In recent years, the major cities of Spain, as well as in particularly popular regions of the coast, where the demand for housing only increases year after year, have seen a strong increase in rental prices. To combat this problem, back in 2023 Spain’s government agencies have begun to consider possible options for regulating rental prices.
As of March 13, 2024, a new price index for setting rent caps will come into effect. It will be applied in “congested” areas, i.e. those municipalities where the rent burden exceeds 30% of the average monthly income.
The measure will only apply to new leases of large owners, i.e. owners with five or more houses. When the regulation comes into force, they will have to set the price according to the Ministry of Housing’s national reference system or continue to use the price of the previous contract. They will also have to adapt to the index if they add properties to the rental market.
So far, only Catalonia (Barcelona) has begun the procedures required by housing law to set maximum rent limits. The Ministry assured that the rents indicated in the new system will be clearly lower than the prices offered in advertisements on real estate portals.
To calculate prices, the new index will take into account, among other variables, personal income, rents by census tract, and apartment characteristics.
A “real example” to consider the application of this index is an apartment on Valencia Street in Barcelona, for which the landlord is asking 1600 euros per month in the advertisement, but according to the new system it is listed for 984 euros. The Ministry claims that in some cases the difference between the highest value of the index and the price at which the apartment is offered exceeds 100%. That is, more than twice as much.
Many landlords in Barcelona are already threatening to remove their properties from the market and thus bring down this system of price regulation. What do you think about such a measure?