Mark Stücklin
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.
