Housing politics
Brussels Highlights The Pitfalls Of Rent Controls — Even If Spain Doesn’t Seem To Notice
Author: 
Mark Stücklin
Posted on
Brussels reminds EU governments — including Spain — that rent controls might feel good politically but rarely work economically, often shrinking supply and deepening the housing crisis they aim to solve.
A new European Commission report acknowledges what many economists already know: rent controls rarely work as intended. While Brussels stops short of naming and shaming Spain, its analysis of rental regulations across the EU reads like a quiet warning to governments tempted to tinker with prices rather than tackle supply.
In Housing in the European Union: Market Developments, Underlying Drivers, and Policies, the Commission notes that rent controls can reduce affordability and availability over time. Caps may provide short-term relief, but they also distort incentives, discourage renovation and investment, and create dual markets where unregulated rents rise faster. Over the long run, excessive regulation can even fuel housing bubbles and push households into debt — exactly the kind of unintended consequence policymakers claim to be avoiding.
Spain’s small rental market under strain
The findings are especially relevant for Spain, where the rental sector is both small and under pressure. Only around 1.1% of the housing stock is social housing — among the lowest in the OECD — and private landlords have been retreating from the long-term rental market for years. In key regions like Madrid and the Balearics, rents have climbed by up to 50% since 2014, according to BBVA Research, leaving many young adults unable to move out of the family home.
Mixed results in Catalonia
The 2023 Housing Law promoted by Pedro Sánchez allows regional governments to impose rent caps in so-called “stressed” areas. So far, only Catalonia has fully implemented the measure, and the results have been ambiguous. While average rents in regulated municipalities have dipped by about 5%, the number of new long-term rental contracts has dropped by 17%. That suggests landlords may be withdrawing properties from the regulated market or switching to temporary contracts that avoid the caps altogether.
A generation stuck at home
With limited supply and high costs, nearly half (46%) of Spaniards aged 25 to 34 still live with their parents — one of the highest rates in Europe. This lack of independence drags down labour mobility, delays family formation, and widens the generational wealth gap. Government subsidies, such as the €250 monthly youth rental bonus, may offer temporary relief, but without more homes to rent, they risk pushing prices even higher.
The bottom line
Brussels isn’t attacking Spain — it’s just stating the obvious: rent control sounds good in theory, but in practice it often deepens the problem it’s meant to solve. Spain’s housing crisis won’t be fixed by decrees and caps; it needs bricks, cranes, and policies that make building more homes worthwhile.
The Catalan government (Generalitat) has been busy spinning the latest rental market figures as a vindication of its rent control policy—but scratch beneath the surface, and the numbers tell a very different story.
Official spin: “price containment” success
Sílvia Paneque, the Generalitat’s Councillor for Territory, Housing and Ecological Transition, was quick to trumpet the results in the Catalan Parliament this week, citing what she called a “continued trend in price containment.” According to Paneque, there has been a “cumulative 4.9% reduction in Barcelona city and 1.9% across all officially designated stressed market areas since the policy began.” The chart above illustrates the decline in average Barcelona rental prices in H1 (-4.4%).
She also contrasted this with a “6.6% increase” in rents in areas not subject to rent caps (where a fraction of the population lives), arguing that rent controls are clearly working to “defend the right to housing” and rein in “years of excessive speculation.”
It’s a bold pitch. But it’s also a classic case of polishing a turd.
The real numbers: lower supply, not lower prices
While declared rents in official contracts did edge down slightly, asking prices on the open market soared—up over 12% year-on-year in H1 2025. Meanwhile, the number of new rental contracts in Barcelona have continued to tank. Just 15,026 were signed in the first half of 2025, down 15% from last year and over 7,000 below the ten-year average (20% down). The chart above illustrates this precipitous decline.
In Q2 alone, the number of new contracts fell to just 7,411—the lowest level on record (excluding the lockdown period). So yes, a lucky few (with the best rental profiles) are paying marginally less for increasingly scarce rental housing, but many thousands of families are now shut out of the market, even if they can afford to pay the market rate. But hey, fewer homes to rent and more people locked out—apparently that’s what success looks like now.
Rental market index shows dramatic divergence
Using 2015 as a base index (100), we can see how rental supply and prices have evolved over the last decade, taking in Barcelona’s first experiment with rent controls between Q3 2020 and Q1 2022, which coincided with the pandemic, and the lastest experiment starting in Q1 2024.
- €/sqm contract rents: index 153
- Asking prices: index 196
- Rental contracts signed: index 77
The first experiment appeared to restrain rental prices, but in reality that was due to the pandemic, which dragged down prices to the same extent in other cities like Madrid (see next chart), where there were no rent controls in place.
But rent controls sent a clear message to landlords: expect punishment. Many have been leaving the market ever since.
This stark divergence makes it clear: rent controls are strangling supply while doing little to reduce prices.
More homes for rent? A convenient fudge
In a further attempt to salvage the narrative, Paneque pointed to what she claimed was a “positive balance” of 2,285 more rental contracts across Catalonia in Q2 2025 and 14,124 more since the start of the policy. But this figure includes all ongoing rental contracts, not just new ones—so it says little about access for those looking for a home today.
Nor does it square with the hard data from INCASOL showing a steep decline in new contracts being signed in Barcelona, the region’s most important rental market.
Why more rental contracts doesn’t mean better access to housing
The total number of rental contracts can increase even as new contracts decline because rent controls reduce tenant mobility—people stay put to hold onto capped rents, meaning fewer homes turn over and fewer new contracts get signed.
Think of the rental market as a population of rental contracts. The total number of contracts is like the population, and the number of new contracts is like immigration—new entries into the system. Meanwhile, contracts ending or tenants moving out are like emigration—exits from the system.
Here’s the dynamic under rent controls:
- New contracts (immigration) are falling, because there are fewer homes coming onto the market—landlords are less willing to rent under capped prices, and fewer people are moving out.
- Existing tenants are staying put (lower emigration) because they have a good deal and don’t want to lose it. In normal conditions, some of them would move for a job, buy a home, or upsize/downsize, freeing up a rental. Under rent controls, many choose not to move at all.
So even with a sharp fall in new contracts, the net total of active contracts can still rise if fewer people are leaving. That’s how the Generalitat can claim that there are “more contracts than before,” even as new rental opportunities for would-be tenants have collapsed.
But that increase doesn’t reflect better access—it reflects reduced turnover and tighter market stagnation.
Blaming the past, ignoring the present
“The housing crisis,” Paneque said, “is the most visible wound of an economic system that has tolerated excessive speculation.” And while she insisted that the government’s housing strategy is a national priority built on “planning, dialogue and coherence,” the reality on the ground is that rent controls have pushed the market further into dysfunction.
In a high-demand city like Barcelona, the unintended consequences of these regulations—lower supply, longer queues, greater informality—are anything but coherent. While some lucky tenants may enjoy lower rent, thousands of others are locked out entirely, or paying under-the-table to meet the real market price.
No amount of spin can hide the damage
One year on, rent controls in Barcelona have delivered exactly what many warned: a smaller, murkier rental market that helps a few while hurting the rest. And while officials keep dressing it up as success, for most people trying to find a home to rent in Barcelona, it’s mission impossible.
The Catalan government (Generalitat) has been busy spinning the latest rental market figures as a vindication of its rent control policy—but scratch beneath the surface, and the numbers tell a very different story.
Official spin: “price containment” success
Sílvia Paneque, the Generalitat’s Councillor for Territory, Housing and Ecological Transition, was quick to trumpet the results in the Catalan Parliament this week, citing what she called a “continued trend in price containment.” According to Paneque, there has been a “cumulative 4.9% reduction in Barcelona city and 1.9% across all officially designated stressed market areas since the policy began.” The chart above illustrates the decline in average Barcelona rental prices in H1 (-4.4%).
She also contrasted this with a “6.6% increase” in rents in areas not subject to rent caps (where a fraction of the population lives), arguing that rent controls are clearly working to “defend the right to housing” and rein in “years of excessive speculation.”
It’s a bold pitch. But it’s also a classic case of polishing a turd.
The real numbers: lower supply, not lower prices
While declared rents in official contracts did edge down slightly, asking prices on the open market soared—up over 12% year-on-year in H1 2025. Meanwhile, the number of new rental contracts in Barcelona have continued to tank. Just 15,026 were signed in the first half of 2025, down 15% from last year and over 7,000 below the ten-year average (20% down). The chart above illustrates this precipitous decline.
In Q2 alone, the number of new contracts fell to just 7,411—the lowest level on record (excluding the lockdown period). So yes, a lucky few (with the best rental profiles) are paying marginally less for increasingly scarce rental housing, but many thousands of families are now shut out of the market, even if they can afford to pay the market rate. But hey, fewer homes to rent and more people locked out—apparently that’s what success looks like now.
Rental market index shows dramatic divergence
Using 2015 as a base index (100), we can see how rental supply and prices have evolved over the last decade, taking in Barcelona’s first experiment with rent controls between Q3 2020 and Q1 2022, which coincided with the pandemic, and the lastest experiment starting in Q1 2024.
- €/sqm contract rents: index 153
- Asking prices: index 196
- Rental contracts signed: index 77
The first experiment appeared to restrain rental prices, but in reality that was due to the pandemic, which dragged down prices to the same extent in other cities like Madrid (see next chart), where there were no rent controls in place.
But rent controls sent a clear message to landlords: expect punishment. Many have been leaving the market ever since.
This stark divergence makes it clear: rent controls are strangling supply while doing little to reduce prices.
More homes for rent? A convenient fudge
In a further attempt to salvage the narrative, Paneque pointed to what she claimed was a “positive balance” of 2,285 more rental contracts across Catalonia in Q2 2025 and 14,124 more since the start of the policy. But this figure includes all ongoing rental contracts, not just new ones—so it says little about access for those looking for a home today.
Nor does it square with the hard data from INCASOL showing a steep decline in new contracts being signed in Barcelona, the region’s most important rental market.
Why more rental contracts doesn’t mean better access to housing
The total number of rental contracts can increase even as new contracts decline because rent controls reduce tenant mobility—people stay put to hold onto capped rents, meaning fewer homes turn over and fewer new contracts get signed.
Think of the rental market as a population of rental contracts. The total number of contracts is like the population, and the number of new contracts is like immigration—new entries into the system. Meanwhile, contracts ending or tenants moving out are like emigration—exits from the system.
Here’s the dynamic under rent controls:
- New contracts (immigration) are falling, because there are fewer homes coming onto the market—landlords are less willing to rent under capped prices, and fewer people are moving out.
- Existing tenants are staying put (lower emigration) because they have a good deal and don’t want to lose it. In normal conditions, some of them would move for a job, buy a home, or upsize/downsize, freeing up a rental. Under rent controls, many choose not to move at all.
So even with a sharp fall in new contracts, the net total of active contracts can still rise if fewer people are leaving. That’s how the Generalitat can claim that there are “more contracts than before,” even as new rental opportunities for would-be tenants have collapsed.
But that increase doesn’t reflect better access—it reflects reduced turnover and tighter market stagnation.
Blaming the past, ignoring the present
“The housing crisis,” Paneque said, “is the most visible wound of an economic system that has tolerated excessive speculation.” And while she insisted that the government’s housing strategy is a national priority built on “planning, dialogue and coherence,” the reality on the ground is that rent controls have pushed the market further into dysfunction.
In a high-demand city like Barcelona, the unintended consequences of these regulations—lower supply, longer queues, greater informality—are anything but coherent. While some lucky tenants may enjoy lower rent, thousands of others are locked out entirely, or paying under-the-table to meet the real market price.
No amount of spin can hide the damage
One year on, rent controls in Barcelona have delivered exactly what many warned: a smaller, murkier rental market that helps a few while hurting the rest. And while officials keep dressing it up as success, for most people trying to find a home to rent in Barcelona, it’s mission impossible.
Author: 
Mark Stücklin
Posted on
It seems that when it comes to Spain’s housing woes, both ends of the political spectrum can agree on at least one thing: foreigners make an easy scapegoat.
This week, political party Vox joined the chorus calling for higher taxes on foreign property buyers. The far-right party has proposed a new levy on foreign purchasers, with the proceeds supposedly funding tax breaks and subsidised housing for Spaniards. The stated aim is to stop what they describe as a “mass acquisition of housing” by foreign capital, which they claim is pricing Spaniards—especially young people—out of the market.
In their words, the rate of home ownership among young Spaniards has fallen from 56% to 27% over the last two decades, while foreign purchases have risen from 7.6% in 2007 to 19.3% in 2025. Vox calls this an “expulsion effect” and says it wants to “protect Spaniards from speculation and the massive purchase of homes by foreign fortunes and funds.” They are echoing the socialist Spanish President Pedro Sánchez who claims that all foreign buyers are “speculators”.
A familiar tune from the other side
What’s striking is how much this sounds like the rhetoric of the hard left, which also loves to talk about “speculators” and “foreign funds” hoovering up Spanish property. The far left blames foreign investors and holiday-home buyers for rising prices and falling rental supply—sometimes even calling for outright bans on foreign purchases. Vox, meanwhile, wants to hit them with extra taxes. The ideological packaging is different, but the impulse is the same.
The real problem lies closer to home
Foreign buyers do play a visible role in certain markets—coastal resort areas in particular—but they are not the reason housing has become unaffordable in Madrid, Barcelona, or Seville. The real culprits are chronic undersupply, suffocating regulation, high transaction costs, and years of policy failure. Instead of building more homes, streamlining planning rules, or cutting taxes on construction and renovation, politicians of all stripes find it easier to point the finger at foreigners.
Blaming outsiders may win votes, but it won’t build a single new home.
A Swedish Education In Marbella
Swinging Sundays At Kukko Events
Barcelona Homes Sales Rise Again – And Foreign Demand Hits A Record 25%
Unemployment rate in Spain rises to 10.4% despite record number of workers
Sufferers of agonising ‘Butterfly Skin’ in Spain denied access to revolutionary new gene therapy – after it’s made available in France, Italy, and Germany
Teresa Ribera Ante La Oleada Negacionista: “Sin Una Economía Verde No Hay Futuro”
-
Business & Finance3 weeks ago
Unemployment rate in Spain rises to 10.4% despite record number of workers
-
Butteryfly Skin3 weeks ago
Sufferers of agonising ‘Butterfly Skin’ in Spain denied access to revolutionary new gene therapy – after it’s made available in France, Italy, and Germany
-
America4 weeks ago
Teresa Ribera Ante La Oleada Negacionista: “Sin Una Economía Verde No Hay Futuro”
-
New Developments2 weeks agoHow To Get A Tourist Rental Licence In Andalusia (Spain) – Step-By-Step Guide 2025
-
Heads-up!3 weeks ago
📣 Heads-up! New report shows mixed fortunes across Gran Canaria, Fuerteventura and Lanzarote
-
Competiciones4 weeks agoAntony Frena La Crecida Del Villarreal
-
Aleksandar Vucic2 weeks agoEl Año De Protestas En Serbia Contra El Gobierno De Vucic Desemboca En Una Gran Manifestación: “Ya No Hay Marcha Atrás”
-
Uncategorized4 weeks agoRed Bull blasted over Schumacher