Cap on rents “Prices are not lowered by law, but by Covid”
Barcelona and 59 other Catalan municipalities are celebrating one year this week with their rents intervened. The law that limits prices in the region has reached its first anniversary in force with the widespread rejection of the sector, fewer price drops than in other cities in the country and pending the Constitutional Court to resolve the appeal that the government itself and the PP filed against the rule.
The law forces to freeze or lower the price of rents in areas with residential “tension” of the 60 Catalan cities with more than 20,000 inhabitants, although “vulnerable” landlords are exempt, considering as such those who enter less than 2,000 euros per month.
The main argument against that the different parts of the real estate sector put on the table is that prices have not fallen more than in other Spanish cities where rents are not intervened and that the falls, in any case, are not due so much to the impact of the norm but to a set of factors including the effects of the pandemic or the flight of demand to the periphery.
From the real estate portal Fotocasa They have focused on this situation and have compared how rental prices have behaved in Catalonia and in its main affected municipalities with other communities and municipalities where rents are not limited.
At the regional level, Fotocasa has analyzed Catalonia, Madrid, Andalusia, the Valencian Community and has also included the national average. “From this analysis it can be seen that Catalonia and Madrid began to fall the same month, specifically in August 2020, but Madrid did so at a higher rate than Catalonia. Madrid began to decline at a rate of -1.4% and Catalonia at a rate of -0.3%. Since that month, August 2020, the rental price in the Community of Madrid has not stopped falling. On the other hand, in Catalonia there were still two months in which the price rose (September and October 2020) and from November 2020 the price has not stopped showing year-on-year decreases “, they point out in their conclusions.
Regarding the rest of the communities, the Valencian Community began to fall at the beginning of the year, as did Andalusia and the national average of Spain and it has not stopped falling since then.
“These data show us that the rental trend for 2020 and 2021 was that of a general decline in rental prices throughout Spain. It is true that the real estate market moves at different speeds and precisely, the communities of Madrid and Catalonia are the ones that usually lead the changes and advance the trends in terms of prices, “they add, although they also warn that “It is difficult to see what the impact of the Rent Containment Act has really been in Catalonia, since it falls at the same time and level as Madrid, where there is no price limitation. Furthermore, even in the Community of Madrid the price falls at a higher rate than in Catalonia “, he explains. Mara Matos, Director of Studies and Spokesperson for Fotocasa.
The real estate portal also focuses on the effect of the regulation on cities and in this sense detects that the decreases in income in Barcelona already occurred before the entry into force of the law. “Specifically, the rental price began to fall by -1.5% in June 2020 and since then it has not stopped showing year-on-year decreases. Just one month later, it also fell by -1.2% in Malaga and in Madrid by -0.2% (July 2020) and since then the price has not stopped falling in either of the two cities.
What the portal does observe is that the falls in the city of Barcelona were more pronounced as of October 2020 and went from -1.5% in June of that year to -11.8% in November. “In other words, in just six months the fall in the rental price accelerated by 10 percentage points in the city of Barcelona, while in the rest of the cities the falls were much more staggered. However, the evolution of prices in the city of Madrid has been very similar to that of Barcelona and even during 2021 the declines in Madrid have been more pronounced than in Barcelona. In Madrid they have fallen to -12.8% and in Barcelona the maximum this 2021 has been -11.4% year-on-year “, he collects.
Along the same lines are the conclusions of Idealistic, another real estate portal whose data serve as a reference to the Bank of Spain and the Ministry of Transport, Mobility and Urban Agenda to carry out studies and statistics on the market. Idealista points out that, according to its data, during the year of validity of the price regulation in Barcelona the rents they have become cheaper by 8.2%, “a decrease less than the 9.3% decrease in Madrid, where there is no similar rule “.
The firm also points out the impact that the rule has had on the offer and its consequences for potential tenants. “The supply reduction it is now the main problem facing future tenants, who now have a much smaller market, which makes it even more difficult to access a rental home, “he says.
According to the offers registered on its website, Idealista has detected that since September last year, the rental offer has been reduced by 42% in Barcelona, to 10,000 tickets, while in Madrid by 20%.
The portal, like other actors in the sector, have warned during the last year that an initiative such as the Catalan one generates legal insecurity among owners and discourages them from wanting to put their properties on the market or for international investors to bet on Catalonia as a destination.
The Secretary of Housing and Social Inclusion of the Government, Carles sala, has told . that there is “certain unanimity” that the Covid-19 pandemic “makes it impossible to know what degree of incidence the law has had on rental prices,” the director general of the Rental Negotiating Agency, Jos Ramn Zurdo, denies its effectiveness and puts it as an example of what could happen in the rest of the country if the Executive finally decides to limit rents through the future Housing Law.
“If the Government wants to know what will happen to the rental market in the rest of Spain if the Catalan rental law is applied, it already has the answer: every sudden supply of housing in the intervened areas, with rents that hardly go down in price “, he points out Jos Ramn Zurdo.
On the opposite side is the Trade Union of Llogateres de Catalunya, which positively values the impact of the regulation on the Catalan rental market during this last year. The Law “has managed to lower the rent by up to 5% in some of the municipalities without reducing the supply. But the best evidence is that 24 new Catalan consistories requested that the regulation be implemented through the declaration of tense area necessary to be able to regulate prices. And that 57 of the 61 municipalities where it was initially implemented have already endorsed it and have asked to continue regulating prices for 5 more years, “they said in a statement.
According to the criteria of
The Trust Project Learn more