Two years of air for 25,000 families in the Balearic Islands in the face of the largest rent increase in the State

PalmaNearly 25,000 families in the Balearic Islands can gain two years of breathing room before having to face the renewal of their rental contract, if the Congress of Deputies does not overturn the measure approved this Tuesday by the Council of Ministers. The Balearic Islands, according to the Ministry of Social Rights, Consumer Affairs and 2030 Agenda, was where the highest increase was expected for contracts ending in the coming months: the State had calculated that moving from a contract ending this year to a new one at market prices could mean an average additional cost of 4,615 euros per year for the Islands, about 385 euros each month, the greatest impact of all the autonomous communities. The state average stood at 1,735 euros per year, about 145 euros per month.

This is the context in which the extraordinary extension approved this Tuesday by the Council of Ministers arrives. The first of the two royal decree-laws agreed upon by the Spanish government allows current contracts that reach their end before 2028 to be extended for two years, maintaining their conditions, a protection that must now pass validation in Congress.

The biggest jump in the entire State

The 385 euros are not an estimate from a real estate portal. The calculation comes from the Ministry and measures the potential difference between the rents of contracts that are reaching their end and the prices these households would find if they had to return to the market now. This also does not mean that all contracts must increase by exactly 385 euros per month. It is an estimated average. But the result places the Balearic Islands at the forefront of the State and shows how great the distance is between many contracts signed years ago and the current market.

For a family economy, the jump is not a small matter: 4,615 additional euros each year is equivalent to having to find almost 400 euros more each month just to continue allocating them to housing. This pressure is especially relevant for households with less disposable income. And official sources confirm that the market to which these families would have had to return has become intensely more expensive.

The State System of Rental Price Reference, prepared by the Ministry of Housing based on tax sources, confirms that the price of existing contracts has not stopped increasing. In 2024, the average price in the Balearic Islands was already exceeding 9 euros per square meter per month. The rental stock analyzed by the state system reached 87,759 homes that year, double that of 2011.

A second official source offers an even more compelling signal. The Housing Observatory of the Balearic Islands, based on the deposits held at Ibavi, concludes that between 2020 and 2025 there has been a sustained upward trend and a “practical doubling” of average rental values. No municipality in the Islands presents in 2025 an average lower than the one it had in 2020.

Data from portals, which mainly reflect the prices of the supply that enters the market at any given time, point in the same direction. Fotocasa calculated at the end of 2025 that the rent for a typical 80-square-meter home had gone from about 931 euros per month five years earlier to more than 1,500 euros: nearly 600 euros more per month and an increase of around 64%. It is in this market where thousands of households would have had to renegotiate if their contracts were ending now.

Two years without having to return to the market

The main consequence of the extension is precisely this: for a maximum of two years, the affected families can avoid the moment when the current contract expires and another price must be negotiated.

The formula already has a precedent. The Spanish government approved in March an extraordinary two-year extension for habitual rental contracts that were set to end before the end of 2027. That regulation established that, at the tenant's request, the landlord had to accept it in general terms, and the essential terms and conditions of the contract had to be maintained, with exceptions such as the legally provided need for the owner to recover the property.

That protection ended up failing in Congress, so households with contracts about to expire were once again exposed to renegotiation. Now the government is recovering the instrument within the new package approved this Tuesday.

The extraordinary extension, however, does not resolve the market evolution by itself. Postponing the renewal for two years does not mean that in two years prices will have fallen, but it does prevent affected families from having to face a renegotiation now during one of the most tense moments of recent years.

Real estate agents warn of a cooling of supply

The Balearic real estate sector focuses on the other side of the intervention. The president of the Official Association of Real Estate Agents of the Balearic Islands (COAPI), José Miguel Artieda, has said in recent days that caps and limitations on contracts may cause some owners to "cool" the decision to put their apartments up for rent.

Artieda reiterated this concern on IB3 Radio this Tuesday. His argument is that, faced with new restrictions, some owners may choose to wait before putting their housing on the market. He had already made the same warning publicly on Monday: he claimed that there were owners "on alert" who were calling agencies to find out about the future regulations and that some were holding back both the release of apartments to the market and renewals for fear of the changes. It is the main question that the sector raises about the measure: whether protecting existing contracts for longer may end up reducing a rental supply that is already limited.

Tenants wanted to go further

At the other extreme, tenant organizations consider that two years are still insufficient. In Mallorca, the Tenants' Union demanded before the approval an indefinite extension of contracts, freezing rent increases, and modifying legislation to avoid the use of temporary and room-rental contracts as a formula to escape regulation. Its spokesperson, Óscar Martínez, had asked the Spanish government not to approve a "mutilated" decree. A portion of the protesters who took to the streets in Palma on Monday held an encampment in the Plaza de España while waiting to know the result of the Council of Ministers.

In Ibiza, the approach is similar. The Tenants' Union had gathered about 200 people on Sunday in Vara de Rey and directly demanded freezing prices and establishing the indefinite renewal of contracts. Its spokesperson, Daniel Granda, warned that on the island, cases of families, young people, and workers with difficulties in maintaining housing occur continuously. Ibiza is already known for the extreme situations that workers have to endure as they see how the price per square meter of rent is among the highest in the State.