The limitation on the rental price that Catalonia will soon apply, following state regulations, is already having an impact on the housing market, warns the Association of Building Developers of Catalonia (APCE). 19% of the developers who were planning to invest in the community to build apartments have decided to move their projects from Catalonia to other areas of Spain.
They have done so in reaction to the approval by the central government of the new Housing law, which includes a rent index for stressed areas. At the moment, Catalonia is the only community that has requested to apply this limit in 140 municipalities, including Barcelona. “They take it to places like Madrid or Malaga,” stressed Xavier Vilajoana, president of the APCE.
The reference price index will come into force on March 13, as announced by the ministry. For the APCE, the price limitation will have the opposite effect to what is intended, since it will “reduce supply.” 80% of rental home owners are small holders, according to Vilajoana, who pay for the properties through a mortgage.
For developers, homogenizing the rental market is “impossible.” At the same time, they regret that the budgets of the Generalitat "are 10% below what is invested in other countries such as Holland, Germany, Austria or France, both in direct investment in housing and in associated policies."
The association's surveys indicate that, with the rise in interest rates, the implementation of a cap on the rental price means that these owners are disincentivized and many prefer to sell the home to recover their investments. “We are already seeing it,” they say. The promoters consider that the new rule causes legal uncertainty, lack of economic profitability and financing difficulties, among other issues.
Despite criticism of the new state index, the promoters believe that it improves some points of the one that the Catalan Government applied for a year and a half as a result of law 11/2020. The state is calculated from Treasury data and the income data is updated, which corresponds to a greater extent with the reality of the market. On the other hand, they added, the one previously applied by Catalonia was made through Incasòl rental deposits, so it was more outdated.
