The limitation of the rental price on housing in Catalonia
In the last reform of the Law for Urban Rents, on May 2019, in its Second Additional Provision, in relation to the rental price index, it was stated that the Autonomous Communities could define their own reference index in a specific way and adapted to their territory, for the exercise of their powers and for the purpose of designing their own public housing policies and programs.
Consequently, the Generalitat of Catalonia has approved a Decree Law 9/2019 of May 21, published in the DOGC on 05/23/2019, of urgent measures regarding the containment of income in housing lease contracts, in order to limit the price of housing rents.
How does it work?
First of all, before a limitation of the rental prices of housing rents can be established, the areas or areas of “tense market” housing (these are the municipalities or the areas of municipalities where the supply is at risk of insufficient rental housing in affordable conditions); for this, various aspects must be stated:
- as if the growth of the rental price and its cost in the family budget is clearly higher than the average in Catalonia;
- as if that there is a disproportion between the increase in the population and the number of available rental homes, or
- as if the cost of rentals increases above the CPI of the affected area.
Once the “tense market” zone or area has been fixed, the rent of the housing lease contracts may only exceed the Reference Index of the Rental Prices by 10%. An additional increase of 5% can be allowed due to special characteristics of the house (views, community areas equipped with a garden, swimming pool, etc …).
Likewise, newly built and fully rehabilitated homes may be rented at 20% above those established by the Reference Index, but only for 5 years after the completion of the works.
The rent review of these leases can only be carried out if expressly agreed, and with reference to the annual variation of the competitiveness guarantee index.
The Sagrada Familia, one of the many wonderful site to see in Barcelona
In homes that were already rented, and when the rent was higher than the price set by the reference index that should be applied, the last rent of the previous contract can be set as the initial rent of a new contract (producing, as evidence, the amount of the last receipt).
If the lessor collects rents above the limits established, the lessee will have the right to recover the difference between the legal limit and the rent he paid, with interest. It may be required by Courts, but the Department of Justice will promote mediation and other alternative dispute resolutions systems.
As a transitional regime, it is established that leases concluded prior to the entry into force of the Decree will continue to be governed by previous legislation. In case of renewal that involves extending the duration or modification of the rent, after the declaration of the area in which the house is located as a tense market, the provisions of these regulations shall be applied.
This Legislative Decree entered into force the day after its publication, that is, on May 24, 2019.
Morning natural lights in the master work of Gaudi: the Sagrada Familia
Different sectors have already objected this regulation, real estate professionals, owners and social organizations (Sindicat de Llogaters, Tenant Association, etc.) and all agree in their rejection for different reasons, but agree that it will not solve the problem of rental prices, since it is will most probably increase prices due to a reduction on the offer and, therefore, the real expectations of limiting rental prices will not be reached.
The different sectors coincide, however, that one of the measures to contain rental prices should be to increase the offer of social leased housing by the administration.
This article is written by one of our independent partners in Spain, Juan, who is one of our Legal partners in Catalunya. Check his full profile here.