Catalonia has taken a groundbreaking step as the first autonomous community to enforce rental price controls. The Department of Territory of the Generalitat, in collaboration with the Ministry of Housing and Urban Agenda, has processed the declaration of 140 municipalities as tensioned areas, where rental limitations established by the new Housing Law will be applied. This development directly impacts Sitges and other municipalities in the Barcelona Metropolitan Area (AMB).
The Official Gazette of the Generalitat de Catalunya (DOGC) has outlined the process, justifying the criteria for selecting these municipalities. Although initially estimating 163 localities with these characteristics, ultimately, 140 meet all the requirements established by the law.
These municipalities, housing 6.2 million people, representing 80.6% of the total population in Catalonia, are mainly located in the AMB. The Generalitat expects the state law to be effective in these areas with a “special risk of insufficient affordable housing supply.”
The process now enters a “public information period” of 20 days, during which administrations, entities, and individuals can submit objections. The final resolution, once approved by the Ministry of Transport, Mobility, and Urban Agenda, will be valid for three years, with the possibility of annual extensions.
This progress comes after the Government of Catalonia initiated, on June 6th, the preparatory actions to define the areas where residential rental prices will be limited, in accordance with the Housing Law that came into effect on May 26, 2023. The Generalitat aims to implement the new law as soon as possible to counteract the shortage of affordable housing.
The price index regulating rents will be published in February.
In this context, Sitges is among the municipalities affected by these measures. With the implementation of rental controls, the aim is to address the risk of insufficient supply and ensure housing affordability in these tensioned areas. However, concerns are expressed from the real estate sector about possible negative effects, citing past experiences in other cities where similar measures led to issues such as housing shortages and price increases, as prices cannot be changed for a minimum of 3 years afterward.
The most significant aspects of the law include:
- New lease contracts cannot exceed the rent of the previous contract.
- If the property has not been rented in the last 5 years, the price will be determined by the government-created index.
- A person or entity with 5 or more residential properties in tensioned areas is considered a major holder.
- Major holders, when entering a new contract, must adhere to the index price even if the property was previously rented at a higher price.
The declaration of a tensioned residential market zone, as stipulated by the Housing Law, aims to address evident imbalances, including the average burden of mortgage or rent costs in personal budgets and the cumulative growth of housing prices in recent years.
Since the new housing law came into effect in May 2023, the rental market in Sitges has experienced price increases and a decrease in rental availability, contrary to the law’s intentions. It seems that the implementation of these measures will further discourage property owners and investors to other parts of Spain where there is less hostility towards them.
The evolution of this process in Catalonia will continue to be a key topic in the real estate sector. Stay informed by subscribing to our newsletter and following our blog articles. If you need advice on this matter, don’t hesitate to contact us! We’ll be happy to guide you.
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