New Emergency Decree in Catalonia: Regulation of Mid Term Laws - What does this New Law Mean for Landlords and Tenants in Barcelona?

New Emergency Decree in Catalonia: Regulation of Rental Laws

 

On April 24, 2024, the Government of Catalonia enacted Decree Law 6/2024, introducing urgent measures concerning housing. This decree came into force on April 26, 2024, following its publication in the Official Gazette of the Government of Catalonia (DOGC), just ahead of the regional elections.

Purpose of the Decree Law:

The primary objective of this decree is to address legal loopholes that allow the evasion of the state law on housing rights (Law 12/2023, May 24). Since March 16, 2024, Catalonia has implemented rent price caps, which have led to a 24% decrease in the supply of permanent rental housing and an increase in "seasonal rentals."

Structure of the New Law:

The decree comprises 12 articles, primarily modifying and adding to the Housing Rights Law of December 28, 2007 (the Catalan housing law). Key changes include:

1. Changes in Temporary Rentals and Room Rentals Regulation:

   The regulation of temporary rentals and room rentals has been updated, including a new sanction regime, the introduction of pre-emptive purchasing rights for the Generalitat, and new mandatory information to be included in rental advertisements and contracts.

2. Right of Pre-emption and Retraction:

   For property sales by large legal entity landlords, the Generalitat can exercise pre-emption and retraction rights to increase public housing stock. Any sale of such properties must be notified to the Generalitat.

3. Mandatory Information in Advertisements and Contracts:

   Advertisements, offers, and rental contracts must now include the rental reference price from the reference price index system, the rent of the last valid contract from the past five years, and, if applicable, the landlord's status as a large holder.

4. Purpose of the Rental:

   All rental contracts must state the purpose or objective of the rental, which must be properly accredited. If omitted, it will be presumed to be a permanent residential rental.

5. Need for Permanent Housing:

   Contracts deemed to have a need for permanent housing include those for professional, work, study, medical care, temporary situations pending home delivery, or return to habitual residence, among others. If the temporary nature is not specified, it will be considered permanent.

6. Room Rentals:

   The total rents of simultaneous room rental contracts in a residence located in a tense residential market area cannot exceed the maximum rent applicable if it were rented as a single unit, according to the State System of Rental Price Reference Index.

7. Sanction Regime for Non-Compliance:

   A new section covers rental infractions, classified as very serious, serious, or minor, depending on the extent of the non-compliance with rent limits in tense residential market areas.

Goals and Speculation:

The goal of this emergency decree is to better regulate the rental market, protect tenants, and ensure a more stable supply of permanent housing. By reinforcing the rules and introducing new measures, the government aims to improve living conditions for tenants in Catalonia.

However, the reality so far shows a decrease in the supply of rental properties since the implementation of rental price caps. This reduction in availability has led to concerns and speculation that the new law might further limit rental options for tenants, potentially making their lives more challenging rather than improving them. Critics argue that such stringent regulations could discourage property owners from renting out their properties, thus exacerbating the housing shortage and increasing competition for the remaining available rentals.

Political Context:

As an emergency decree, it must be ratified within 30 days. Opposition parties have dubbed this decree an electoral move, given that it was announced the day before the autonomous community of Catalonia began its governmental election campaign. They have stated they will not support it, arguing that the timing is politically motivated. However, they acknowledge that the law itself indicates the direction politicians are taking on this issue.

As these regulations take effect from April 26, 2024, the impact on the rental market in Catalonia will be closely watched, with both tenants and landlords adjusting to the new legal landscape. The long-term effectiveness of these measures in achieving the intended balance between protecting tenants and maintaining a sufficient supply of rental properties remains to be seen.

Link to the rental index for Spain