Rental prices are rising after years of declines, but many landlords fail to declare their rental income to the tax authorities.
Average rental (asking) prices rose by 3.1% in the first quarter, to 7.24 €/m2/month, according to the property portal Fotocasa – the highest quarterly increase since Fotocasa started publishing this index in Q1 2007.
Rental prices turned around in 2015 after 8 years on the slide, say Fotocasa. “The rental market has been enjoying robust growth and this is affecting prices,” explains Beatriz Toribio, head of research at Fotocasa. “60% of owners who rented out a home last year did not have to reduce their asking price to do so, and 90% found a tenant within 6 months.”
By municipality, Ibiza takes the prize for highest rents in Spain, with 14.53 €/m2/month, followed by Barcelona (13.82 €/m2/month). The Catalan resort town of Sitges also has one of the highest rents in Spain (12.20 €/m2/month).
By district, Barcelona’s Ciutat Vella (Old Town) is the most expensive place to rent a home in Spain, with asking prices of 16.44 €/m2/month, followed by Sarria – Sant Gervasi (also in Barcelona) with 15,09 €/m2/month).
Research by the Spanish Treasury reveals that an estimated 41% of homes are rented on the black market, cash in hand, with no declaration of rental income for tax purposes. Back in 2007 the figure was 54%.
That means that more than a million homes in Spain are rented on the black market, without paying any tax on the income.
The biggest number of black market rental properties are located in Murcia (61%), followed by the Canaries (56%), and Andalusia (55%). These are all popular tourist destinations, which helps explain why the black market for rental accommodation is so large in these regions, as tax fraud is common in the holiday-rentals world. At the other end of the scale, the lowest level of blackmarket rentals are in Galicia (25%), where the holiday-rentals business is relatively small.
Specialists from the Treasury claim that black market rentals are an unsophisticated tax fraud they can spot without difficulty. The internet age is making it easier for them identify black market rentals by cross-reference databases and checking rental listings online. This year tax collectors have started warning people suspected of not declaring rental income.