The Generalitat approves the regulation to limit rent prices

The Government of the Generalitat of Catalunya has approved an executive order that allows to establish the maximum rental prices for housing in zones considered as areas with high demand.

This law intends to fight against the strong increase that rent prices have experienced in the different municipalities of Catalonia, but especially in Barcelona, where they have risen an average of 38% in 5 years, reaching figures higher than the pre-crisis years.

The approved executive order allows the City Council of Barcelona department to declare an area as an “unstable housing market” to those areas it considers adequate, or even to the whole city. Regarding the rest of the municipalities, it will be the Generalitat, and more specifically the Conselleria de Territori, who will develop this competence. Even so the law contemplates the possibility that a municipality discards the option of imposing restrictions.

Key points of this executive order:

  • The incomes of the homes belonging to those declared areas of unstable housing may not exceed, in more than 10%, the limit established in the price reference index. This index is drawn up by the Generalitat based on transaction data provided by the Incasòl through the Security Deposit Register.

  • A tenant may file a judicial claim in the event that they are being charged a higher rent to the one indicated in this executive order, having the right to reclaim the difference between the legal limit and the rent paid plus the corresponding interest.

  • In case the house has features that provide added value such as terrace, views or community areas, there can be added 5% to this exceeding limit. All these aspects must be duly recorded in the rental agreement.

  • The new construction housing or to which an integral rehabilitation has been applied can apply a rent up to 20% over the price index during the 5 years after the completion of the works. At the end of this period, and after a moratorium of a maximum of 3 years, the limit to be applied will be the same as that of the rest of housing.

  • This law is not retroactive, so there is no possibility of claiming for contracts signed prior to the establishment of price limits by the Ajuntament de Barcelona or the Regional Ministry of Territories, as appropriate.

Possible negative effects on rental prices

Different sectors, especially in the real estate sector, warn of the danger that this measure will have the opposite effect to that expected with regard to the relaxation of rental prices.

In the opinion of Álex Vázquez, director of the Rental Management department of Forcadell, "there is a possibility that this measure will cause a decrease in rental housing supply, as it would be detrimental to the profitability for owners, whether individuals or companies. At this point there is a danger that they will look for other ways to make their properties profitable, put them up for sale or look for other ways of investment. Leaving aside this matter, it remains to be seen how the Ajuntament de Barcelona applies the order and the reaction of the Central Government, which has the possibility of appealing this executive order to Constitutional Court.”