Rental Law: The Perfect Time to Rent Out Properties

The Rental Law 11/2020 came to light in September 2020 and was approved by the Catalan Parliament. Its main objective is to improve the residential rental market by creating measures that regulate the prices of rent leases by setting a legal cap on the rent price. These measures were only applied in a tense market area in some municipalities of Catalonia, which led to a downturn in the rental market in Barcelona for almost 2 years, consequently, the Spanish Parliament decided on April 8 this year to repeal this law. The annulment of the law means that there will be important movements in the rental market that will help improve the offer of the properties and establish a better price level. Likewise, the Spanish government wants to introduce a new rental law throughout the country that could come into force between the end of 2022 or the start of 2023.

In this article, we would like to give you an overview of what will happen with these laws and how you can benefit from these changes.

What is Rental law 11/2020? 

The Rent Law 11/2020 came into force on 22 September 2020. This law was proposed by the Catalan Parliament with the main objective of mitigating the shortage of offers that exists in the rental market by protecting and empowering tenants to increase the rental market, in order to combat the economic blow of covid-19 in 2020.

One of the key measures introduced by this law was price regulation for rental housing by setting a maximum price range for rent in a“tense market area”. This is the designation for 60 Catalan municipalities with more than 20,000 inhabitants, which means that there is more demand than supply in the rental market. These areas are also recognized as areas of tension based on official government statistics.

The impact of  Law 11/2020 in Barcelona

In Barcelona, there has been an 8.2% decrease in rent over the year since the Rent Law 11/2020 came into force, which is less than what was recorded in Madrid (-9.3%), where rent is agreed between the two parties.

The supply of properties in the Catalan capital at the beginning of September 2021 has decreased significantly compared to the previous year. The number of properties offered for rent has decreased in all major markets, but none has reached Barcelona’s level due to the 11/2020 Rental law.

Why was it annulled?

The Court considers that the law exceeds the competencies of the autonomous communities and has led to an imbalance in the national rental market, which is why the Constitutional Court has decided to annul it. It also considers that this law has not achieved the main objective for which it was created. Another possible reason for the partial annulment is that the Spanish government is planning a new housing law that has some interesting similarities with the 09/2020 law. Would you like to know more about it?

Overview of what is happening about the Rental law in Spain.

What do we know about the upcoming Spanish rent control law?

Under the proposed plan, nationwide rent controls could be introduced, imposing a cap on the rent a landlord can charge per month. The main aim is to prevent rent from skyrocketing, which is a growing problem in Spain, especially in the cities of Madrid and Barcelona, but also on the coasts.

According to some articles of the law,  the autonomous communities will have the power to declare stress areas to limit rent. Another implication of this law is that the capping of rent also does not affect all markets or all owners of rental properties equally; it is primarily aimed at large investors with 10 or more properties, but small investors will also be affected.

People who have invested in 10 or more properties, including companies, are considered “BIG” owners and are subject to rent control in areas of high demand. However, they only account for 15% of the Spanish rental market.

This upcoming control rent law does not contain any significant changes concerning the previous Catalan Rent law, especially about price control. Therefore, the Court analyzed the statistics of the previous Rent Law 11/2020 to improve the functioning of this law, in order to allow the rental market balance the exorbitant price and the lack of supply in the market. 

If you want to know more specific information about this you can find on this page.

When will it come into force?

The new Spanish Rent Control Law was passed in February 2022, but that does not mean that the law will come into force immediately. The government’s goal is to have the law ready by October, However, the parliamentary process could be delayed by the possible avalanche of amendments the law could receive. Also, the parliamentary elections will be held this year and the majority members in the parliament could change. It is doubtful that the law will come into force by mid-2023 or early 2024, which opens up an ideal gap for renting out, come and discover why? 

Perfect time to increase your profit by renting out your properties in the nowaday´s market.

The ideal time to be in the rental market

The perfect time to rent your properties has arrived thanks to the annulment of the law 11/2020 which means that there is no legal limit to the price of rent in future contracts, providing a greater freedom to the rental market and setting better prices for the market.

Experts believe that this sentence will be beneficial for the territory, recovering the offer lost since the Rent Law 11/2020 came into force. However, these measures have a limited period because as we know there is a new law approved and is awaiting publication by the constitutional court, re-limiting market price in tense areas. Look at www.casamona.com and we will find the perfect rental for you