Short-term leases: a loophole in the housing price cap regulation

Short-term leases have become a new focal point for housing rights activists after a gap in the housing price cap law omitted seasonal rents, leaving them unregulated.

Leases are considered short-term if the contracts are for a maximum of 11 months. In these cases, the rent price caps do not apply to the apartment, as they do for ‘permanent’, longer-term, contracts. 

Since early 2024, Catalonia has applied price caps in towns deemed to be ‘tense housing zones’, and the regulation, which sets minimum and maximum prices apartments can be rented for, is in effect in areas where more than 90% of Catalan residents live, including Barcelona. 

This regulation has been in effect since early 2024, but short-term leases were left out of the law. The effect has been a significant decrease in the market for long-term housing, and in increase in flats available for a maximum of 11 months, leaving many people in uncertain situations looking for places to live. 

“Anxiety, fear, and injustice”

Naoufal Amrani, a resident of the Nou Barris neighborhood of Barcelona, received a notification from the owner of his flat saying the owner did not want to renew the contract 46 days before the term was finished. Amrani described the situation as one of "anxiety, fear and injustice." 

He wanted to negotiate the price and was given an offer of an increase of €250 per month and a contract of only 11 months, which he was forced to accept. In addition to increasing the monthly rent, he was forced to pay €1,000 in agency fees. "It was a very, very abusive offer," he criticizes.

While looking for an alternative, Amrani, who works as an engineer specializing in AI, found up to 400 applicants going for a single flat. He says he has several friends and neighbors in the same situation. 

In an interview with the Catalan News Agency (ACN), Amrani said he only realized that it was a short-term contract, and not an extension of the previous one, at the time of signing. Before that point, he had had a three-year contract - formalized in 2018 when there was not yet a minimum of five.

Advised by the Tenants’ Union, Amrani is now negotiating with the property via intermediaries, to try to convert the contract into a traditional tenancy for five years, before having to go to court and request an injunction to continue residing in the flat. 

With only a month and a half to look for an alternative, Amrani visited some apartments further and further away from Nou Barris where he lives with his family. He has been forced to look as far away as Manresa and Igualada in case the negotiation to extend the contract is unsuccessful. 

In some cases, he found himself competing with more than 400 applicants for the same flat. "I encountered another very harsh reality. The reality is people do not have a real right to housing because there is no supply," he laments.

Owners switch to short-term rentals

Short-term leases are now seen as an alternative for some owners who want to avoid the price cap laws. 

The contracts have a maximum duration of eleven months and are primarily designed for teachers, students, company managers, and professionals - or similar profiles - who make temporary stays. Companies dedicated to this sector, such as GuestReady, admit that they have noticed a growing interest from owners to transfer their flat to this market and attribute this trend to the fact that they are "totally unprotected."

The country manager of GuestReady, Lorenzo Ritella, tells ACN that owners are worried about risks of non-payment or not being able to use the flat when they require it, as they may need it over the course of the five years that an ordinary rental contract lasts.

GuestReady is a company present in Barcelona and other Spanish and European cities, in addition to Dubai and Riyadh, that offers apartments for those making temporary stays in cities for work, studying, or to families who are in the middle of a move and need to stay there for two or three months of impasse.

The company takes care of the entire process for renting the apartments, from promotion on its portals to booking management with customers, 24-hour assistance, cleaning of the apartments and other procedures. 

"The flats are furnished and perfect to walk in, open your computer, and start working," Ritella points out, emphasizing that clients value flexibility and that, for example, rents are charged according to the term of stay and not for whole months.

Renting for whole months, on the other hand, penalizes the owner in a certain way, Ritella says, because they runs the risk that the flat will remain empty for some days between an entry and an exit. 

Tenants' Union committed to "attacking root problem"

The Spanish government has already announced it will create a single register for short-term rentals that will need to be renewed every year.

Ritella warns that owners who only need their home for three or four months and are left off the register will have to leave the flat empty the other eight months, "with all the risks that entails."

The spokesperson for the Tenants' Union, Carme Arcarazo, says that this registry is something "imposed" by the European Union, and she instead wants to "attack the root problem." Arcarazo says that the price caps must be extended to seasonal rentals like these to avoid this "fraud."

"If you say to a landlord: 'you can offer the usual rentals at €900, or you can do short-term rentals at whatever price you want,' then obviously those who want to speculate will choose to do seasonal rentals," she argues. 

The Catalan Government already tried to regulate these short-term leases through a decree-law that ended up being overturned in Parliament. In the Spanish Congress, a surprise Junts vote against its regulation, along with the conservative People’s Party and far-right Vox, prevented it from going through.

Increase in ads for short-term rentals

Experts consulted by ACN agree there has been an increase in seasonal rental ads on real estate portals since the regulation came into force. 

The president of the housing foundation Hàbitat 3 and the Barcelona Metropolitan Housing Observatory, Carme Trilla, explains that there is an increase in advertisements for seasonal rentals on real estate portals, but this is because traditional rentals don't even get published.

Trilla also warns that there are rental ads that are not advertised as short-term, and at the time of signing the contract, the owner obliges the lessee to sign for less than one year.

The Urban Property Chamber of Barcelona, ​​Òscar Gorgues, shares the view that there have been more seasonal rental ads posted because traditional rental ads are no longer published on the internet – “a mathematical illusion," he calls it. 

According to Gorgues, there will always be some owners who, if they previously had a low rent and now cannot raise it, will look towards the seasonal option.

The director of studies at real estate portal pisos.com, Ferran Font, warns that the short-term rental market "has the nature that it has," and anticipates that if a rent cap is applied to these properties, it may have the same effect as in traditional renting: the reduction of supply.

"If [landlords] don't find an alternative, in many cases they'll take them off the market and we'll have a temporary, long-term market where there may be more basic prices but with fewer contracts signed, so there will be even more problems accessing the market," Font predicts. 

He quantifies the growth of seasonal rental ads below 5% on pisos.com, although he admits that this percentage is "relevant" because "it's a market that has a tendency to tighten up."

46% of Idealist ads are short-term

On the other hand, Idealista say that almost half of the rental offers advertised on their platform in Barcelona are short-term. 

Specifically, the figure reached 46% in the third quarter of 2024, 18 percentage points higher than a year earlier, according to data from the platform itself. 

Seasonal rentals accounted for 42% of all ads in Barcelona during the second quarter of the year. 

The figures are also reflected in other Catalan cities, at different rates. Tarragona has gone from 15% to 26% in one year, while Girona has grown from 10% to 25%. In Lleida, the trend is also one of growth, although much lower, from 1% to 5%. 

According to Idealista figures, one in ten rental ads in Spain was short-term a year ago, and now it stands at 14%.

Drop in long-term rentals

The rise of short-term rentals has been to the detriment of standard leases, at least according to the offers that have been published on Idealista, which do not necessarily conform to the contracts that end up being signed. 

According to this data, Barcelona is the city which has seen the biggest drop in long-term rental ads: in the third quarter of 2024 there were 38% fewer ads, and if compared to five years ago, the figure rises to 75% fewer. 

In other words, since 2019, three out of four homes offered in the Catalan capital intended for stable rent have disappeared.

The trend is similar in Tarragona, with a year-on-year drop of 31% and a 37% drop compared to 2019. In Girona, the trend is also downward, 16% compared to the third quarter of 2023 and 45% compared to five years, while Lleida has seen an 11% drop compared to 12 months earlier, and there is no data for 2019.

The data collected by Idealista is similar to that of the Habitaclia portal, collected and analyzed by the Chamber of Urban Property of Barcelona, ​​which states that long-term rents in the city has fallen by 66.4% between the first quarter of 2019 and 2024. 

In a report at the end of October, the institution pointed out that the situation has "worsened" even more since then.