Strict rent controls are set to be introduced in Barcelona following a decree published by officials last week.
The rent controls will mean that landlords have to negotiate leases based on benchmark prices set for each property in neighbourhoods tagged as most desirable. That regulation follows a national law implemented in March that caps annual rent hikes at the rate of inflation, currently 1.5 per cent.
Spain’s hottest property markets – Madrid, Barcelona, the Basque region, and the Balearic Islands in the Mediterranean – have attracted money from overseas property investors such as Blackstone Group and Cerberus Capital Management in recent years just as thousands of landlords converted year-around flats to tourist apartments.
Progressive parties that have taken control of city halls blame the foreigners for much of the rent increases that have seen housing costs jump by more than 50 per cent over the last five years.
The rules were written by the government of Catalonia and allow similar rent controls in the region’s smaller towns. However, it is only expected to be the big cities that will be affected by the new rent controls, as rural areas and smaller towns have yet to fully recover from the financial crisis.
Catalonia’s new rules make exceptions for new construction and higher-end apartments – those with amenities such as swimming pools and gardens. And they don’t give tenants the right to renegotiate contracts that exceed the new caps.
Some economists and builders say the rent controls will do little to protect the middle class, as they threaten to drive more Madrid and Barcelona flats into the short-term market for tourists. The combined listings of Airbnb and HomeAway/Vrbo in the Mediterranean city have grown over the years to about 20,000 last month.
Barcelona is Spain’s most visited city by tourists, and therefore particularly popular with overseas property investors.