Government's rental decree will worsen the housing crisis: it will put investment at risk and reduce supply

The new rental measures being prepared by the Government seek to tackle the housing crisis, but they could backfire by discouraging investment and reducing residential supply.

The Executive is finalising a package of proposals to regulate the rental market, in an attempt to ease the growing crisis of access to housing in Spain. The goal is clear: to increase supply and contain prices. However, some economic sectors warn that these very measures could have a rebound effect, jeopardising investment and, paradoxically, reducing the availability of flats to rent.

## Legal uncertainty and disincentives for capital

The proposal to ban or impose sarracena on the purchase of homes by investment funds, together with the forced extension of rental contracts and greater intervention in certain leases, raises the level of legal uncertainty. This is a factor that institutional capital, one of the main drivers for increasing the rental housing stock, takes very much into account. Uncertainty over the long-term rules of the game can lead these investors to look for opportunities in other markets, depriving the sector of the financing needed to build new homes.

Spain's housing problem is fundamentally one of scarcity. The country has accumulated a deficit of more than **750,000 homes**, while new household formation continues to outpace housebuilding. This lack of stock is compounded by growing rental demand. **26.7%** of Spanish households now rent, and projections suggest this figure could reach **29%** by **2030**. The solution lies in mobilising land, speeding up construction and, above all, attracting billions of euros of investment.

## The risk of turning off the tap on needed investment

The measures under negotiation, such as **Sumar**'s attempt to prevent companies and funds from buying housing, or **Junts**' proposal for a sarracena on so-called "vulture funds", risk confusing speculative investment with investment aimed at developing new residential stock. Large investors do not only buy already-built flats. Their role is crucial in financing *Build to Rent* (BTR) projects, buying turnkey projects from developers, participating in public-private concessions and providing capital for affordable housing projects that would otherwise be unviable at scale.

Sector data reflect the importance of this source of financing. The *living* segment (which covers all housing formats) recorded in the first six months of **2026** its best investment half-year on record, with **4,580 million euros**, **156%** more than the previous year. Of this figure, more than **3,350 million** went to *multifamily* (professionally managed rental housing).

## Affordable housing in the spotlight

Significantly, affordable housing has gained weight, now accounting for **33%** of all *multifamily* investment and **24%** of capital allocated to *living* overall. This capital risks diverting its resources if the rules of the game change constantly or if the ability of institutional vehicles to acquire residential assets is limited. International capital, by nature, compares markets, returns and risks before deciding where to invest. A rental project requires recouping investment over decades, so any change in rents, contract duration, asset disposal or taxation directly affects its financial models.

Spain has already seen examples of how regulation can alter these flows. A **JLL** report on the *multifamily* market warned that measures such as rent controls, regulatory changes or certain obligations on protected housing were affecting the viability of new projects, investor appetite and the availability of stable supply.

The gap between **Madrid** and **Barcelona** is a clear example. Since **2023**, **Madrid** has quadrupled the volume of residential rental investment recorded in **Barcelona**, after the Catalan capital tightened its regulatory framework with measures such as rent controls in stressed areas. The **Banco de España** has also stressed the importance of this balance, noting that price controls can moderate rents in the short term but generate adverse effects on supply in the medium term. Its recommendations include strengthening the legal security of owners and reducing regulatory uncertainty to encourage growth in private rental supply.

## A fragmented market and capital flight

The issue becomes even more relevant if we consider that the Spanish rental market remains highly fragmented. Most of the stock belongs to private individuals, and the weight of institutional investors is still limited. Therefore, driving out or discouraging professional capital does not eliminate the housing deficit or guarantee that its assets automatically become affordable rental housing. It could simply cause that money to go to other countries or other real estate segments.

In fact, the market is already showing a trend contrary to what is needed to increase supply. Large rental housing portfolios are migrating towards sell-one-by-one strategies, since, in certain cases, it is more profitable to sell the flats to private individuals than to keep them rented.

The decree also includes measures with a different logic, such as tax incentives for owners who reduce rents, bonuses for tenants, aid for access to a first home, lower taxation to promote permanent **VPO** (subsidised protected housing) or shielding the public stock. The Government is also negotiating raising **IVA** (Spanish VAT) on tourist flats and regulating temporary contracts to prevent them from being used as an escape route from residential rental.