The Spanish Government is currently seeking to ratify a Royal Decree in Congress that would extend rent controls for two years and cap annual increases at 2%. This decree, championed by Sumar—the more left-wing partner of the coalition—faces a difficult path to approval. Consequently, the PSOE has moved to process it separately to prevent Parliament from voting it down alongside other measures designed to mitigate the effects of the conflict in Iran (such as fuel VAT cuts).
Experience, economic doctrine, and various studies have consistently shown that while capping rent may benefit current tenants, it ultimately shrinks the supply and makes it increasingly difficult for new seekers to enter the market. Landlords are now demanding stricter requirements, such as higher incomes and additional bank guarantees.
In this situation, it is precisely those with the lowest incomes and the most vulnerable people—under current Spanish legislation, declaring oneself “vulnerable” prevents eviction from an apartment even if the rent is not paid—who end up being unable to access the real estate market, whether to buy or to rent.
Under these circumstances, hundreds of thousands of tenants expect a call from their landlords in the coming months for a rent review. According to industry sources, more than 300,000 contracts are due to be renewed or settled in the coming months throughout Spain. According to the Ministry of Social Rights, more than 600,000 rentals still have prices from five years ago (the typical period for automatic extensions)—prices, in short, from the COVID-19 era. Since then, rents in Spain have skyrocketed by an average of 40%, and even more in major regional capitals.
Once again, it has been a prestigious economist from Fedea, Benito Arruñada, who has had to explain that the suspension of evictions and price caps—measures that the current government has championed—have a detrimental effect on supply. Arruñada insists that we are facing a “historical persistence in error” that avoids taking the most effective—and fair—decision. According to the Fedea economist, this would involve financing rental assistance for the most disadvantaged through the budget, including rules to mitigate the hole in public accounts, alongside parallel measures such as reforms to incentivize supply.
A clear example is Catalonia, where due to the implementation of price caps, the number of rental contracts in 2024 fell by 10.8% compared to 2023 (a 14.9% drop in Barcelona city), while the average annual rent increased by 1.1% across the region and by 1.0% in Barcelona; in other words, the harm outweighs the benefit. Furthermore, a wealth of scientific literature warns that in Catalonia, while the most expensive homes have become cheaper, the most affordable ones have become more expensive, further hindering access to housing for the lower classes, immigrants, and young people.
