New rental regulation in Andorra (2027–2030): what you need to know

Andorra Rental Law 2027–2030: What You Need to Know

The rental market in Andorra is undergoing a significant transformation starting in 2027. The new legislative framework introduced by the Government of Andorra establishes a structured and gradual phase-out of the forced lease extensions that have been in place since 2019.

This article provides a clear and reliable overview of how these changes will impact both landlords and tenants.

Current Market Context

According to official data:

• Approximately 25,000 rental contracts exist in Andorra
• Around 20,000 are currently subject to forced extensions
• The average rental price stands at €13.5/m²
• Older contracts (signed before 2012) average €7.9/m²
• All legal extensions will expire in 2027

This context highlights the need for a controlled transition towards a more balanced and sustainable rental market.

Objectives of the New Law

The reform is built around two key principles:

• Gradual elimination of forced lease extensions
• Ensuring a fair balance between landlords and tenants, while protecting the general interest

Progressive Phase-Out Timeline (2027–2030)

The removal of forced extensions will follow a phased approach based on contract date and rental price:

• 2027: Contracts signed up to 2012 or below €6/m²
• 2028: Contracts from 2013–2015 or below €7/m²
• 2029: Contracts from 2016–2018 or below €8/m²
• 2030: Contracts from 2019–2021

This prioritizes older contracts and those with below-market rental values.

Landlord Flexibility

Once a contract is no longer subject to extension:

• Landlords may retain the current tenant or replace them
• A minimum 6-month notice period is required

However, rental prices will remain regulated and cannot be freely adjusted.

Controlled Rent Increases

During the first five years of the new contract, rent increases are capped according to the previous price per square meter:

• Up to €7/m² → +6% annually + CPI
• €7–8/m² → +5% + CPI
• €8–9/m² → +4% + CPI
• €9–10/m² → +3% + CPI
• €10–12/m² → +2% + CPI
• Above €12/m² → +1% + CPI

Lower rents are allowed to increase more significantly, facilitating alignment with market conditions.

Special Adjustment Mechanism

If a property’s rent is below the public affordable housing benchmark for its parish:

• First 3 years: gradual increase to reach the benchmark level
• From year 4 onwards: annual updates based on CPI, unless the standard increase system allows for a higher adjustment

Excluded Contracts

The following are not subject to this regulation:

• Properties with rent above €2,500/month
• Single-family homes
• Properties requiring major renovation works
• Contracts signed after January 1, 2022
• Specific cases such as personal use or certain residency situations

These cases fall under the principle of contractual freedom.

Additional Government Measures

The reform also includes:

• Incentives to develop and renovate affordable housing
• Tax benefits for landlords
• Creation of a rent guarantee fund to cover potential defaults

Conclusion

This new legal framework represents a structural shift in Andorra’s rental market:

• It brings an end to an exceptional system of forced extensions
• Introduces a gradual and controlled transition
• Ensures regulated rent adjustments to balance interests

For property owners and investors, this creates a more predictable environment, while still requiring careful planning and strategic decision-making.