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The effect of second generation rent controls: New evidence from Catalonia

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Abstract

Catalonia enacted a second-generation rental cap policy in late September 2020. The policy affected some municipalities but not others, and within those, only the units above a certain reference price. Using micro-data on rental units, we analyze the effect of the policy on both rental prices and rental supply. We find that the policy led to a reduction in rental prices of around 5 percent. Half of this price decline is due to changes in the composition of units available in the market, particularly in larger municipalities. The policy also led to a decline in the amount of rental units available in the market. Using variation from the policy change, we compute a rental housing supply elasticity of around 4.

Suggested Citation

  • Joan Monràs & José Garcia Montalvo, 2021. "The effect of second generation rent controls: New evidence from Catalonia," Economics Working Papers 1836, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2022.
    • Handle: RePEc:upf:upfgen:1836
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    Cited by:

    1. Jan David Bakker & Nikhil Datta, 2024. "Avenging the tenants: Regulating the middle man's rents," CEP Discussion Papers dp2019, Centre for Economic Performance, LSE.
    2. Lukas Hauck, Nicola Stalder, Simon Büchler, Maximilian von Ehrlich, 2025. "Incidence, Allocation, and Efficiency Costs of Tenancy Rent Control," Diskussionsschriften dp2507, Universitaet Bern, Departement Volkswirtschaft.
    3. Jofre-Monseny, Jordi & Martínez-Mazza, Rodrigo & Segú, Mariona, 2023. "Effectiveness and supply effects of high-coverage rent control policies," Regional Science and Urban Economics, Elsevier, vol. 101(C).
    4. Morin, Yoann & Regnaud, Martin & Breuillé, Marie-Laure & Le Gallo, Julie, 2025. "PARIS2019: The impact of rent control on the Parisian rental market," Journal of Housing Economics, Elsevier, vol. 70(C).
    5. Lorenzo Vidal & Javier Gil & Miguel A Martínez, 2024. "Accommodating ‘generation rent’: Unsettling dominant discourses on rental housing reform in Catalonia and Spain," Urban Studies, Urban Studies Journal Limited, vol. 61(11), pages 2060-2079, August.
    6. Kholodilin, Konstantin A., 2024. "Rent control effects through the lens of empirical research: An almost complete review of the literature," Journal of Housing Economics, Elsevier, vol. 63(C).
    7. Bakker, Jan David & Datta, Nikhil, 2024. "Avenging the tenants: regulating the middle man's rents," LSE Research Online Documents on Economics 126810, London School of Economics and Political Science, LSE Library.

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    Keywords

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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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