Cataluña’s New Housing Law Receives Widespread Criticism

27 January 2020 – Idealista

La Generalitat and the Town Hall of Barcelona have joined forces to introduce new measures to improve access to housing in Cataluña. Whilst the objective is honourable, real estate operators across the sector have criticised the initiatives, warning that they will achieve exactly the opposite of their intention.

The primary aims of the legislation are to increase the stock of social housing and expand the supply of rental homes. Specifically, the law reinforces the tools to bring empty homes onto the market, manage social emergency situations, classify homes as protected and moderate the rental prices of private homes. 

For example, now when the use of a plot of land is changed to residential, at least 40% of the space must be reserved for affordable housing (previously that figure was 30%). In addition, the price of protected housing will now be fixed (per month and m2), in such a way that an affordable home will cost the same in every neighbourhood.

Experts and operators from across the sector have criticised the new measures. Mikel Echevarran, CEO of Colliers, warns that the legislation is going to completely deter property developers by making residential construction in the region unprofitable. What’s more, it will lead to an increase in the rental prices of the few private homes that are on the market.

His views are echoed by the Association of Property Developers of Cataluña (APCE), which warn that the legislation will have completely the opposite effect of its intention. The APCE points to the negative impact of the modified Barcelona Metropolitan General Plan, which was introduced in 2019 and had similar objectives. During the first 9 months of 2019, the construction of homes in Barcelona fell by 55.3% with respect to 2018, following the introduction of the plan. It fears that this Law could have the same effect across the whole of Cataluña.

Changes have also been made to rental contracts. For example, the mandatory social rental period has been increased from 3 years to 7 years, which will no doubt cause headaches for major property owners and managers across Cataluña (those with more than 15 properties). According to the APCE, it is a clear case of over-legislation that endangers legal security and comprises the feasibility of companies and their workers.

Other critics of the new legislation include Neinor Homes, one of the largest property developers in Spain, which is convinced that the measures will deter investment in the residential sector; and La Llave de Oro, a property developer that works almost exclusively in Cataluña, which points out that the new legislation makes the renovation of buildings almost impossible (unfeasible financially) and completely deters the construction of build-to-rent homes.

All eyes will be on the Catalan residential market over the coming months.

Original Story: Idealista

Translation/Summary: Carmel Drake