Effectiveness of Rent Controls: Evidence from Spain

TL;DR

This study empirically evaluates the 2024 rent control policy in Catalonia, revealing short-term impacts such as fewer tenancy agreements and moderated rental price growth, while noting data limitations and robustness issues.

Contribution

First empirical analysis of Catalonia's 2024 rent control policy using municipality data and difference-in-differences methods.

Findings

Reduction in tenancy agreements

Moderate decrease in rental price growth

Short-term effects with data limitations

Abstract

Growing concerns about housing affordability have prompted the adoption of rent control policies and renewed debates over their effectiveness. This paper provides the first empirical evaluation of the 2024 rent control policy implemented in Catalonia under Spain's new national housing law. To identify the causal effect of the policy on the rental market, I use municipality-level administrative data and implement several difference-in-differences strategies and event study designs. The results point to a reduction in tenancy agreements and a less robust decrease in rental price growth. While the findings highlight important short-term consequences of rent control, they also underscore the need for caution due to data limitations and limited robustness in some estimates.