Spain’s housing crisis: a lesson for Czechia and the rent cap trap

The Spanish government tried to solve the housing crisis with tough decrees on rental housing, but parliament rejected them, and the country now faces early elections at the end of November. In Czechia, the author of a business column argues, there is already experience with this: rent regulation does not create new apartments.

The trigger was the story of 87-year-old Maricarmen Abascal. The new owner of the building where she had lived for seven decades tripled her rent, and in September she was forcibly evicted. For outraged Spaniards, it was the last straw.

What the Spanish government proposed

The scale of the problem is clear from the numbers: in 2025, Spain formed about 240,000 new households, but only about 92,000 apartments were completed. By some estimates, the market is short of at least 700,000 apartments, and rents have doubled on average since 2016, from roughly eight to more than 15 euros per square metre.

The cabinet issued two decrees: a ban on evicting vulnerable tenants until 2030, a two-year extension of contracts expiring before the end of 2028, automatic five-year renewal of contracts (seven if the landlord is a company), compensation equal to 12 monthly rent payments if the owner declines to renew a contract without serious cause, and a cap on rent increases of two percent a year, with inflation at 4.9% in September according to the INE statistics office. All of this with retroactive effect, for contracts already signed.

Why regulation doesn’t work

Retroactivity is the riskiest part. Berlin froze rents in 2020, and, according to studies at the time, the supply in the regulated segment fell by about half. A year later the federal constitutional court struck the law down, and tenants had to pay back the savings retroactively.

This is not the first time Spain has tested this on itself. After the pandemic, a ban on evicting vulnerable tenants appeared, while coastal property increasingly attracted foreign buyers. In response, higher taxes on holiday homes and tourist rentals were introduced. Added to that is the problem of “inquiokupas”: tenants who stop paying but do not move out. The court process drags on for months, and the owner pays for electricity and water out of their own pocket the whole time. According to Spanish media estimates, housing supply fell by 20 percent during Pedro Sánchez’s three years in power.

The Czech experience and what to do

Czechia has already been through this lesson. Regulated rents in the socialist era produced two markets: people with old contracts paid laughable sums, new tenants paid noticeably more, and regulated buildings decayed because there was neither money nor motivation for repairs. Deregulation was phased in and finished at the end of 2012. It was politically painful, and when the Communists later proposed bringing back general rent regulation, the Chamber of Deputies rejected it already in the first reading.

The only way out is to build more, and Czechia has work to do here too. The column’s author gives a personal example: changing the zoning plan for a family housing project of three thousand apartments took 17 years. Appeals, repeated procedures at different authorities and the NIMBY effect — “everyone wants cheap housing, just not next to them” — cause the delays. Part of the barriers should be removed by the new building act, which was passed this year and takes effect next year.

In addition, municipalities need to be motivated to support new construction. At present it does not pay off for a mayor: the budgetary allocation of taxes depends on the number of registered residents, while new residents and businesses are, for the municipality, primarily costs for waste, kindergartens, schools and services. That is why the “Second Economic Transformation” initiative calls for this incentive to be taken into account in the revision of tax allocation mentioned in the government’s economic strategy.

Maricarmen’s story ended sadly: under public pressure, the landlord agreed to return her to the apartment where she had lived as a girl with her parents, but she never went back. On Thursday she died in hospital at the age of 87. Catalan premier Salvador Illa wrote on the social network X that her death had deeply affected everyone and that politics cannot tolerate any form of inhumanity.

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Around Prague, based on reporting by seznamzpravy.cz