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Barcelona puts a cap on rocketing rent prices

Barcelona puts a cap on rocketing rent prices

The local government passed a regulation that declares the city – a ‘tense housing market area’

Last week, the Barcelona City Council approved the renewal of a legal declaration that marks the city as a ‘tense housing market area’. The argument is that this is a necessary act, and one within the framework of Law 11/2020 approved by the Parliament of Catalonia, given the difficult economic conditions in the wake of the COVID pandemic and the housing shortages. The new regulation is set to enter in force from September and remain for five years.

What is ‘tense housing market’?

The Catalonian Law on rental regulations was adopted last summer and it states that one year after coming into force municipalities must apply, again, if they want to continue as being defined as tense housing market areas. Provided that this status is extended the local administrations have to continue to apply the existing measures on rental regulations. 

In this sense, Barcelona meets the two requirements provided by the law in order to be able to make this declaration: the burden on the family budget to pay the rent is more than 30% of its income and the price increase exceeds the Consumer Price Index (CPI).

Here it is also necessary to clarify that this status is particularly important for Barcelona since it is one of the Spanish cities with the highest share of its residents living in rented accommodation.

According to statistics, close to one-third of the Catalonian capital’s inhabitants pay rent. Furthermore, rental prices have risen by 31% between 2015 and 2020 making affordable housing an impossibility for many.

In this sense, the commitment of the City Council, the economic data of falling disposable family income and the growth of unemployment due to the crisis caused by the ongoing pandemic have motivated this declaration to be valid for five years, the maximum period provided by the law.

From September onwards, the reference price when signing a new rental contract will be formed by comparing the price of the previous contract and 95% of what is indicated in the reference price index of the Government of Catalonia, taking the lower of the two. 

In addition, and unlike last year, there will be a reduction of 5% of the reference price according to the Government's price index and homes with a usable area higher than 150 m2 will also benefit from this regulation of rental contracts.

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