Spain’s Rent Control Is Failing—Argentina Shows a Better Way

Marcos Falcone

On Friday, March 20, in light of the Iran war, which has pushed up energy and other prices, Spanish Prime Minister Pedro Sánchez announced measures to lower the cost of living. Rent control was included among those measures, even though it is already failing in Spain. 

Reportedly under pressure from one of its left-wing coalition partners, Sánchez decreed a nationwide contract extension at current prices for rentals about to expire, effectively amounting to a rent freeze. He has also instituted a 2 percent annual cap on rent increases through the end of 2027, which will apply to existing contracts currently indexed to inflation.

Ironically, a report published by the Instituto Juan de Mariana the same week as Sánchez’s announcement shows the extent of the harm that various forms of rent control are already causing in Spain. Following the introduction of rent caps in the region of Catalonia in 2024, the supply of rental housing has declined by 23 percent. Even more dramatically, the city of A Coruña and the region of Navarra saw rental supply fall by 44 percent and 51 percent, respectively, only six months after they designated certain areas as “stressed” housing markets and also imposed rent caps. In a country with an estimated deficit of 700,000 housing units, rent control is making things even worse.

Rent control in Spain not only cuts supply but also fails to improve conditions for renters. As the Instituto Juan de Mariana shows, wherever rent control has recently been introduced, average rental unit space has decreased, and prices per square meter have either stayed the same or increased—in Barcelona, for example, prices reached a record high in the third quarter of 2025.

The Spanish experience contrasts sharply with Argentina’s, which has adopted the exact opposite approach since Javier Milei became president in December 2023. Before then, listings had plunged by 53 percent following the passage of a rent control law in 2020. But after Milei repealed it ten days after taking office, supplies rose by a staggering 180 percent less than a year and a half later. (My colleague Ryan Bourne and I documented that extensively here). As of December 2025, rentals in the city of Buenos Aires were still almost 30 percent down in real terms from two years before, and supply has not declined.

Rent control does more harm than good, as Ryan Bourne explains in The War on Prices. Hopefully, Spain will correct course as Argentina did before things get much worse.