The rent control paradox: a quasi-experimental evaluation of Spain’s Housing Law 12/2023 in Catalonia (2023–2025)

Abstract

Purpose: This study aims to evaluate the impact of Spain’s Housing Law 12/2023 on the rental market, exploiting the fact that Catalonia is the only autonomous community that has activated the regulation of stressed residential market zones. The selective, discretionary adoption of a national law under a multilevel governance framework distinguishes this setting from previous city-level or uniformly applied rent-control reforms, and constitutes the analytical lens of this paper. The paper examines whether rent containment mechanisms have moderated price growth and how they have affected rental housing supply and demand pressure. Design/methodology/approach: A quasi-experimental difference-in-differences (DiD) design is implemented using data from the Rental Housing Barometer for the period 2019–2025. Catalonia is defined as the treatment group and compared with three structurally similar regions that have not implemented the regulation: Madrid, the Valencian Community and Andalusia. The design is operationalized as a two-way fixed-effects (TWFE) regression with region and period fixed effects, and standard errors clustered at the region level. The authors complement the TWFE estimator with event-study checks of pretreatment parallel trends, placebo tests on alternative control regions and a provincial-level analysis. The analysis considers rental supply, listed prices and demand pressure, combining descriptive evidence with statistical inference at both regional and provincial levels. Findings: The results are consistent with a significant relative contraction in rental housing supply in Catalonia following the activation of the regulation, alongside a more moderate increase in listed prices compared with control regions. The supply reduction is economically substantial and statistically significant, while demand pressure increases sharply. A DiD estimation applied to demand pressure confirms a large and highly significant relative increase in Catalonia, reinforcing the interpretation of supply-side rationing. Although listed price growth appears partially contained, the contraction in available housing suggests that the regulation may have generated unintended market distortions. Research limitations/implications: The analysis relies on data from real estate platforms and does not distinguish between dwellings withdrawn for temporary rental, sale or vacancy. In addition, the limited number of pretreatment observations constrains the empirical verification of the parallel trends assumption inherent to the DiD design. The small number of treated provinces (four) further limits the statistical power of disaggregated tests, and the results should therefore be interpreted as local to the Catalan institutional setting rather than as fully generalizable estimates. Future research should examine housing flows between different market segments and evaluate the distributional effects of the regulation. Practical implications: The findings highlight the importance of complementing rent regulation policies with measures aimed at expanding housing supply, such as public housing programs, incentives for private investment and regulation of alternative rental segments (notably short-term tourist rentals and temporary leases, which fall outside the scope of Law 12/2023). Social implications: While rent containment policies are designed to improve housing affordability, the reduction in available rental housing may increase competition among prospective tenants, as reflected in the sharp rise in contacts per listing documented in Section 4, and potentially worsen access conditions for vulnerable groups, specifically young adults attempting to leave the parental home, low-income households, single-parent families, migrants and temporary workers with limited credit history, who are less able to meet the stricter informal screening requirements that emerge in a rationed market. Originality/value: This paper provides the first comprehensive quasi-experimental evaluation of Spain’s 2023 national housing law using postimplementation data. Its distinctive contribution is not merely an empirical replication of the Berlin or San Francisco findings, but the explicit use of a multilevel governance setting in which a national law is selectively activated by a single subnational government. This institutional configuration, rare in the international literature, allows the effects of the regulation to be separated from contemporaneous nationwide shocks (inflation, monetary policy, postpandemic adjustment) that contaminate most city-level evaluations. By leveraging the asymmetric territorial application of the regulation, it contributes new empirical evidence to the international debate on second-generation rent controls and their effects on housing market dynamics.