Catalan government creates price index to control rents

The Catalan regional government will attempt to reduce abusive rental prices through tax breaks and subsidies to homeowners who set fair prices. The Ministry of Government, led by Meritxell Borràs, announced the conclusions of the expert working group on rentals created last September. Among these is the creation of a price index, which will serve as a reference for city councils or even for the Catalan government, to provide rebates on property tax (known in Spanish by the acronym IBI).

For months, different real estate companies’ studies have been showing an increase in rental prices, especially in Barcelona. One study published on January and, according to the website Fotocasa, the average price per square meter last year in Catalonia was €11.24 per month, a 14% increase compared to 2015. The Spanish average is around €7.49 per square meter.

Both the Catalan Government and Barcelona City Council have spent months trying to find ways to put an end to abusive rental pricing but they find their way blocked by the Urban Leasing Act, a national law. In addition, experts are divided on whether to put a cap on rents, considering that Catalonia does not have a broad social housing stock, as other countries that limit property prices tend to.

Owners will have to alert potential tenants when rent price is more than the index price

The working group has found a way to launch the index within Catalonia that will help to preserve the good health of the housing stock, one of the biggest worries about rental control. Borràs explained that the list, which will be available to the public online, will be created using the amounts deposited with the Catalan Land Institute (INCASOL) as a reference. The area, location and overall status of the property will also be taken into account, as well as its energy efficiency and whether it is furnished.

Owners will be able to set any rental price for their property but they will have to alert potential tenants when this is more than the index price. The Catalan Government has also said that any public help with renovation will be awarded first to owners who offer their properties below the index price. Borràs expects to approve the decree in two months.

The Catalan regional government expects city councils to use the price index to develop their own rebate system, for example, with property tax. Borràs anticipates that any rents that are above the listed price will not be able to access the Catalan government’s rental guarantee scheme.

Experts consulted by the regional government have also proposed the creation of a lease register, which will contain the information of both landlords and tenants, and will be used to record bad practices. They have also put on the table the possibility of extending rental contracts up to five years, with the possibility of three additional years, something that must be regulated at state level.

English version by María Sol Buscaglia, Albert Serratacó and Blanca Ojeda