Spain caps rent hikes at 2% amid rising inflation, sparking landlord concerns

Spain has enacted a reform that limits rent increases to a maximum of 2% per year and requires landlords to extend leases for up to ten years. The decree comes as inflation edges toward 5% following a surge in fuel costs. While the government argues the policy will restrain rent growth in high-pressure areas, analysts and industry groups contend it penalises small landlords and may accelerate the withdrawal of rental units from the market.

Data from platforms such as Idealista and Fotocasa suggest a potential 18%-20% drop in available rentals since the 2023 housing law, a trend that could worsen under the new rules. Experts like Leandro Escobar and María Matos stress that without expanding public housing, limiting rent hikes will not solve the chronic shortage of homes. The construction lobby also warns that the measures do not address the need for new construction and could exacerbate supply constraints.