The rental intervention in Catalonia has made the cheapest apartments more expensive

Catalonia functioned as a kind of laboratory for future Spanish housing law. In September 2020, the Catalan parliament approved a rent cap decree that was in force for only two years, until it was overturned by the Constitutional Court in March 2022 due to jurisdictional issues. However, the Catalan regulations present important differences to the regulations that Sánchez’s executive is planning to approve in the coming days. Namely, it is much more demanding.

First of all, obliged to adjust the rental prices to the official reference index in all circumstances. Moreover, if more than the index was charged in the previous contract, the owner had to reduce it to the new tenants. In addition, it treated small and large landowners equally and did not provide any tax relief for landlords.

The big problem with the Catalan regulations was when. Its coincidence with the pandemic made it difficult to comprehensively analyze the consequences of its application. There have been many studies that have been presented with very different conclusions. While the official report — prepared by the Barcelona City Council, the Metropolitan Area, the Provincial Council and the Generalitat — pointed out that the measure achieved reduce rents up to 7.7?% in Barcelona and another 7?% In the municipalities where it was applied, another Esada study points in a different direction.

Report Effects of rental price caps in Cataloniasigned by professors José García Montalvo, Joan Monras and Josep María Raya summarizes that the regulation caused “unwanted side effects that indicate that the problem of the rental market in tense areas is not the existence of large landlords with market power, but the lack of offers.

Thus, during a year and a half of application, The rental price was reduced by an average of 5?%. But if you read the fine print, the effect is not as positive as it seems. Because this reduction was basically aimed at the most expensive properties, while the effect it had on the price of the cheapest apartments (and thus those that families with less means have access to) was exactly the opposite: their rents rose significantly.

The authors of the study explain that “while expensive properties in municipalities affected by the law have experienced price reductions to comply with the regulations, inexpensive properties have seen an increase. The reference index acts in the opposite direction from the requested one, increasing the rents of those houses that were rented below it. In addition, they claim, there was also a drop in the rental offer of about 10 percent.