Limitation of housing rental prices in Catalonia and its impact 1 month after its entry into force

22 April, 2024
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Real Estate
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Amaia Forcada


Context

On March 16, 2024, a limitation on housing rental prices came into force again in Catalonia. We say “again” because this autonomous community had previously had a limitation on prices, of an autonomous nature, which in 2022 was declared unconstitutional for encroaching on the exclusive competencies of the State.

The new price index stems from Law 12/2023, of May 24, for the right to housing, as well as the declaration by the Generalitat of Catalonia of 140 municipalities as tense market areas. This declaration is possible when the purchase or rental price in these areas has increased at least 3% above the CPI of the autonomy, and/or if the mortgage or rental price represents more than 30% on average of household income.

To which rentals does it apply and until when?

It applies exclusively to habitual residential rentals. Therefore, temporary and/or tourist rentals are excluded, as well as rentals for commercial premises, offices, and/or garages, among others.

As for the term, the new price index will be valid for 3 years, although annual extensions are possible if the market situation remains tense.

How does it work?

The index provides a range of prices, indicating the minimum and maximum monthly rental price of a certain property.

It can be consulted here. Simply enter the address of the property, its energy certificate, its condition, and the floor it is on. Additionally, there are elements that can modify the range, such as whether the property has an elevator, is furnished, or has a parking.

As an example, a 65 m2 property on Mallorca Street in Barcelona – located in the central Eixample district – with an energy certificate D, in good condition, and located on the third floor: has a price index, without adding any additional elements (elevator, garage, etc.), ranging between 782 and 995 euros.

Which landlords are obliged to apply it?

Exclusively large property owners, that is, those who own 5 or more properties within the declared tense area.

Therefore, if a landlord has three properties in Catalonia and three in Andalusia, he or she would not be obliged to apply this index. However, if he or she has two properties in Girona, three on the Costa Brava, and one in Tarragona, would be obliged.

Does it apply to all residential lease contracts?

It only applies to contracts formalized after its entry into force. The rest continue to be governed by the price agreed upon in the lease contract at the time.

However, regarding new contracts, two cases must be distinguished:

| | | |
| --- | --- | --- |
| Properties that have not been rented in the last 5 years | Properties that have been rented in the last 5 years | |
| These properties are subject to the new price index regardless of whether the landlord is a large property owner. | Large property owner | Not a large property owner |
| The rental price will be limited to the lower of the following two amounts: a) The one set by the range; or b) The price of the last rental contract. | The rental price will be limited to the price of the last rental contract plus the applicable CPI (in 2024, 3%). |

Are there exceptions?

The maximum rental price set by the range can be increased by up to 10% by the landlord, provided that the property has been recently rehabilitated, or when the rental period is equal to or greater than 10 years, or can be extended for an identical period.

To sum up

According to a study conducted by the real estate portal Idealista, since the entry into force of the new price index, the supply of housing has decreased in all provincial capitals of Catalonia: by 9% in Lleida, 14% in Barcelona, 16% in Tarragona, and up to 21% in Girona. Additionally, the study concludes that rental prices have increased by 4.6% in Barcelona and 4.3% in Catalonia as a whole. It is worth noting that this report was carried out using specific weekly metrics, whereas traditional studies rely on quarterly methodologies, so Idealista acknowledges that the estimates made will need to be confirmed by subsequent studies.

In conclusion, we will have to wait to know the impact and evolution of the new price index in Catalonia, for now, the only community that applies it. However, it is worth remembering that Navarre is studying it, and the Basque Country and Asturias have expressed their intention to join.

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