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Spain’s rent control threat subsides as Catalonia curbed

Although rent controls have recently been on the table in Spain, the concern is subsiding for institutional investors according to CMS partner Álvaro Otero.

“The reality is that only one region in Spain has set this kind of controls, which is Catalonia, and the Constitutional Court has determined that this should no longer be a concern for international investors because they will more than likely annul it,” Otero told Real Asset Insight’s Richard Betts.

Catalonia region had determined that parties should refer to a state index when fixing the rent when agreeing residential leases. The court determined that forcing parties to agree a certain rent is against the law.

A minority part of the Spanish government was trying to force this through at the national level but after the constitutional court’s decision are now being more cautious. The new housing act, which will come into being during the first quarter does not refer to rent control, “which is, of course, good news for the institutional investment community,” Otero said.

Even in the short term the measure should not have much impact, he adds, because it only applies to residential leases and will only affect short-term investors because in the long term it is likely to be removed in the next few months.

Click on the video above to watch the full interview or listen to the podcast below.