Catalonia to set recommended rental price to avoid new housing bubble

Catalonia will introduce in the next two months a recommended rental price. The Catalan Minister for Government, Public Administration and Housing, Meritxell Borràs, said that the initiative, pioneering in Spain, aims to reduce the currently ‘exaggerated’ rental increases in Catalonia, which has 6 of the 10 most expensive cities for renting in Spain. Barcelona has the highest rents, with an average of 17.36 per square metre being paid in the capital’s old town. Borràs hopes the recommended set price will help to ‘adjust’ rental prices to more reasonable figures and avoid a new housing bubble in the country.

The Catalan Government hopes to introduce the recommended rental price for an initial 115 towns, including Barcelona, the main metropolitan area and those with a high demand. The index will have to be visible in all rental contracts if the price to be paid is higher than the recommended one. The Ministry of Government, Public Administration and Housing will calculate the price using information such as the location of the property, when it was built, the number of square metres, its energy efficiency and whether it is offered furnished or unfurnished. The recommended rental price will be revised every two years, and every four years the criteria for setting it will be also updated.

The councils of Barcelona, Tarragona, Lleida and Girona, the four Catalan capitals, welcomed the initiative and are prepared to study the introduction of tax reductions for landlords that rent below the recommended price. However, they want to study the details of the new law first and legislate according to their particular needs. Other councils, such as those of metropolitan cities Badalona, Sabadell and Mataró, are more cautious, warning that introducing tax reductions will hit one of their main revenues. Coastal town Sitges and Vic, in central Catalonia, welcomed the proposals, and Garraf is hoping to introduce the property tax benefits amongst its new fiscal measures.

But not everyone is satisfied with the Catalan Government plans. Rental sites such as ‘Lloguer Segur’ and ‘Pisos.com’ have warned that a recommended price won’t solve the issue. ‘It is a useless and counterproductive measure that will boost the black market and the number of vacant properties’, said the director of ‘Lloguer Segur’, Sergi Gargallo. Manuel Gandarias, from ‘Pisos.com’, rejected the need for intervention in the rental market, saying that authorities should let the market ‘regulate itself’.

Catalonia is the autonomous community in Spain that saw the highest increases in rental prices in 2016. They went up by 15.6% in comparison to 2015, a figure that more than doubles the Spanish average, set at 6.7%.