Catalan real estate agencies have closed the first week with the rental price index in force with a negative valuation. Beyond the impact it may have on rent control and market supply, companies in the sector criticize that the Government has activated an indicator that causes great uncertainty due to its gaps and they fear that the interpretations on its application could lead to a conflict between owners and tenants, or administrative sanctions for possible errors.
The new index enabled by the Ministry of Housing offers a range of rental prices in the residential market based on the location, surface area and other characteristics of the homes. Rent control can be applied in all municipalities that have been declared as stressed areas by the autonomous community. Large holders (more than five properties) must adhere to the index and small owners must reference their prices to the previous contract. At the moment, it is only applied in 140 locations in Catalonia.
“We have received about fifty calls every day from our professionals about how to interpret different aspects of the regulations,” explains the spokesperson for the College of Real Estate Property Agents (API) of Catalonia, Carles Sala. In his opinion, the Government's work is “very deficient” because the result is a rule that is difficult for owners and tenants to understand.
Sala adds that many citizens do not know that the new index is not applied in the same way as the previous one that was in force in Catalonia for 18 months between 2020 and 2022. “Many tenants think that it works the same as the previous rule and ask for discounts. This regulation is difficult for everyone to understand. We will limit ourselves to applying the law with the best criteria we can,” he says.
The director of studies and spokesperson for Pisos.com, Ferran Font, explains that real estate agencies must identify the large owners, but they have doubts even in defining them. “The law does not define any assumptions. The most common is how the shares that an owner may have in different properties are computed, but it is not the only one,” he says.
The definition of a large owner is one of the most questioned topics. The manager of the Chamber of Urban Property of Barcelona, Òscar Gorgues, recalls that the first instance judges of Barcelona issued a unification of criteria months ago where they indicated that vertical properties will be counted as a single property, regardless of the homes in each asset. “This criterion applies here, but the legislator should not allow each autonomy to have particularities,” he says.
Real estate agencies also have doubts about what information housing offers should show. Despite the repeal of the Catalan rental law, part of the regulations remain in force and require the display of regional index information. “There is a lot of confusion about whether to show the last rental income or the range of the new index,” says Font.
The general director of Amat Immobiliaris, Guifré Homedes, points out that there is also a significant gap when it comes to new construction. “There are cases of homes that do not yet appear in the index because they are in the process of being registered and do not have a prior contract either. "They are left in a limbo in which the index is not applied to them," he denounces.
On the other hand, the sector is concerned about sanctions for possible non-compliance. “The law does not provide for a sanctioning regime, so we do not know what compensation we must face if errors are made,” Gorgues points out. In this sense, he assures that the Generalitat wants to convey possible fines through the Catalan Consumer Agency, although this decision may be counterproductive for the interests of individuals. “If the owner is an individual, Consum has no room to act,” they point out.
In Idealista they talk about “biases” of the index. The director of the study service, Daniel del Pozo, explains that the clearest is that “it only takes into account the contracts in force in 2022, without taking into account the variations registered in the last two years.” The portal also denounces that the official indicator leaves out homes rented by legal entities (companies, funds and SOCIMIs), which number in the thousands. The homes of low-income people not required to file the personal income tax return are also not included. Del Pozo agrees in pointing out that this situation "and the coercive nature of the index itself suggest a high level of litigation in the coming months."
