Rent cap in A Coruña, Spain: prices down 1%, supply down 27%

Rent cap in A Coruña: prices 1% cheaper, supply 27% scarcer

One year after A Coruña became the first Galician city to be declared a stressed residential market area, the results are a cold shower for supporters of the intervention. Average rents have fallen by a meagre 1%, while the supply of rental homes has plummeted by 27%. The measure, championed by Socialist mayor Inés Rey, was meant to curb rising rents, but the balance sheet suggests the remedy may be worse than the disease.

Why is supply shrinking?

The mechanism is well known: by capping prices below the market equilibrium, many landlords prefer to withdraw their flats from the rental market or push them into the black market. The lack of effective inspections and penalties —as some analyses point out— leaves gaps that the regulation does not cover. The result is that tenants find fewer options, and those available often come with harsher conditions. Some argue that without thorough enforcement, stressed areas only make the market tighter.

Testimonies from people with experience in other countries illustrate how tenants can work around caps through strategies that ultimately equalise the real cost. In controlled markets, loopholes are possible on both sides, and the final price creeping back toward the market level is the norm. The anecdote of a tenant in Sweden who negotiated outside the contract —ending up paying the same as without the cap— shows that intervention does not always protect tenants as expected.

The debate over the verdict

Critics of the measure make no attempt to hide their scepticism: if supply has contracted by 27% and prices have barely moved, the intervention has failed in its main objective. Its defenders argue that the lack of enforcement prevented it from working, and that stricter controls could correct the unintended effects. But with the data on the table, the question that remains is whether the price of a marginal rent reduction is worth losing a quarter of the available supply.