The news out of Catalonia, which has implemented the nation’s most stringent rent control and punitive, anti-landlord taxation laws, is looking both complicated and simple. At first that sounds confusing but a deeper look at the numbers will demonstrate the point.
On the one hand, the introduction of rent control laws has led to a decline in average rents, which is being celebrated by the PSOE-led regional government. Across Catalonia as a whole, rents have declined by 3.7%. Within Barcelona, the most stressed market in the autonomous community, rents have declined by 6.4%.
These rent control laws were implemented as of March 2024 and the statistics were measured one year later. That is a significant price easing over a single year, especially given recent history.
According to a study by CaixaBank Research, rental prices had grown by 28% between 2015 and 2022, while incomes had only grown by 7%.
Housing has become unaffordable in Spain as a whole but especially in Catalonia. According to Funcas Research, 44.6% of households are spending more than 30% of their income on rent, compared to 38.2% nationally.
Catalonia also has amongst the country’s highest rate of rental vs owning. The community as a whole has a rental rate of 24.9%, according to the Bank of Spain, with Barcelona topping 30%. That means close to 15% of the population of Barcelona are living in economically stressed conditions due to rental costs.
However, the apparent decline in rents is a more complex phenomenon than it would at first appear.
Alongside this price decline, there has also been a sharp decline in the number of homes offered for long term rental contracts. According to an article on Spanish Property Insight:
“However, those gains [fall in rental costs] come at a price: liquidity. Rental contract signings in these areas have plummeted. Across the designated municipalities, new rental agreements dropped 21% from Q1 to Q4 in 2024. In Barcelona, the number of contracts declined 17% in the three quarters following the introduction of the price caps.”
Part of the reason for this, perhaps the major reason, is that landlords are switching to seasonal rentals to avoid rent controls. If they rent for less than 12 months, for instance to students, they can raise the rents above the rent control rates.
As a result, seasonal rental listings grew by around 37.5% in 2024. Because of that, the true listing price for rental housing in Catalonia and Barcelona grew by 12% and 14% respectively.
There is now talk of the regional government implementing measures to either apply the rent control laws to seasonal rentals or making it harder for landlords to offer seasonal rentals entirely.
It becomes a game of “whack-a-mole” where government legislators try to spot all the workarounds to their attempts at regulation – and stomp them out – only for clever landlords to discover other ones.
In the worst case scenario, the government is effective and this has the result not of making rents cheaper but of killing the rental market entirely. And this is more than just a hypothetical possibility.
For one thing, there is already evidence of an increase in landlords looking to exit the rental market entirely. An article on Spanish Property Insight, writing about a poll commissioned by Fotocasa, a real estate portal, found that this sentiment had jumped from 29% to 38% in just one year.
And the pressure continues to grow.
As of the end of June, 2025, the regional government of Catalonia began implementing a new property tax regime. For those buying properties above €600,000 the tax rate will rise from 10% to 11%, increasing up to 13% for properties purchased for greater than €1.5 million.
However, the more extreme aspect of the law is that which targets large landlords, such as institutional investors. From a previously flat rate of 10%, the tax rate has doubled to 20% for large landlords. It also targets anyone who purchases an entire residential building. The only exceptions are narrowly defined social housing projects.
But, if you were going to purchase a building in order to renovate, upgrade and then rent it, the Catalan government will now take 20% of your budget from you off the top. The result is that projects are being canceled.
They have also eliminated the 70% tax reduction for investors who purchase buildings to renovate and upgrade them before reselling them (aka flipping). This will suppress an already low rate of building upgrade. As the above-linked article in Idealista noted:
“…we have one of the oldest housing stocks in Europe, with a renovation rate of 0.2% (far from the 2-3% required by the European Union) and more than 9.4 million homes in urgent need of renovation.”
These disincentives to construction and renovation are especially upsetting because the true underlying problem that is causing a lack of affordable housing is the lack of construction. Research by BBVA found that Spain, at 2.3 housing starts per 1,000 inhabitants, is the lowest in Europe. For every new household that is formed in Spain, only 0.6 homes were built, leading to a chronic and growing housing deficit.
These policies are a stake through the heart of exactly the much needed boost to new home creation, housing upgrades. It ensures there will be no private sector increases to rental accommodations, especially in stressed urban centres, like Barcelona.
There’s no doubt that the situation for private landlords in Catalonia is difficult and getting worse. On top of the policies discussed above, Catalonia is set to outlaw all tourist apartment rentals by 2028.
That will eliminate an important source of economic growth and income for landlords in the region. And, given current sentiments, many of those apartments won’t be converted to long term rentals.
There is some hope that the new tax regime will be modified to address the concerns of landlords. This might include a return of the 70% tax rebate for investors who upgrade buildings.
The government also plans an ambitious public housing construction program. It was announced last October that they would invest €1.1 billion/year for the next four years to build 50,000 new public housing units.
It is true that Spain, at 2.3%, has the lowest ratio of public to private housing in the EU (which is 9.5%). And Catalonia is the worst in Spain, at 1.7%. If this plan is implemented – and that is a big if – it would boost Catalonia’s public housing stock significantly, though only to about half of the EU average.
Of course, initiatives that ease the crisis should be commended. But in this case, it looks like giving with one hand and taking away with the other. It makes little sense to remove rental housing from the market today with the intention to only replace it years from now based on a plan that won’t really even kick off until 2026, with some of the first housing only being completed in 2028.
View full article in Terra Meridiana