Podemos proposes a 40% rent cut by law

Cutting rent by 40% by law: Podemos's plan and its flaws

"To crush the right." With this slogan, Podem València presented a decalogue of eight measures. The second – cutting rents by 40% by law – is what has peine the economic can of worms, as it directly impacts a market already struggling with a fundamental problem: a shortage of housing.

The package is completed by reform of the CGPJ (General Council of the Judiciary), public economic control, regularization of migrants, banning Desokupa (an anti-squatting group), a referendum on the monarchy, blocking ship traffic to Israel, and a shift in position on the Sahara. Eight points that read more like a campaign program than a government plan. The uncomfortable question is always the same: who pays the difference?

What fixing a maximum rent price means

Fixing a maximum price by decree does not create housing: it redistributes what already exists. If the reference price drops by 40% and demand remains the same, the result is not that everyone pays less, but that there will be more candidates for each apartment and some criterion – explicit or not – for choosing a tenant. In a market with scarcity, the cap does not eliminate bidding. It displaces it.

On paper, someone paying 1,000 euros today would pay 600. That 400 euro difference is also the exact size of the incentive to seek alternative formulas: off-contract payments, surcharges for furniture, or for annexes. Some argue that the money will eventually come out the back door; against this is the argument that, without intervention, the price does not fall as quickly as social urgency demands.

The precedent of social housing: official price and cash payments

The most repeated objection – and the hardest to refute – is historical. Social housing had prices fixed by law for years. Officially, that price was always respected. Unofficially, the buyer gave cash gifts to secure the apartment. The transaction was formalized informally, and the difference was paid separately.

The lesson is uncomfortable for any price cap: a mandatory price system is only sustainable if the state becomes much more intrusive, with permanent inspection. And even then, the market finds a way. If control is total, the unintended consequence is often corruption within the very agencies overseeing the control.

Less supply and more undeclared rentals

The second effect highlighted by the most critical analyses is the flight of supply. A landlord whose rent is legally reduced by 40% and who faces legal uncertainty has two options: sell or take the apartment off the market. Both reduce the number of available homes, which is precisely the starting problem.

From there to undeclared contracts is a single step. Less legal supply, more pent-up demand, and a cap that no one respects when the real price is much higher: the classic recipe for the undeclared portion to grow. Breaking down how much is lost for each home that leaves the legal circuit is not a pleasant exercise.

The landlords who aren't in the picture

There's a statistic that often gets left out of the narrative: more than 70% of Spaniards own the home they live in. Rental policy is designed as if the country were a nation of tenants, when the majority pay a fixed mortgage and watch from the sidelines.

Added to this is the rental taxation for those living abroad. A non-resident renting out their Spanish property pays 24% of the gross income as IRNR (Non-Resident Income Tax), without deducting expenses: not mortgage, not renovations, not community fees. With a forced 40% reduction and that tax regime, the result is a negative return in many cases. The landlord who still holds on is often the small saver who bought an apartment to supplement their retirement.

From parliamentary group to taxi: electoral arithmetic

Podemos once had 71 seats in Congress. Today its influence is measured on a different scale, and every announcement is seen as an attempt to regain attention and votes. The composition of its electorate, the distribution of space to its left, and the proximity of elections explain proposals launched on social media rather than in the Official State Gazette.

The pattern is familiar: the narrower the electoral base, the louder the volume. The measure doesn't need to be applicable; it needs to be recognizable and mobilizing. And on an issue like housing, with prices at the center of public conversation, the headline is free.

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The underlying problem – a shortage of homes, too many candidates for each one – is not solved with a number in a decree. Building more, making land cheaper, or streamlining permits are slow, invisible answers without a headline. Cutting rents by 40% by law is fast, free, and sounds like a victory. That's where the analysis gets stuck: no one has yet explained who is covering the 400 euros that are missing each month.