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Practical guide to the new rental law in Catalonia

On September 23rd, Law 11/2020 of September 18th on urgent measures for rent containment came into force, which regulates the rent of housing contracts that are the permanent residence of the tenant and that are located in an area declared to have a tense housing market. This last competence mentioned corresponds to the Generalitat and, in Barcelona, to the City Council, the Metropolitan Area and the Metropolitan Council. This new law to regulate the rental market has generated much controversy, so in this post we will try to briefly clarify what it means and how it affects to owners and tenants.

One of the sine qua non conditions of this law is that the housing be in an area with a tense housing market. To determine this situation, attention is paid to three main factors: if the rent has grown more than the average in the community, if the average rental cost exceeds 30% of the tenant’s usual income and if prices have risen in five years more than the CPI in Catalonia. Once these points have been established, the price per m² of the property is calculated, which must be within the parameters set by the rental price reference index (Índex de referència de preus de lloguer). This index is a reference framework, determined by the ‘Agència de l’Habitatge de Catalunya’ that, taking into account the data from the ‘Institut Català del Sòl’, establishes a value per square meter in a given area. With the new law, prices must be adjusted to the value that marks the index, without exceeding the price (euros/sq m) marked.

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In order to understand which properties must adjust to this regulation, what the exceptions are and how this law affects them in general, we have prepared a small practical guide that will answer the following questions:

How to know when this regulation is applied?

What is the maximum income that can be established?

As a landlord, can I increase the rent above the established limits?

What expenses can be passed on to the tenant?

What about new construction or completely renovated housings?


1) How do I know what this regulation applies to?

IT APPLIES TO:

– Habitual rental contracts

– New contracts

– Modifications of contracts signed from 1995 onwards

– Municipalities within the tense housing market area

DOES NOT APPLY IN:

– Contracts that are subject to a specific income regulation (official protection, social renting, assistance, etc.)

– Contracts that are in force

– Newly built homes or homes undergoing major renovation

– Temporary contracts

– Municipalities outside the tense housing market area

– When all of the following are true: the home has been rented in the last 5 years, the landlord’s living unit has an income equal to or less than 2.5 times the CSRI, and the tenant has an income which is equal to or less than 3.5 times the CSRI.

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2) What is the maximum income that can be established?

The rent must be lower than that indicated in the reference index and lower than the rent agreed in the last lease contract if the property was rented between September 2015 and 2020.

3) As a landlord, can I increase the rent above the established limits?

If the home meets at least three of the following characteristics, you may increase the price of the rent obtained in the index by up to 5%.

– Elevator

– Parking

– Furniture

– Heating/Cooling

– Community areas

– Concierge services in the building

– Special views

4) What expenses can be passed on to the tenant?

It is important to mention that, in addition to the rent, general expenses and individual services of the property can be charged to the tenant. To do so, it is necessary to detail it in the contract, and, every January, make a settlement, and justify to the tenant the amounts of those expenses. In the event that the tenant has been made to pay an extra amount, the difference must be returned. Among the expenses that can be charged to the tenant we can find the following:

– IBI

– Ordinary community expenses

– Garbage collection

– Concierge service

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5) What about new construction or refurbished homes?

In these cases, the regime will not apply to the housing. It will be considered new construction housing when the contract is formalized up to a maximum of five years after the end of the construction license. On the other hand, it will be considered as a major refurbishing when a construction project is in place, when the city council’s license marks “major renovation”, and when there is a certificate of end of construction.

As we pointed out before, this law has generated a lot of controversy among real estate agencies, owners, and tenants. Establishing a fictitious regulation in the rents has a series of positive consequences, but also negative ones:

PROS

– The result is a more controlled market and some consistency in the price of the product for rent

– The dynamization of the rental market

– More balance between supply and demand

– Regulation improves the quality of life of tenants

CONS

– That stability is diminished and, as a result, some of that product is derived for sale

– That the mortgages assumed by the investors or owners are not covered by the rent and their economy is affected

– A possible underground and unregulated economy

– A mismatch of the index with market reality

– Lack of valuation of unique products

– Parking spaces and terraces are practically ignored, as they are not considered as independent units, nor do they bring additional value to the useful set


To deal with this law and inform you of everything you need, ATIPIKA has a property management department to assist both the owner and the tenant. Our administration department, supported mainly by technology, can manage the marketing, follow up, solve any incidents that may arise, make the monthly settlements, and, in short, advise you on everything you need to make the rental management a success, in order to meet and improve your expectations. We assure you that you will have maximum peace of mind by entrusting your management to ATIPIKA, and you will not give up on achieving maximum profitability.

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Visit our website to find out all our services and the properties we offer. ATIPIKA’s successful path in the real estate market over nearly 20 years makes it possible to offer a broad and attractive range of properties for sale and for rent in Barcelona, with a concise up-to-date information. Do not hesitate to consult our website www.atipika.com. You can contact us through our chat, send us an email to info@atipika.com or call our phone 93-4815032.

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