Catalan rent controls struck down by Constitutional Court with biggest impact in Barcelona

rent controls in Barcelona
Barcelona, where rent controls have just been struck down.

Controversial rent-control regulations in Catalonia that critics say reduced housing access have been struck down by the Spanish Constitutional Court, as local politicians vow to bring them back as soon as possible on the back of a new housing bill going through the national parliament in Madrid.

Catalonia’s regional government – the Generalitat – introduced its own rent control regulations as part of a regional housing law in September 2020 to suppress rental prices in areas with ‘taut’ housing markets like Barcelona, where housing activists and like-minded politicians argued that rental prices were rising because of speculation and greedy landlords, not supply and demand.

Local politicians from the right-wing PP party challenged the Catalan law in Spain’s constitutional court, which has ruled that clauses limiting rental prices to an index set by the Generalitat exceeded the regional government’s powers on the grounds that private contract regulations are the business of the national government.

Fortunately for those in favour of rent controls, there is a new housing bill going through the national parliament in Madrid that might devolve rent control powers to the regions, though the draft is still work-in-progress for the left-wing coalition government in Madrid. It is not yet 100% clear that regional governments like the Generalitat will be authorised to introduce their own rent control regulations. 

Arguments for and against rent controls in Catalonia

According to the Generalitat, 160,000 rental contracts were signed under the terms of the new law. This helped reduce rental prices in the period by 1.4% in Catalonia, and 4.8% in Barcelona, say the groups lobbying for rent controls like the Sindicat de Llogaters (Union of Tenants).

Barcelona’s city council, led by Ada Colau, a former squatter and housing activist, has been leading the call for rental controls in the city, and claim they helped reduce rental prices. Lucia Martín, the councillor responsible for housing and rehabilitation in the city says that “it is of maximum urgency that the future national housing law learns from the experience of Catalonia and many other European countries, and fixes an effective and immediate rent control.” 

On the other hand, critics in the housing industry say that Catalonia’s rent controls reduced the supply of rental housing, discouraged  housing investment, and increased legal insecurity, all to the detriment of housing access. 

According to Óscar Gorgues of the Urban Property Chamber of Barcelona, a trade body, “the supply of homes for rent is at historic lows, with just 5,000 available in the whole of Barcelona, which is not enough to meet demand and that tightens up prices. Since the end of the pandemic the supply of homes has collapsed as many owners have taken their homes off the market. We hope that this ruling gives them more legal security and reverses that trend.”

Critics also point out that rental prices fell even more in Madrid, where there are no rent controls.

Regardless of whether rent controls work or not, this is unlikely to be the end of Catalonia’s experiment with them, with implications for property for sale in Barcelona.

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