Spain’s new Housing Law flops

Raymundo Larraín Nesbitt, November, 1. 2023

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Surprise, surprise. Who would have guessed?

I dislike writing articles such as this one in which – unfortunately – we are proved right over time. But don’t take my word, almost every specialist working in real estate for decades could have also told you on reviewing the draft law that it was doomed to fail, as it in fact has.

Mark Stucklin, director of Spanish Property Insight (Spain's leading property think tank),  published a nice take on this topic: New Housing-Law has crashed the rental market in just six months - 29th October 2023.

You also have interesting opinions from the Spanish financial press on this topic: Renting in Spain: Mission Impossible.

On the 26th of May 2023 Spain's new Housing Act was approved, which introduced a spate of changes to rental laws that apply nationwide. The self-declared purpose of this law was to significantly reduce the price of lettings across the board, introducing a state intervention on prices (rental prices are capped in some areas). This was done with a lofty goal in mind, to assist  vulnerable collectives, such as youngsters, and elderly persons, on low wages or on precarious pensions.

To cut a long story short, we repeatedly analyzed and explained - through multiple articles - why the new proposed measures introduced by this law were in practice a bad idea (polite understatement) and how it would prove counterproductive for the overall rental market, despite the goal being good.

The road to hell is paved with good intentions.

As examples:

Government to introduce rental control in 2021 - 28th October 2020

Spain’s new Housing Act - 5th November 2021

A brief look at Spain’s new Housing Act - 8th November 2021

Spain to approve new Housing Act - 12th February 2022

Lo and behold, six months later we can affirm that this new law is a (total) failure. I know, shocking.

If anything, this new law has made matters (much) worse for prospective tenants, specifically for struggling collectives (read financially challenged).

I really wish the government listened to experts at times, removing its ideological bias which blinds it, before rashly enacting such ideologically-motivated laws that in practice fall flat on their face, making matters worse for us all; specifically for the vulnerable collectives it sought to protect.

So, what now?

Is anyone going to be held accountable for this failure?

Is anyone going to be held responsible for making rentals MUCH more expensive, as landlords have in effect greatly reduced the offer available increasing rental prices as a result (following the law of demand and supply)?

Of course not, this is Spain! No one ever resigns, for any reason.

They’ll just blame it on 'evil' foreign speculators and on ongoing wars to hide their own incompetence and shortcomings. It’s always someone else’s fault, right? In the public sector this is how they roll, no pasa nada. In the private sector, people would get fired over botching Spain’s rentals market.

Ah politicians, you gotta luv’em; they spice up our lives like the clowns they are.

Ah well, life goes on.

 

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