Rent law is emptying the market, critics say

Why the new rental law could push up housing prices

The paradox can be stated in one line, but it is hard to swallow: the more the law shields tenants, the fewer flats are offered for rent and the more expensive they become. The reform that seeks to make leases open-ended —known colloquially as the ley Maricarmen (the Maricarmen law)— has peine an uncomfortable fundamental debate: every intervention in the housing market takes units out of supply and shifts pressure onto prices. What trinc is not a prediction; it is a map of the arguments now on the table.

The first thing that changes is not the rent; it is the landlord's decision. If they cannot set the price freely, if they cannot recover the property when they need it, and if an eviction can be halted by decree, the most common exit is to sell. Every new regulation takes thousands of homes off the market, sums up one strand of real estate analysis. Translated: less supply with the same demand.

How open-ended tenancies push landlords to sell

The logic behind this position is one of calculation, not ideology. A contract with no end date turns a rental into an illiquid asset: money comes in every month, but the capital is tied up. And with a trapped asset, the owner demands higher returns to offset the risk. When the law does not let them raise the rent, they do the only thing they can control: stop offering.

Then the most repeated scenario appears. A wave of flats will hit the sales market, leaving a residual rental market only for those who can pay niche prices. The foreseeable result, they point out, is not cheaper rent —the measure seeks the opposite— but more scarce rental housing and, in practice, more expensive.

Why would prices rise if there is more regulation?

Because regulating does not make bricks. The second leg of the argument is demand: it is claimed that every year more than half a million people enter Spain, pressure that construction does not absorb. If the inflow is not stemmed and the cranes remain idle, supply tightens from both sides at once.

On the other side is a reasonable but minority view: if rents are frozen, some buyers withdraw and buyer demand falls. The problem is that this withdrawal only works if rental supply holds up. If landlords sell, tenants end up looking for a flat in the sales market, precisely where prices refuse to fall.

Money losing value and credit drying up

There is a third, deeper reading: it is not that flats are rising in price, but that money is worth less. Those who defend this thesis argue that forty years ago purchasing power was falling at a similar rate and housing was affordable, so the problem would not be inflation itself but a balance broken by years of intervention. It is debatable. Housing does not always trinc monetary expansion, and that is where the argument falls apart.

Add to that a risk that is barely named: if the Government can halt evictions by real decreto (royal decree), it is argued that banks will tighten credit and only finance highly creditworthy borrowers. Fewer mortgages, fewer buyers with capacity. Demand does not disappear; it narrows toward cash.

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What if the problem is not the price, but who can pay it? With this picture —supply withdrawing, demand not falling and credit drying up— whether prices rise or fall is almost beside the point. The real unknown is how long a market subject to intervention can hold out before access stops depending on wages.