Stifiling Rising Spanish Rent

Stifling Rising Spanish Rent

The effort by Spain’s Socialist government to control apartment rents is off to a rough start. Just 2 months after imposing rent-suppression measures, rents rose at a 7.5% annual pace 

The new rules for privately owned apartments in Spain were meant in part to counteract Airbnb-type rentals, but this isn’t a struggle just the Spanish are experiencing. In the United States, the government is struggling to remedy how to keep tenants from being priced out of their neighborhoods. Germany is going even further than Spain, with plans to freeze rents for 5 years and give tenants the opportunity to demand reductions.

In Spain, the new rules limit annual rent increases for five years to the inflation rate much to the distain of landlords, however after that period is over they can raise, or lower, them as they wish, in a new contract. 

“The big institutional investors are specialists, they’re opportunistic and will focus on where the outlook and conditions are most favorable,” said Joe Lovrics, who runs Citigroup Inc.’s Iberia markets desk in Madrid. “They look at these rules and say: ‘If this is permanent, we’ll look elsewhere.”’

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What are your thoughts on the measures the Spanish government is taking. Do you believe they will successfully keep the rent prices down? Join the conversation below!