THREE years after Spain’s Housing Law was introduced to ease the renting crisis, the results have fallen short of expectations.
Introduced in May 2023 to control rental prices and improve access to housing, Spain’s Housing Law introduced rent caps and enforced stronger regulation on landlords with multiple properties.
However, three years on, rental prices are 30.7% higher in Spain while supply has fallen by 30% and the competition to rent a home has more than doubled according to data from Idealista.
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The main goal of the law was to reduce renting prices by capping annual rent increases.
Increases were capped at 3% in 2023 and 2% in 2024 while in 2025 the rental price index (IRAV) was introduced and currently sits at 2.2%.
Despite this measure, rental prices have actually increased in all of Spain’s provincial capitals where rental caps apply.
Over the past three years, Segovia saw the sharpest rise in rental prices, up 51.2%, followed by Madrid at 42.1% and Valencia at 41.6%.
Not all cities are subject to these rental regulations; it depends on whether a regional government declares an area a ‘stressed housing market’ (zona tensionada).
This has had the inadvertent effect of reducing the supply of rental properties as landlords have chosen to sell up or converted long-term rentals to tourist apartments or seasonal lets amid tougher regulation.
In areas implementing price caps, therefore, the supply of rental properties has plummeted.
The largest drop has been recorded in Barcelona, where available long-term rentals have fallen by 69% over the past three years.
Bilbao follows, with a 60% decline, while Pamplona and San Sebastian both recorded decreases of 58%.
Among the major markets where prices remain unregulated, the drop in supply has been far smaller.
In Malaga, the number of long-term rentals has fallen by just 3% over the past three years, compared with 8% in Valencia and 9% in Alicante.
The problems do not end there, with competition for rental properties increasingly fierce.
According to Idealista, each rental property listed in Spain receives an average of 41 inquiries, marking a 119% rise since 2023.
Landlords therefore prioritise tenants with higher incomes and job security instead of selecting young people and middle-income families.
Three years on, Spain’s Housing Law has failed to ease pressure on the nation’s property market, with soaring demand and dwindling supply continuing to squeeze renters.
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