Madrid’s rental squeeze keeps long-term leases tight

Madrid’s long-term rental vacancy rate is still just 2% to 3% in early 2026, with central districts such as Salamanca, Centro and Chamberí dropping below 2%, according to Idealista and the Observatorio del Alquiler. Homes are renting in 7 to 20 days on average, while yearly rents rose 10% to 12% into 2026.

Spain’s latest cap keeps annual rent increases at 2% nationwide until Dec. 31, 2027, under Real Decreto-ley 8/2026, published March 21. The rule applies to ongoing LAU contracts and overrides higher reference indices.

Expats and nomads face the tightest competition

Expats, digital nomads and young professionals make up 25% to 30% of tenants in Madrid’s central market, where supply is thin and turnover is fast. Long-term visitors are also competing with continued pressure from short-term rentals and conversions out of the residential market.

Rents now average about €23 per square meter a month or roughly €800 for studios, €1,150 for one-bedrooms and €1,700 for two-bedrooms. Some neighborhoods are even tighter than the city average and that leaves fewer options for anyone trying to sign a standard lease.

What renters need to check now

Landlords must give 30 days’ notice before raising rent and any increase above 2% is void. Tenants can request up to 2 years of extension in writing before a contract ends, but the rule applies only to habitual housing under the LAU.

Digital nomads still need standard lease documents plus visa proof and new rents in stressed zones can be capped by reference indices. Read our full Spain guide for the complete picture and our latest visa updates.