Spain’s rental price reference index sparks debate among industry groups
The government introduced a rental price reference index this Tuesday, aiming to address concerns about soaring rents. Since its announcement as part of the Housing Code nine months ago, the index has been met with strong resistance from industry stakeholders who worry it could hamper the rental market. Market observers describe the index as a tool to guide rents for new lease agreements by providing indicative values, though doubts persist about its effectiveness in curbing excessive prices.
One of the earliest voices to challenge the measure was the real estate portal apartments.com, which questioned how well the index would work in practice. Ferran Font, the portal’s Research Director, warned that the measure could slow down the introduction of new rental properties that have not yet been listed for at least five years, since landlords would be bound to adhere to reference prices. He noted a sizable gap between current market prices and reference figures, suggesting that the incentive for property owners to bring properties onto the rental market would be limited.
Beatriz Toribio, General Secretary of the Association of Promoters and Builders of Spain (APCE), criticized the government’s housing policy as poorly directed. She argued that the shortage of rental housing is what pushes prices higher, and, given this dynamic, the difference between offer prices and final rents could remain narrow. She urged the public to recognize that the index may not reflect the market’s true conditions and predicted discord between landlords and tenants. To bolster her position, she promoted the idea of forming a Housing Observatory in collaboration with the CEOE to focus on housing supply rather than price alone, arguing that price caps could restrict supply.
The real estate portal photo house aligned with the same concern, stressing that a lack of supply is a primary driver of higher prices. The portal warned that the index could be intrusive for landlords and might lead to a contraction in the supply of rental housing. It argued that property owners typically seek maximum profitability, and price limits could deter them from listing new properties during a period when rental stocks are already tight.
Iñaki Unsain, a manager at the consulting firm ZMA Real Estate Management, contends that reduced supply would disproportionately affect households with lower purchasing power. He described the measure as a big mistake, predicting that intervention would not only lower prices but also shift investment to other regions and alter the types of rental contracts offered.
Related coverage includes a study by professors José Garcia Montalvo and Josep Maria Raya, along with research fellow Joan Monras from Pompeu Fabra University and the Federal Reserve Bank of San Francisco. The researchers questioned the measure, asserting that the root problem behind rising rents in major cities is primarily a shortage of supply driven by increased demand, rather than market power alone.
The index will be applied in areas deemed stressful. These areas are defined as places where the average rent exceeds 30 percent of the average household income and where rents have risen by more than 3 percent relative to the Consumer Price Index. The policy targets larger landlords, defined as those with more than five or ten homes depending on the autonomous community, or homes that have remained off the rental market as primary residences for the past five years. Autonomous communities themselves will designate the areas considered problematic. At present, Catalonia has requested such designation, with implementation scheduled for March 13, as part of the rollout plan.
According to observers, the measure seeks to influence market dynamics by identifying stressed areas and adjusting expectations for rents in newly listed properties. Yet critics argue that the solution lies in expanding housing supply rather than micromanaging rent levels. The ongoing debate highlights the tension between policy aims to stabilize housing costs and the practical realities of landlord decision-making and market availability. The discussions continue as lawmakers and industry stakeholders monitor the impact of the index on rental activity and regional price trends. (Attribution: policy brief analyses from multiple academic and industry sources.)