Catalonia will begin to squeeze rental rates

The Spanish region of Catalonia plans to take control of rental rates in “stress zones”: the government will adjust rates in some areas to “balance the market.”

“Stress Zones”:  1) areas where the consumer price index (CPI) is five points higher than the corresponding province, 2) areas where families spend more than 30% of their income on rent. These include Barcelona, ​​Lleida, Girona and other major cities in Catalonia.

In “stress zones,” homeowners will be limited to a certain range of rental rates, and some tax benefits will be promised as compensation.

“Stress regulation” is planned to begin in February 2024.

But everything is not so simple: in 2022, the Spanish government set a general 2% “ceiling” for rent increases throughout the country; in 2023 it was extended, in 2024 it was increased to a maximum of 3%.

The goal was to bring the ever-increasing prices of rental housing under control and make it affordable for local residents. The effect was exactly the opposite: in Barcelona, ​​for example, rental prices increased by 12% last year alone.

Therefore, it is possible that this time the restrictions will not only not slow down the growth of rental rates, but, on the contrary, will spur them on.