Government adds 131 municipalities to list of tense housing market zones to limit rent prices

The Catalan government has decided to add 131 municipalities to the considered tense housing market zone list, as announced by the territory minister, Ester Capella, from the Val d'Aran, Catalonia's westernmost point, on Monday.

The ministry has already started the procedures to include sites such as Val d'Aran, the Costa Brava's Cadaqués and Begur, or Altafulla, near the southern city of Tarragona.

With the new addition, Catalonia will have 271 municipalities where a rent cap will be possible, a measure in place in the home of 90% of the population, over seven million inhabitants.

The new index, promoted by the Spanish government, has been in place since March 14 in 140 municipalities in Catalonia, including Barcelona.

According to the new regulation, new contracts cannot exceed the price of the last contract in force in the last five years, after the annual update, which is 3% for 2024. 

For homes owned by large-scale property holders (individuals or companies with more than ten urban properties for residential use), the rent cannot be higher than the reference price index.

The new expansion of municipalities subject to the rent cap includes towns and cities with more than 2,000 residents that were not on the original list and that meet one of the law's requirements: that residents spend more than 30% of their wages on housing or that rents or new home prices have risen at least 3 points above inflation over the past five years.

The minister said the revision of the criteria, which she hopes will be applied in July, aims to deal with the changes in the housing market since the measure came into effect and the upward trend in rental prices in recent months. Capell said the government will continue to work "intensively" to "limit the housing market" and prevent prices from rising.

"[Rents in Catalonia] have increased between 43% and 46% in 10 years. In the capital [Barcelona], they have increased by 60%," she said. 

Long-term rental availability falls by 13% 

Developers in Catalonia have warned that capping rents will reduce the availability of long-term rentals.

Marc Torrent, director general of the Catalan Developers Association (APCE), told the Catalan News Agency (ACN) that "intervening in the rental market generates the opposite effect."

Torrent also warned that the rent cap will also reduce the creation of new housing and anadequate maintenance of already available housing.

According to real estate listing website Idealista, the availability of long-term rentals in Catalonia has fallen by 13% since the measure was introduced last month.

The decline in supply has spread to the capitals of the four counties of Catalonia: in Girona it has fallen by 21%, in Tarragona by 16%, in Barcelona by 14% and in Lleida by 9%.

The rent cap has not had an "immediate effect" on prices, according to the study, as the average rent in Catalonia has increased by 4.3% in the last month.

However, Idealista notes that this is an estimate that "will have to be confirmed" in the next analysis, which it publishes every three months.

Troubled history 

A rent cap has been a long-standing demand of housing rights activists in Catalonia.  

In September 2020, the Catalan parliament passed a law regulating rent prices but this was later mainly annulled by Spain's Constitutional Court. 

The Spanish government introduced its own – and highly contentious – housing law in April 2023.