pressure for speculation.

2. Tax incentives for long-term renting: Temporary tax relief or depreciation for landlords who rent long-term to families or island employees.

3. Support program for affordable housing: Municipal and island-wide financial aid for building or converting apartments into social housing, tied to clear rent caps.

4. Conciliation bodies: Free mediation and advisory services between tenants and landlords to avoid evictions and find fair adjustments.

5. Strengthened controls against illegal holiday rentals: Rapid sanctions and targeted inspections could promote the return of apartments to the regular market.

Why these approaches are realistic

No single measure is a cure-all. But combined instruments can reduce pressure: registries create facts, tax incentives change calculations, and more social housing provides breathing room. It is important to design measures so they alleviate short-term hardship and address structural causes in the long term.

What politicians must do – and what society can contribute

Politics and administration must act now: clear rules for rent increases after fixed-term contracts expire, protection mechanisms for price jumps in already burdened zones and accelerated procedures for social housing. At the same time, locally rooted action is needed: cooperatives, neighborhood initiatives and employers securing housing for employees can provide short-term relief.

Pointed conclusion

The threatened 50–70% increases are legally possible, but they are not a law of nature. If we in Palma and across the island do not soon regulate more clearly, increase transparency and invest purposefully, Mallorca will lose more than tenants: it will lose neighborhoods, diversity and everyday life. The question is not whether something can be done, but whether we can muster the political will and local initiative to treat housing as a basis for living rather than merely an investment.