June 13, 2021

IMF criticizes rent price controls as ineffective


MADRID

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Spain is one of the European countries where low incomes have the most problems to pay their rent, given the rising prices, which especially weighs on young people. The International Monetary Fund (IMF) yesterday published a report in which it found that 60% of tenants in the lowest income quintile spend more than 40% of their rent on paying rent, a percentage that in Europe only the United Kingdom and Finland surpass. The percentage is lower in Greece – just over 50% – and is 45% in Italy without reaching 30% in France.

«Some countries with severe rental affordability issues provide limited subsidized rent, for example, Greece and Spain», Underlines the document. Although several studies show that the aid is effective in reducing inequality and helping the households to which it is directed, others also confirm that they can raise the rental price artificially “partially destroying the positive long-term effects.”

The report criticizes the few measures of social rent or aid that there are in Spain for households with lower incomes. “Governments could adjust tax incentives, penalizing empty homes,” he says, although he opposes that this does not always help low-income households.

Likewise, it also concludes that there is no evidence that price control is effective. «Sometimes the control of rent prices is used as a tool that favors social integration; this result is not supported by evidence», Sentence. Regarding the measure, defended by United We Can, he adds that «there is no clear evidence that rent controls have led to lower rentsRather, they seem to be associated with a lower supply of housing ”.

What the IMF does observe is that it gives premium to “tenants with longer rents over time,” as may be the case of the decree-law approved by the Government in 2019, raising the minimum number of years from three to five and limiting the price rises to the CPI.

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