The regional government of Catalonia (Generalitat) has introduced two big regulatory changes to the housing sector that industry insiders warn will reduce investment, encourage squatting, drive up housing costs, and foment a black market.

Decree 17/2019, described as “urgent measures to improve access to housing” has already been approved by nationalist and socialist parties in the regional parliament. Amongst other things, it forces investors to provide accomodation to squatters for five to seven years if they have occupied their properties for six months or more, and imposes a social housing quota of 40% on all new developments in the Barcelona area, up from a current 30%. It also prepares the legal ground for rent controls based on a reference rental price index.

Decree 1/2020 creates a category of “empty housing” that can be requisitioned after two years even when occupied by squatters for six months, condeming investors to housing squatters for many years. Thanks to this decree, yet to be approved by the regional parliament, financial institutions and investors who own properties that are empty as the result of foreclosure, dation settlements, or evictions, could be obliged to accommodate squatters for five to seven years. It’s an invitation to squat for six months, and get someone else to pay your housing costs after that.

The Council of Statutory Guarantees, El Consejo de Garantías Estatutarias (CGE) in Spanish, the body responsible for ensuring that laws are constitutional, has said the new law violates property rights by supporting squatters. In particular it says that it “legalises” squatting “under the influence of Podemos” – a hard left party and junior coalition party in the central government in Madrid. The Generalitat says it will press ahead with these new decrees regardless of constitutional problems.

New Catalan housing laws create total dismay in the industry

The reaction from the housing industry has been one of total dismay. “In Catalonia squatting is not only free but protected by the authorities from now on,” says Fernando Encinar, head of research at the Spanish property portal Idealista. “Catalonia’s international credibility as an investment destination will be badly damaged. It would not be strange to see, in the coming months, fewer new promotions started, lower residential investment, and, in the medium to long terms, higher rental prices, and the emergence of a significant black market.”

Juan Gómez-Pintado, President of the Spanish Association of Developers and Builders (APCE), calls the decree “absolutely pernicious”, and probably illegal. He points out that new development in Barcelona has already fallen 55%, and warns against copying “short term and populist measures” that have failed in other countries and which, in the medium term, are harmful to society.

On the other side of the argument, Lucia Martin, Barcelona’s housing councillor, welcomed the decree. “However, we still need to regulate [rental] prices,” she said. “Our work here is not done, and we have to continue changing the housing policies of Barcelona.”

It seems that the regional authorities in Catalonia are out to create a ‘hostile environment’ towards property investment and ownership.