The agreement between the Government and the Comuns to unlock the budgets bets once again on the same design error that has been straining rentals for years: stimulating demand and restricting supply. In housing, this combination is not “social”; it is inflationary.

First, rental assistance increases from 200 to 300 million (a 100 million increase) and the income threshold to access it rises from 25,000 to 36,000 euros. In economic terms, this is a transfer that increases tenants' ability to pay in a market with rigid or diminishing supply. When supply cannot respond quickly —due to lack of available stock, legal uncertainty, or regulatory costs— the subsidy filters into prices: the equilibrium rent rises and part of the aid ends up captured by the market itself. The typical result is a temporary relief for some households, but more general pressure on prices and, therefore, more need for subsidies in the next round. It is a known spiral: the State tries to compensate with public spending for what its own policy has made more expensive.

The structural cause is supply. Rental housing is not a “magical” good: it is created when the owner perceives that the profit-risk ratio is reasonable. If you increase the risk (defaults, occupation, slow procedures) and also raise regulatory uncertainty (caps, purchase/use restrictions, constant changes), what falls is not “greed”: supply falls, because capital is reallocated. And here we are not just talking about large investors; we are mainly talking about the average owner.

The second block of the agreement, presented as a “fight against speculation”, seeks to limit purchases in tense areas through municipalities, with a scheme of permits and restrictions based on the type of owner and type of purchase. From an economic point of view, this introduces three very predictable effects:

1. Regulatory Risk Premium
   Each restriction and each discretionary criterion adds uncertainty. And uncertainty translates into a demand for a higher return to invest. If the return does not compensate, the investment does not occur. In rental housing, “not investing” means: not buying to rent, not rehabilitating, not placing on the market, or simply selling. Result: less effective supply.

2. Segmentation and Inefficiency
   By imposing what can be bought, where, and for what use, the market stops allocating housing to the most valued use and starts allocating it to the permitted use. This generates inefficiency: poorly used assets, transactions that do not occur, and less mobility. In a tense market, mobility matters: if it is costly or uncertain to move capital towards rental housing, scarcity becomes chronic.

3. Substitution Effects (displacement, not solution)
   Capital does not disappear: it displaces. Part goes to other territories, part to other assets, and part to modalities that evade the most burdensome framework (sale, seasonal rental, own use, etc.). That is, you do not reduce the “problem”: you change its form and reduce the long-term supply, which is precisely the most necessary.

Moreover, the data contradicts the simplistic narrative of the “professional landlord”. According to the Bank of Spain, around 92% of long-term rental housing is in the hands of individuals. And according to the Secure Rental Foundation, 93.4% of individuals who rent have one single property; 5.3% have two; and only 1.3% have three or more. Translated to political economy: when you regulate “against the large ones”, in practice you are raising the cost and risk for a market that massively depends on small providers. And in an atomized market, if you scare away part of those providers, the impact on the overall supply is immediate.

The package, therefore, is poorly calibrated:

• on one hand, it aims to discipline a phenomenon (investment) which is a necessary condition to increase supply;

• on the other hand, it compensates with subsidies for the price increases caused by the restrictions;

• and in the middle, it creates a risk environment that disincentivizes exactly the behavior you need: putting stable rental housing on the market.

If the real objective were to lower prices, the economic logic is the opposite: reduce risk and increase supply. This implies legal security against defaults, agile procedures, regulatory stability, and a framework that rewards long-term rentals. With more supply, the price decreases through competition. With more subsidies and less supply, the price increases due to scarcity. It is not ideology: it is market arithmetic.

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