Just one day before the regional and municipal elections, Catalunya’s government approved a decree-law limiting the raises in housing rental prices.
The limit stated that in the areas in which the renting market is unfair, the owners can only raise the price of the rent up to 10% above the price stated in the reference index.
The reference index of rental prices is published by Catalunya’s government, but the authority that decides in which areas the limit must be applied is the municipal government. For example, it is the City Council of Barcelona in Barcelona city’s case.
The decree-law included some cases in which the owner could ask for a higher price. For example, a new building or a property that has been fully refurbished can have a price up to 20% above the index’s price. However, this special treatment is only valid for the next five years after being built or refurbished. Some other special cases, like properties with extra services such as a garden or swimming pool, have a higher limit than 10%, up to 15%.
Nowadays, Barcelona is facing the issue that tourism demand for renting makes the prices too high for the average citizen’s income. With this measure, the government is trying to make it fairer. On the other hand, some experts suggest that this kind of regulation only brings contraction to the offer and less availability for renters.
The Decree-Law Was Rejected by Parliament on June 25
Presented by the government’s left-wing party, the decree-law needed to be accepted by the Parliament of Catalunya. However, the ballot wasn’t successful. Although the left-wing parties had a majority, the fact that the government’s party proposed the regulation just before the election made their supporters reject it.
Nowadays, Barcelona has a coalition of left-wing parties in the government, and it seems that those supporting the party of the majority didn’t like that this regulation was presented as the sole initiative of the ruling party. As a consequence, they did not vote in favour; and for now, the decree law was rejected with 64 votes against 69.
However, all the left-wing parties in the coalition agree with the ideas behind the regulation, so it is reasonable to think that some similar regulation will be approved in the coming future.
While Barcelona is a beautiful city to invest in, the uncertainty related with property rentals is big. Investors may prefer to wait to see what will eventually happen with these regulations. As we always say, you can adapt and make plans once you have a regulation, no matter how good or bad it is for investment. On the other hand, uncertainty does not allow you to do it, and, since real estate is not the most liquid investment, the future regulations are something to think about.