NEWS

Effects of 12-month housing law in Spain: drop in supply and rise in prices

The introduction of Housing Law 12/2023 in Spain has led to a drastic drop in supply and an increase in rents. Although the law was meant to stabilise the housing market and guarantee affordable rents, the opposite effect has taken place.

Many owners have withdrawn their properties from the market for fear of the new rules and restrictions, causing the supply of rental properties to fall by more than 50 per cent in some areas. In urban areas, the impact has been even greater, with declines of more than 70% in some cities. This has led to a severe shortage of rental housing and rising rental prices.

Catalonia, one of the first regions to introduce stricter rental regulation, has experienced a significant drop in the supply of rental housing, with a drop of more than 80% in Barcelona. This trend is also observed in other major cities in the region, such as Tarragona and Girona.

The Constitutional Court has approved much of the Housing Act, but warned of the possible consequences of further expanding areas classified as ‘tense’. This could cause problems in the housing market and further reduce supply, potentially violating the constitutional right to property and the free-market economy.