Rent prices to be capped in Catalonia

The Government has approved a law on Tuesday that allows for the control capping of rental prices in neighborhoods or cities where a lack of affordable housing can be proven.

As a general rule, the rental cost in these areas decreed to have unstable rental markets can only exceed the reference index of rental prices, to be determined by the government per area, by 10%.

The price can be extended up to an additional 5% in cases where exceptional views or special features can be justified, such as community pools or gardens.

Newly built or totally refurbished apartments can be offered at 20% above the reference index in the first five years of its availability in the market if their application for exceptionality is successful.

The approved decree law allows the City Council of Barcelona or the Government department of housing to declare an area as an unstable housing market. Smaller towns may, on their own initiative, ask the Government to be declared as a tenuous housing market too, presenting a report to justify the status, and have the law applied to their area.

To be declared an unstable rental market and qualify to have the law applied, a "sustained" increase in the rental price and at a cost for families "clearly above the average in Catalonia" must be stated.

Otherwise, the law could also be applied if there is a disproportion between the increase in population and the availability of housing, or if the prices rise significantly above the reference index pricing of the area in question.