Renting in Andorra: Forced Contract Extensions 2023-2027
- elizabethhelenpier
- May 9
- 5 min read
Updated: May 13
For decades the Andorran rental market remained stable, with low demand, fair prices and plenty of selection. However, as we discuss in our blog post A guide to long term rentals in Andorra the story began to change in 2021. By 2025 prices have now risen to 300-500% above the 2020 value with a continued huge demand over supply. Since 2023 the population began holding marches for the first time in Andorran history to oppose the price rises, that would leave many Andorran households with no option but to leave the country permanently unless the government stepped in. In response, the government came up with an emergency plan and ratified the Law of Rental Market Stimulation and Stabilisation. Below we explain in detail what this law has done to the rental market now, what consequences will there be in the future, what the effect on tenants is and importantly how landlords who own rental property are affected.
What is the Law of Rental Market Stimulation and Stabilisation?
This Law forces landlords into an extension on their rental contracts surpassing the normal 5-year tenancies in Andorra. It is important to mention that for the moment in 2025, only contracts made before or during 2021 are affected. Furthermore, the rental price increases during these forced extensions are controlled by government legislation to avoid massive hikes in prices for a large part of the population renting in Andorra.
If there is no agreement between tenant and landlord to renew a contract signed before or during 2021, or to terminate or extend it mutually, then the tenant is in their right to force extension of the contract. These extensions in general began in 2023 and 2024 when interests rates were peaking.
For rental contracts made before or during 2019 once the regular contract has ended (after 5 years) the forced extension period is 3 years, and if the tenant is paying:
- less than 6€/m2 the price can only be increased by 4% above the CPI
- between 6 to 7€/m2 the price can only be increased according to the CPI
- over 7€/m2 the price can only be increased 4% max.
- over 8€/m2 there can be no price increase
After the first year of extension the price can be increased according to the CPI annually.
The price increase must be notified a month before the beginning of the extension.
For contracts made in 2020, once the regular contract has ended (after 5 years) the forced extension is for 2 years, and the rent can only be increased according to the CPI annually.
For contracts made in 2021, once the regular contract has ended (after 5 years) the forced extension is for 1 year and the rent can only be increased according to the CPI annually.
What right does it give tenants renting in Andorra?
To begin most of the tenants in Andorra can breathe easy knowing they are guaranteed a roof over their head until 2026-2027. Furthermore, this law means the tenants can avoid the 300-500% increases and instead happily be set with a 0-25% maximum increase in rent price over the years.
What rights do landlords in Andorra have?
Unfortunately, not a lot, unless your tenant signed in 2022 or after. The only way to get out of a forced extension is to prove you yourself or a family member need to reside in the property. Or if your tenant is a passive resident in which case they are exempt from being able to demand forced extensions on their rental contracts.
Selling or buying property that is rented in Andorra?
If the landlord has not notified the tenant of dissolution of their rental contract on completion of the 5 years, and the extension is happening automatically with no formal notification in place, the extension in reality is only happening on an annual basis. This is a very important fact if you are looking at buying or selling for personal use. If the buyer is to use the property as their permanent homestead, they may dissolve any Andorran rental contract running on automatic extensions at the end of any contractual year as long as you give the correct 3 months notice. Crucially, they cannot cut short a contract that is not extended and is still in force through the regular 5 year rental contract period in Andorra, nor a contract that has an official extension in place due to official notification of dissolution of contract.
How many people are in extended contracts?
According to Andorran Government statistics, 65% of the population are renting in Andorra, although the most up-to-date data is from 2023. Furthermore 60% of those in rented housing are in a situation of forced extension. This means around 40% of the population in Andorra is currently signed into forcefully extended contracts with government rent controlled prices. We are talking about 15,000 households!
The effect of extended contracts on the Andorran property market
I think we can all agree a bubble has been created by locking down rent prices in this manner for a such a huge percent of the population. In 2026-2027 we will see either a mass exodus of Andorran residents who cannot find a replacement home, and/or a big decrease in rental prices in Andorra when thousands of apartments and houses come back on the market all at the same time, or possibly with sheer luck the majority of these 15,000 households will simply agree a new contract with their landlords.
Another issue that has already occurred is a drop in the supply of property for sale in Andorra. As many landlords can no longer sell their apartments tenant free, many are instead waiting until the forced extension period ends before putting their property up for sale, to assure a sale and at a good price. This in itself may be creating a bubble as of current, with no supply on the Andorran buy-sale market. On the other hand, the bubble may well burst when possibly thousands of properties will come onto the market for sale at the same time in 2026-2027. Lastly, there is simply very little property for rent in Andorra as most is already rented with forcefully lengthy contracts in place. This is in large part due to the Government’s action to control and protect the old-time residents of Andorra. Unfortunately, in the process they have worsened the situation on the current rental market and for any resident or citizen whose rental contract or residency began posterior to 2021.
How does the Andorran Government plan to remedy the bubble created by forced extensions?
There are various tactics that the Andorran Government has taken to decelerate the effects of the housing crisis and furthermore to stem any explosion of property or renters onto the market in 2026-2027:
Creation of social housing: these are rent controlled buildings reformed by the government and rented to residents in most need. They hope to move over a thousand households from the forcefully extended contracts into social housing before 2027
Tax benefits for anyone looking to rent property (IRPF and ITP), hopefully creating more supply of rental property between 2025 and 2027
Blocking most foreign investment unless it is dedicated to the rental market under a rent control scheme, to up the supply of property on the Andorran real estate and rental market
Slowing down immigration, to hopefully lessen the pressure of demand for anyone renting property in Andorra
In 2025 the Head of State has reiterated that they cannot permit the ending of so many rental contracts all together, therefore legislation will be put in place previous, to make sure the forced extensions are terminated gradually
