Rentals in the Canary Islands: cap imposed by the government on rents?

cap on rents in the Canary Islands

Some news begins to leak into the newspapers and it's already chaos: all the "the fun is over boys” ready to enthusiastically welcome this new political madness of the rent cap which, if it really goes through, will only bring further increases and inconveniences for those who are looking for a house to rent.

But, as always, let's try to go in order and start from the beginning.

Let's talk about the 2023 law

On May 25, 2023, the new Ley de Vivienda was launched which, among other things, provides for the possibility for municipalities to impose ceilings on rents in the so-called "tensionadas”.

What is a zone “tensioned”? It is an area subject to a particular risk of insufficient supply of housing for the population, determined by a series of parameters which take into account, among other things, the average amounts of rent and mortgage repayments, the income capacity of the citizens and of average price growth.

At the end of February this year, the official reference price index for residential rents was published, although only Cataluña has declared that it intends to apply it in 140 municipalities.

Now, after a few months, other municipalities are waking up who would like, through the autonomous government, to request the application of rent ceilings, declaring themselves "tension zone”.

Among these municipalities we can mention Bilbao or, to stay in our archipelago, Adeje And Las Palmas de Gran Canaria.

Is it the right choice to place a maximum ceiling on rents?

Fantastic, many will think, especially all those who are looking for a house to rent at a "sustainable" price. But things are not exactly as politicians would have us believe.

Let's leave aside colors and political ideas for a moment and try to make objective and constructive reasoning.

The first question that arises spontaneously is: but if the rent cap is the solution to the problem, why did only Cataluña join? And since in the Canary Islands it is not a problem that only affects Adeje and Las Palmas de GC, why aren't the other municipalities stepping up?

The answer to these questions is very simple and is mainly of a technical nature, rather than political: these measures the market doesn't like them, which has historically proven to react in a manner diametrically opposite to that hoped for. And, in the few cases where these measures have somehow survived over time, they have Always were accompanied by a series of incentives towards the owners.

Positive or negative effects?

The negative effects of price limitation policies have always been the same, wherever they were applied: reduction in supply, reduction in investments, collapse in the quality of housing, increase in the black market. In short, to put it in one word, these policies have always failed in their improvement efforts.

The dynamics have also been more or less always the same: an apparent improvement in the initial phase and an inevitable degeneration of the market in the medium and long term.

Albert Einstein defined madness as “keep doing the same thing over and over again, expecting a different result”. What yesterday Einstein defined as "madness", for today's society, is simply "politics".

Article by Marco Sparicius

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