The control of the rental price, in Spain and in other countries, has been one of the debates and frictions that have marked the legislature, especially since the Government has not yet approved the housing law, which aims to solve the inaccessibility of rentals. . Especially in the stressed areas of urban centers.
However, despite the fact that Spain is not represented at the city level, some autonomous communities have measures to take prices, such as the Council of the City of Barcelona; the island of Baliareslike other countries in the world, such as Germany, Canada or the Netherlands.
Measures for the regulation of rents are of various forms. Administrations propose gaps in the direct price, which is known internationally as a cap, measures to limit the growth of prices, reduce investment in housing or building social housing.
Regulation by cap of the rental price in different countries: in the cases of the Balearic Islands, Barcelona and Berlin.
In 2020, the Barcelona city council approved a law to regulate pensions in the city. Paloma Taltavull, Professor of Applied Economics at the University of Alicante, the Barcelona model “is based on placing a cap on the rental price in areas of the market,” and in Spain “we are not alone”.
The same thing that Barcelona did, the city of Berlin (Germany) also did in 2020, according to the Berlin Tenants Association. Still, in 2021, the German Federal Constitutional Court declared the Berlin cap unconstitutional and stopped the regulation from happening.
The Parliament of the Balearic Islands last September approved an initiative, proposed by Més via Menorca, so that autonomous communities could impose a cap on high rental prices in areas. So they made a response delaying the arrival of the housing law in the state of the city, defending Patricia Font, deputy of Més per Menorca.
Now the Congress of Deputies must decide on Tuesday March 7 whether it should begin its parliamentary process in the Cortes Generales, when it modifies the right of the state in Urban Leases to undertake this project. With the modification, the autonomies could establish a government sanction in the event that the maximum prices set are violated. They will also regulate the system for extra-judicial conflict resolution between landlords and tenants.
How the rental price cap works
Taltavull points out that “in European countries, the awareness of tenant protection within the housing market is greater than in other markets such as the United States of America or Australia”. For this reason, in different European cities or countries, rental price control is directly considered as an option to avoid lighting areas.
The Professor of Economic Applications explains that “locality is confirmed by the identification of the areas of the city where the most prices increase. The location of the house, for example in the urban center, determines 80% of the prices both for rent and for property”.
In addition, Taltavull explains the example of how the type of cap on the rental price would work. “If you take away a house, for example 100 coins, and you leave the tenants and the new ones who come in, you want to charge them for the price, which is 150 coins in that area and for that kind of house; The ceiling price of the rental, do not leave you to a certain percentage. That is, maybe you can increase the price by only 3% or 5%.
The direct intervention in prices, therefore, established that the price of the assessment was fixed in the area. Taltavull also states that “any intervention in rental prices will have a medium-long-term effect, in the sense that if the owner is deterred from renting, he will end up owning the rental market.”
Specu- discourage: control of countries such as Amsterdam and Canada to reduce rental prices
But not all measures to stop the rise in rental prices bumping through them. The Amsterdam directive in April 2022 banned buyers of homes worth €533,000 or more from renting homes for up to four years. This order also includes ships for living.
On the other hand, Canada has approved a rule to curb foreign purchases of housing. “Both the Amsterdam regulation and the Canadian measures are aimed at reducing investment in the regions to control the rise in rents,” says Taltavull.
For a professor of applied economics, the problem of housing that affects developed countries is that demand has increased, especially in urban areas, where the use is most concentrated, but the supply does not match. “There is almost nothing that is marketable, which will mix the accumulation of people in the cities and create a problem of punishment,” he said.
In addition, according to the expert, price control as a single regulation does not pay in the long term increased rental prices in the countries that have applied. The professor of applied economics at the University of Alicante also points out that “more and more investment must be made in social housing”. “Don’t give incentives to the market to build, but to do it and manage the state,” he said. Also, that young people have financial support and incentives to be able to afford to buy or rent a home.