After capping this year's annual increase on leases at
2%, the government has proposed a bill limiting it to 3% for
2024 in areas where rents are rising significantly, while it
plans to work out a new index to update rental contracts less
susceptible to upticks in inflation.
"Economic studies show that price controls can have
adverse effects on rental supply, both in terms of quantity and
quality, so, ultimately, far from making rental housing cheaper,
they end up leading to higher price levels," De Cos said in a
speech published on Wednesday.
Following a decline of between 3.5% and 4% in 2021,
according to real estate websites cited by the Bank of Spain,
rents rose between 7% and 7.5% in nominal terms in 2022, but it
said real offer rental prices remained below 2020 levels when
taking into account the accumulated inflation.
De Cos said that in this context, it would be essential to
rigorously assess the ability of this new regulation to
effectively achieve its objectives.
The government is trying to increase the supply of public
housing, which at 300,000 homes is just 3% of total housing
compared to 9% in the European Union.
(Reporting by Jesús Aguado, editing by Andrei Khalip)
MADRID, May 10 (Reuters) - Caps on rents imposed by the
Spanish government could defeat their purpose and lead to higher
lease prices, Bank of Spain Governor Pablo Hernandez de Cos
warned on Wednesday.
Rising housing costs are set to become a key campaign issue
as Spain gears up for regional ballots on May 28 and a general
election at the end of the year.
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