The Costa del Sol has always run on two parallel housing economies. The visible one: estate agents, signed contracts, NIE numbers, and bank direct debits. The informal one: cash rent, shared flats, seasonal workers in accommodation that never appeared on any register.

For most expats, the informal economy was invisible. It kept service costs down, it occupied lower-value stock, and it didn't compete with the apartments you were looking at. The two markets operated in the same geography but were largely separate, divided by documentation status.

Spain just formalized the divide.

On January 27, 2026, the Spanish government approved a regularization program for undocumented migrants. Applications open from April to June 2026 for anyone who can demonstrate five months of continuous residence in Spain before December 31, 2025. The official estimate is 500,000 applicants. A leaked police assessment puts the likely number at 1.35 million. (Confirmed February 2026)

The scale matters. This is the largest regularization since Spain's 2005 amnesty, which brought 500,000 people into the formal economy over eight months.

Regularization doesn't add new people to Spain. It adds new people to the formal economy.

The workers who qualify are already here, already paying rent in some form. What changes is their legal ability to sign a contrato de alquiler — rental contract in their own name, appear on a lease, and access the same documented rental market as everyone else.

In practical terms, a documented tenant can rent an apartment that an undocumented tenant could not. Landlords who previously relied on informal arrangements or avoided certain applicants due to legal risk now have a larger, more legitimate pool to choose from.

That pool is large. And it is entering a market that, by every available measure, is already broken.

Málaga province has the least affordable rental market in Spain. 91% of two-bedroom apartments are unaffordable for an average local salary. The median two-bedroom runs €1,245 per month. Rent consumes 52% of household income (the highest share among provinces, ahead of the Balearics and Madrid). Housing prices rose 12% year on year through January 2026. (Confirmed February 2026, Idealista/INE data)

Formal demand in this market does not create new supply. It adds competition to what exists.

The regularization isn't primarily an expat story. It's a housing market story that affects expats as renters, as landlords, and as part of a wider picture worth understanding.

If you rent a property: the competition in the €800-1,200 per month price band, which has historically absorbed both expat and local demand, now also absorbs formerly informal demand. Landlords with desirable properties in that range have more documented applicants to choose from. Asking rents in that segment are already rising. The direction doesn't change.

If you own a rental property: the addressable tenant pool expands. A documented tenant with legal status is lower risk than an informal arrangement. Landlords who previously couldn't, or wouldn't, let to undocumented workers now have a larger formal market. This is the other side of the same equation.

If you're watching the broader housing trajectory: this is one piece of a pattern that warrants its own examination. The informal economy that kept the Costa cheap (undocumented labor, unlicensed rentals, unreported cash transactions) is being formalized from several directions simultaneously. The rental registry brought holiday lets onto the official register. A February enforcement sweep of viviendas de uso turístico — tourist rental licences removed 13,000 unlicensed properties from Airbnb and Booking.com. The migrant regularization brings a large informal housing cohort into the formal market. Spain is closing the informal economy at every level, and the effects are compounding.

That larger story is one we'll return to next week. The immediate effect on housing costs is already in motion.

(Confirmed February 2026)

Regularización — regularization / legal status program

Contrato de alquiler — rental contract

Spain's regularization adds between 500,000 and 1.35 million people to the formal housing market, with applications opening in April. In Málaga province, already the least affordable rental market in Spain, this doesn't change the direction of travel. It accelerates it. The informal economy is formalizing on multiple fronts at once: holiday lets, labor, and housing. The Costa you moved to ran partly on that informality. That version is closing. More on the full picture next week.

Nearly there — A. and the WaypointSur team (checking our own rental contracts)