The cap on rental prices in Catalonia will come into force in February

Were you aware that, after the approval of the Housing Law in May 2023, Catalonia will position itself at the forefront and establish the cap on rental prices? A milestone announced by Ester Capella – Minister of Territory – and Isabel Rodríguez – Minister of Housing – on January 12.

Given our commitment to provide you with current and relevant information, in KM2 Real Estate Services we have prepared the definitive summary with everything you need to know about this development. A measure that will affect a total of 140 Catalan towns.

Catalonia, the first Autonomous Community to apply the rent cap

Almost two years after its repeal by the Constitutional Court, Catalonia will once again impose a cap on rental prices.

Faced with average rental rents – which exceed €1,100.00 in Barcelona – and the conviction about its benefits, the Generalitat is getting closer and closer to finalizing the identification of stressed areas in accordance with the current Housing Law.

It is expected that the reference price index will be published during this month of February, which would be a fundamental step forward to start regulating rental rates in the selected areas. These areas are home to 6.2 million people, which represents 80.6% of the total population of the community.

What is a stressed area?

Regions identified as “stressed areas” are defined by the competent authorities based on at least one of these parameters:

1. The average cost of the property exceeds 30% of the average income for the area.
2. The value of the property has experienced an increase of more than 3% above the Consumer Price Index (CPI) over the last five years.

How will the cap on rent prices work?

Under the Right to Housing Law 12/2023:

1. When designating an area as a stressed area, the leaders will have the power to set a cap on the rental value in new leases. They will take as a reference the rental values of the previous agreement.

How will lease prices be regulated?

The following situations will have to be taken into account:

• If the landlord is a small tenant with housing already rented.

The cost of the new contract will remain the same as the previous one, with the possibility of a 3% increase in 2024. A number of exceptions are contemplated to increase up to 10% over the previous agreement, such as:

• Renovations in accordance with Article 41 of the Personal Income Tax Regulation (IRPF), which include:

1. Renovations covered by Royal Decree 233/2013, which promotes renting, rehabilitation and urban regeneration from 2013 to 2016.
2. Works focused on the restoration of structures, facades or roofs.

• Improvements that save at least 30% in non-renewable primary energy, carried out two years before signing the contract.

• Accessibility works executed in the previous two years.

• In contracts of more than ten years, or with voluntary extension for the tenant, it will be allowed to renew under the same conditions for a decade or more.

These rules seek to value the most significant improvements in the properties and balance the benefits of the owner with the rights of the tenant.

• If the owner is a small tenant and the dwelling has not been rented or has been vacant for five years.

The price of the new contract may not exceed the value indicated in the reference price index.

It is worth mentioning that, for both of the above scenarios, tax benefits are presented as compensation to small landlords. Which ones?

• General reduction from 60% to 50% in the IRPF for rental income.
• 90% discount if the rent is reduced by at least 5% in new contracts.
• Reduction of 70% in leases to young people up to 35 years old, public entities or NGOs.
• Reduction of 60% if rehabilitation works were carried out in the last two years.

• If the owner is a large tenant

Holders of more than 10 residential properties or more than 1,500 m² built will face stricter controls.

New contracts will not have to exceed the rental price index. In addition, consideration is being given to reducing the limit of properties to 5 in high-demand areas.

Manage the rental of your property with KM2 Real Estate Services

In KM2 Real Estate Services we are aware that this regulation complicates the management of the properties by the owners.

For this reason, if you need advice to rent your property, our sales department will propose a strategic marketing plan to carry out all the necessary procedures in accordance with current legislation.

Do not hesitate to contact our agents for more information or visit us at any of our real estate agencies in Barcelona and Madrid. We are waiting for you at:

• Rambla Cataluña 60, 5º2ª, Barcelona.
• C. Serrano, 51, 4ª Pl. Derecha, Madrid.