The recent housing law approved by the government this year has sent shockwaves through the Vigo real estate market. Property owners are responding to the new rules by taking steps to minimize their impact on tenants and landlords alike. In the past weeks, many apartment owners have asked contractors to create temporary leases for a defined period, most commonly eleven months. The goal is to prevent automatic year-end renewal by the tenant. In practice, this arrangement grants the tenant a commitment to stay up to five years under the fixed-term contract.
There can be non-payments under these conditions, and the new law imposes significant restrictions on evictions for tenants who fall behind on rent. As a result, more and more parties are opting for temporary, multi-month contracts, notes a Vigo real estate agent who manages several buildings using this approach. Short-term leases can help avoid future rent cap increases and shield defaulters from eviction, yet they also remove certain tax benefits, favoring landlords in the traditional market where taxes are higher.
The government’s housing law, which took effect on May 26, sets new limits on how much rents can rise. The rule maintains a 2% cap for this year and increases it to 3% in 2024, establishing a new reference index for the region that sits outside the CPI until December 31 of next year. Additionally, the law introduces measures that make it harder for economically vulnerable tenants to evacuate.
“All of this stems from the new law,” says a real estate professional who handles rental properties under this modality. He notes that owners who rent out their homes for a fixed number of months (in the traditional, non-holiday mode) often require deposits and guarantees similar to standard leases, typically one or two months’ rent and insurance. Tenants in this arrangement have less protection, and in some cases, a tenant renting a room can be asked to leave quickly. Seasonal or room-only rentals also tend to be more expensive.
It’s important to remember that a limited supply exists. The market shows a small pool of historical rental units, with just 484 apartments listed yesterday. The main driver behind this situation is the shift of many homes to the holiday market, where owners can derive higher returns and are exempt from certain traditional rental restrictions.
The problem is clear: with few flats available, properties tend to disappear from the market within hours. One- and two-bedroom units often sell within a day or two of listing. Morning advertisements can be gone by noon as tenants move quickly to secure a place.
Beyond the supply shortage, landlords are tightening entry requirements. Prospective renters who are vulnerable, retired, or depend on Social Assistance are less likely to find openings due to eviction risk concerns for non-payment. Pets remain a barrier as many landlords still deny dog or cat-friendly leases. Families with children also face stricter screening criteria when seeking housing.