Spain to limit rent price increases to 3% in 2024

The Spanish government, the Catalan pro-independence party Esquerra Republicana, and the Basque nationalist EH Bildu group have reached an agreement for a new housing law.

The new legislation increases the number of reasons why rent prices should be limited in tense areas. The law will also limit the annual increases to 3% in 2024 and set a future rate to limit annual prices by 2025, always below the inflation rate.

Parliamentary groups also halved the number of properties needed to be considered a "gran tenidor," , a large-scale property owner, from ten to five. 

The new housing law will "affect all rents in massified areas" whenever regional governments ask for it," Pilar Vallugera, ERC MP, said during a press conference on Friday, hours after reaching a deal with the Spanish cabinet.

In those zones, there will be a price cap for large-scale property owners but also for those with less than five properties. For the latter, there will be an index rate based on the previous rent price, while for the former, there will be a rent cap price.

To consider an area tense, governments will have to prove that only one of the different conditions the law considers applies. Either the average cost of the mortgage or rent including expenses surpasses 30% of the average income in the neighborhood, or the cost of buying or renting a property surpasses by at least three percentage points the inflation rate in the five years prior.

The housing bill has been blocked in Congress for over a year, and it will now continue its parliamentary procedure after ERC and EH Bildu reached a deal with the Socialists and Unidas Podemos left-wing coalition.

Entities such as Amnesty International have welcomed the law, but while others believe it is a step to fight the housing crisis, they also think the agreement may be difficult to implement.

Catalan rent cap law

Spain’s Constitutional Court annulled in March 2022 the vast majority of the Catalan rent cap law. The legislation came into effect in September 2020 and affected up to 61 cities and towns in Catalonia.

The court revoked the law to limit rent prices in some areas of the territory as it is the "state who sets the obligatory contractual standards," a press release read at the time. This means, according to magistrates, Catalonia has overstepped its powers related to housing. 

With the new Spanish housing law, all the considered "affected areas" with the Catalan legislation will continue to be considered as such, therefore the Catalan cabinet will be able to implement new measures "immediately," Vallugera said.

No more dateless evictions

Regarding evictions, ERC and EH Bildu agreed with the cabinet to strip the dateless eviction practice from the legislation, meaning no more evictions can be filed without a specific time and date.

New protocols will also be in place, and regional governments can find other solutions outside of going through courts.

Owner to pay paperwork expenses

The new law also sets that owners will be the ones to pay for the expenses and renting fees of the property. Authorities have also limited increasing other expenses related to the property, such as the rubbish taxes, to use them to cover up the paperwork fees.

Check out our podcast, published in June 2021, on soaring rents in Barcelona for an in-depth report on the underlying crisis: