Research by professors Sergio Nasarre and Santiago Ariste of the UNESCO Chair on the Right of Housing at the Rovira i Virgili University in Tarragona concludes that setting maximum rents reduces the availability of rental accommodation and distorts the market.
The analysis was commissioned by the Balearic Government, which is opposed to implementing rent caps. The government has argued, as have others, that applying caps leads to a reduction in availability. The report recommends incentivising landlords and developers to increase the housing supply, which is what the government has been advocating.
Nasarre and Ariste's research was based on a comparative study of the rental markets in the Balearics and Catalonia. Rent caps have been implemented in Catalonia in areas of high demand.
According to their findings, rent controls have had counterproductive effects on supply, reducing the availability of rental accommodation while encouraging options such as seasonal contracts, tourist letting, and renting by the room.
They warn that the experience of setting rent caps in Catalonia, as well as recent measures in several Spanish cities and various countries, has resulted in decreased residential mobility, withdrawal of properties from the market, reduced quality, and other adverse effects. "The Catalan experience confirms that price controls do not address the underlying causes of housing pressure but, in some cases, can intensify them."