Santiago de Compostela and six other northern cities now face rent price caps. Over 9 million people live in areas with these controls. The move sparks debate between local and regional authorities.
Santiago de Compostela has become the latest Spanish city to introduce rent price caps, following its official designation as a stressed rental market by the Ministry of Housing. The measure, published in the Boletín Oficial del Estado (BOE), also applies to Gijón, Avilés, Llanes, Gozón, Cabrales in Asturias, and Basauri in the Basque Country. With these additions, a total of 317 municipalities across five autonomous communities—Catalonia, Euskadi, Navarra, Galicia, and Asturias—now operate under this regulatory framework, affecting an estimated 9.3 million residents.
The new status means that all new rental contracts in these areas must reference the previous contract's price, with increases only allowed in specific cases, such as significant improvements to the property. For properties owned by large landlords—defined as those holding more than ten homes, though regions can lower this threshold to five—the restrictions are even tighter. The law requires regional administrations to request the declaration, and in Galicia, Santiago de Compostela becomes the second city after A Coruña to adopt the measure. Notably, both cities are governed by parties other than the PP, which has criticized the policy, yet Galicia's PP-led regional government is the only one from the party to allow the controls to proceed.
Local officials in Santiago, including mayor Goretti Sanmartín of the BNG, describe the rent cap as a crucial tool to address the city's housing challenges. The influx of tourists and the presence of Galicia's largest university have intensified demand, making it increasingly difficult for both residents and students to secure affordable accommodation. Some students are now forced to live in neighboring towns due to high rents and limited supply. Pedro Blanco, the central government's delegate in Galicia and a PSOE candidate for Santiago's mayoralty, has welcomed the move, arguing it will stabilize prices and encourage longer-term rental contracts.
However, the Xunta de Galicia remains skeptical, warning that the policy could reduce the number of available rental properties. The regional government points to data from A Coruña, where the number of new rental contracts reportedly dropped from 727 in July 2025 to 320 in May 2026 after the controls took effect. Left-leaning administrations counter that this decline may reflect greater stability in existing tenancies, as landlords are less incentivized to replace tenants for higher rents.
The rent cap mechanism will take effect in Santiago and the other newly designated areas from Thursday, immediately impacting all new contracts. In Asturias, the stressed market status will apply at the neighborhood level rather than to entire municipalities. Authorities are also required to implement urgent plans to boost rental supply, with the goal of reversing market imbalances within three years.
The Ministry of Housing maintains that these controls help contain prices while broader measures to expand affordable housing are developed. The ministry cites results from Catalonia, where after two years of rent caps, prices in Barcelona have fallen by 4.7%, and by 1.3% across all stressed areas. The number of active rental contracts in these zones has also increased. In Gipuzkoa, new rental prices dropped by 3.5% and active contracts rose by 3.2%. Navarra has seen price reductions exceeding 8% in affected municipalities, according to regional data.
This move comes amid growing concern over housing affordability across Spain. In regions like Andalusia, housing has overtaken health and employment as the top public concern, as highlighted in a recent report on shifting priorities in Andalusia. The expansion of rent controls to more cities reflects ongoing efforts by authorities to address these pressures, though debate continues over their long-term impact on the rental market.
Spain's approach to rent regulation is part of a broader European trend, with several countries experimenting with similar measures in response to rising urban housing costs. The effectiveness of such policies remains under scrutiny, as governments seek to balance tenant protection with incentives for property owners to keep homes on the market. The coming years will test whether these interventions can deliver more stable and accessible housing for millions of Spaniards.
