These months, the possibility of creating a law restricting rent has been on the lips, but … What is this proposal about?
In today’s article, we want to talk to you about it and show you what’s going on some places on the planet where it already takes place.
Are you coming?
What is the rent limit?
A brief summary would be to tell you this increases are forbidden, and falling prices are forced.
In other words, no new contract can exceed the price of the previous one.
Or this is what we can know thanks to Law 11/2020, on emergency measures regarding the limitation of income in rental agreements applicable in the capital of Barcelona and the other 60 localities.
In this case, the law sets maximum thresholds based on the set reference value Agència de l’Habitatge de Catalunya, and this varies depending on the average income of each district.
That is, if the contract exceeds the maximum price set by the index, it will have to reduce its amount until it complies with the law.
What happened in Berlin?
In February 2020, Berlin announced a law limiting rental prices.
This regulation sets a reference price expressed in euros per square meter for the lease of houses built before 2014 and froze rental income for five years.
In other words, what the new law takes into account is that rents that exceed the reference price by 20% are violent.
However … what did this lead to the German capital?
The first short – term studied results noticed a drop in prices between 7 and 11% at the same time as the a significant decline in the available supply of apartments for rent in the regulated market.
Going no further, before the law came into force, there were a number of new weekly rental ads that exceeded 600, and after it became real, it barely reached 300.
Despite this reduction in supply, the reality is that unregulated rents and travel to the outskirts of the city have increased.
Authors of the study Forward to the Past: The Short-Term Effects of the Berlin Rent Freeze they notice it while the price per square meter fell in Berlin as a result of the new law, this one grew up in Potsdam, a city that is practically half an hour away by public transport from the capital.
Currently the Federal Constitutional Court of Germany declared this law null and void and restricting rents.
What’s going on in Paris?
In July 2019, a new law on rent price control was implemented in Paris, which will be in force until 2023.
It is difficult to distinguish from those we have already mentioned, because it regulates nMaximum level of rents for new contracts and for renewal with a system of penalties for owners.
However, the French evaluation company Meilleurs Agents made an observation through a report on this law during its first year.
In doing so, they say prices have stalled even though they tend to rise again. They point out that it is 53% of ads did not respect the price limit with an average cost of 130 euros per month.
And only in the case of apartments smaller than 20 square meters, only two out of ten met the rent limit, and the average allowance was one 22% above the limit set for this type of house.
What’s going on in Barcelona?
Perhaps this is the case that interests us the most, because it is closest to us and from which we can learn more in case the rent restriction law is extrapolated to other cities like Madrid.
The reality is that this situation is already harming future tenants who now intend to rent in Barcelona and the 60 municipalities affected by this law, as they will find smaller offers and prices similar to those that existed before the regulations came into force.
In Barcelona alone, the number of rental apartments fell by 10.2%, and in the case of prices, a drop of 3% was recorded.
What conclusion does this situation lead us to?
To this limit on the price of rent can connect more tenants who want to find a place to live, since many owners they will not see the cost-effectiveness of the fact that they have reduced the rent and they will focus on other ways of making money, like selling houses.
Furthermore, this this will affect regulated rent, because they will start asking for rents that are not regulated in order to be able to face this new law, harming, above all, the citizens and putting them in danger.
What do you think? We want to read your opinions in the comments.