The rental landscape in Catalonia is constantly evolving, and the implementation of the new state reference price index is a significant step in this direction. Detailed by the Secretary of Housing and Urban Agenda, David Lucas, this index promises to regulate rental prices in 140 municipalities considered under pressure by the Generalitat.
Starting March 13th, this index will come into effect once published in the Official State Gazette (BOE). However, this move has not been without controversy, highlighting a new confrontation between the State and the Generalitat. While the central government advocates for a uniform index nationwide, the Generalitat had advocated for its own system and a fixed reference price.
This meticulously crafted index will consider various factors, including individuals’ incomes, rental prices by census districts, and specific property characteristics. A notable feature is the price range provided by the reference index, offering a maximum and minimum framework that each property should adhere to based on its location and features.
However, questions arise regarding whether this range might prompt landlords to set prices closer to the upper end. David Lucas has dismissed this concern, emphasizing that “not all homes are equal” and that “with a single indicator, lower-quality properties could increase prices”.
The aim, according to Lucas, is to facilitate negotiation between landlords and tenants, thereby establishing more effective control over rental prices, significantly departing from the current scenario where prices are often uncontrolled.
The calculation system, based on taxation, will be annually updated according to the Personal Income Tax (IRPF). Additionally, new contracts cannot exceed the price of the last contract if it has been in force for the last five years, once the Consumer Price Index (CPI) is applied.
It is noteworthy that in the case of major property owners, rents cannot exceed the reference price index. In Catalonia, individuals or legal entities with 5 or more urban properties are considered major owners.
This regulation will affect new contracts or those renewed from its entry into force, without retroactive effects. The designation of tensioned zones will initially last for three years, with the possibility of annual extension.
The new state reference index takes into account several elements to calculate the price, from the surface and condition of the property to aspects such as the presence of an elevator, parking, year of construction, furniture, among others. Users will need to complete a form with this data to obtain the price range of the index.
Regarding its application, it will initially focus on the 140 Catalan municipalities designated as under pressure, where 80.6% of Catalonia’s population resides. Primarily, these areas are concentrated in the Barcelona metropolitan area and along the coastline, including Sitges and surrounding towns.
The Generalitat has expressed skepticism, warning that the index proposed by the central government will not effectively reduce rental prices. This disagreement reflects a historical conflict between the Catalan and state governments in housing matters.
Ultimately, the new state reference price index to regulate rentals in Catalonia marks a significant milestone in the region’s housing policy. Its effectiveness remains to be seen.
Article by Dust and Sand Luxury Homes
