{"id":2131,"date":"2020-12-21T08:40:32","date_gmt":"2020-12-21T07:40:32","guid":{"rendered":"https:\/\/carlotagonzalez.com\/what-is-the-impact-of-the-new-rent-control-act-in-catalonia-for-you\/"},"modified":"2021-05-04T16:39:46","modified_gmt":"2021-05-04T14:39:46","slug":"rental-price-control-law","status":"publish","type":"post","link":"https:\/\/carlotagonzalez.com\/en\/rental-price-control-law\/","title":{"rendered":"What is the impact of the new rent control act in Catalonia for you?"},"content":{"rendered":"\t\t
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On 18 September, the Parliament of Catalonia approved Law 11\/2020 containing urgent measures for residential housing rent regulation in lease contracts. It amended Law 18\/2007, Law 24\/2015 and Law 4\/2016, relating to the protection of the right to housing. Popularly known as the \u2018Catalan rent control act\u2019, this legal modification is particularly disliked by professionals in the property sector. But how does it affect landlords and tenants?<\/p>\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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With rental prices in Catalonia rising by \u00a0up to 44% <\/a>\u00a0\u00a0on average in the last four years (even more in large cities), the Government of Catalonia has considered it necessary to regulate rental prices in this region through the approval of \u00a0\u00a0Law 11\/2020 on urgent measures residential housing rent regulation in lease contracts<\/a> (the \u2018Rent Control Act\u2019)<\/u>, which entered into force on 22 September 2020.<\/p>\n

The approval of this regulation has been rather controversial, as it does not have the support of property sector professionals. They oppose it mainly because they believe that the Rent Control Act is intended to shift responsibility for ensuring access to housing (which should lie on the Government) onto property owners, due to the shortage of social housing.<\/p>\n

The General Council of the Associations of Estate Agents in Spain expressed its disagreement with this law in a forceful \u00a0statement <\/a>:<\/p>\n

\u2018This is a populist measure which may have an effective impact on rental prices in the short term, but it will actually lead to a reduction in the availability of rental property (…) It is essential to find the right balance between the protection of tenants and the legitimate defence of property owners\u2019 interests. (\u2026) There is not enough housing available to meet the current demand, so the government should promote the creation of a public stock of social housing and encourage construction by providing different tax incentives \u2018.<\/em><\/p>\n

Furthermore, from a strictly legal point of view, the regulation may impinge on some central government powers, which would make it unconstitutional.<\/p>\n

Leaving any controversy aside, it will be interesting to see if the objective of the law is eventually met, that is, if housing rental prices are effectively reduced and moderated. In the first months of its entry into force, there have been \u00a0\u00a0decreases of up to 2%<\/a>\u00a0\u00a0in rental prices in Catalonia, but it remains to be seen whether this has been due to the effect of the new legislation or the result of the economic slowdown caused by the COVID-19 pandemic.<\/p>\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Which lease contracts does the new law apply to?<\/strong><\/p>\n

First, it should be noted that the Rent Control Act applies only to regular dwellings <\/strong>(that is, those intended for the tenant\u2019s permanent residence). Therefore, leasing contracts for use other than housing (such as business premises, office spaces, industrial buildings, etc.) are excluded.<\/p>\n

In addition, the law does not apply to all of Catalonia, but only to the so-called \u2018tight housing market Areas\u2019. These are municipalities or areas of municipalities that are at risk of not having enough rental housing at an affordable price.<\/p>\n

The law includes a list of the \u00a061 municipalities <\/a>considered \u2018tight housing market areas \u2019, including Barcelona and its entire metropolitan area and the most populated Catalan cities. This is not a closed list; rather, the Rental Control Act provides the jurisdiction and procedure to ensure that any municipality or a part of it can be considered \u2018tight market areas\u2019. In the same way, a municipality defined now as having a \u2018tight housing market area\u2019 may lose this status in the future if circumstances change.<\/p>\n

Based on the above premises, this new law is applicable to all new contracts executed after its entry into force <\/strong>(on 22 September 2020) that meet the above conditions (being a regular dwelling and being located in a tight housing market area).<\/p>\n

What happens to rental contracts formalised before the entry into force of the Rental Control Act? It will also apply if the contract is renewed after the Act comes into force, provided that: (i) the home is in a tight market area and (ii) the renewal of the contract entails extending its term or a change of the rent amount.<\/p>\n

However, the Rental Control Act is not applicable to any other lease contracts. This means that, if a contract existed prior to the entry into force of the Act and there is no change in the rent amount and duration, even if it is a tenant\u2019s regular dwelling and the property is in a tight market area, the rental price limitation will not apply.<\/p>\n

Even if the above requirements are met (tenant\u2019s regular dwelling and tight housing market area), the Act does not apply to contracts subject to special rental schemes, such as those signed before January 1, 1995, social housing, and other similar cases.<\/p>\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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How does the Rental Control Act affect rental prices for new leases?<\/strong><\/p>\n

The Rental Control Act will be different depending on whether it is a new lease contract or the renewal of an existing contract.<\/p>\n