The Catalan government has this Wednesday approved an urgent decree law to regulate the fraudulent use of short-term housing rentals in Catalonia, amidst accusations of electoralism from the real estate sector and the parliamentary opposition. The decree states that "the regulations for housing rentals" also apply to short-term contracts - currently defined by real estate agents as those lasting between 32 days and 11 months - and these contracts must explain the reason for their temporary nature and comply with the new rent caps and the rules on bonds and expenses contracts in the housing law which came into force earlier this year. If they do not give the correct details, the owners can be fined between 3,000 and 900,000 euros depending on the seriousness of the infringement.
Thus, the duly-indicated economic activity of the rental occupant will be key, rather than the duration of the contract. If the accommodation is sought for purposes of the renter's study, work or medical care, then, however long it is, it will become subject to the rent limitations for regular housing. This is intended to remove the current loophole whereby property owners rent out their accommodation on short-term contracts in order to avoid the current rent controls and charge higher rates. The only exception under the new decree will be seasonal rentals for holidays or tourism, including both the rent of entire flats for these purposes or of individual rooms and shared flats.
Although the decree-law will enter into force tomorrow Friday, the permanent delegation of the Catalan Parliament has to validate or overturn it in the coming days and, if this takes place, the decree law will be in full effect before the May 12th election, as Catalan government sources explained in a briefing with the media prior to the press conference of the Catalan territorial minister, Esther Capella.
It will be regarded as a very serious breach, with fines of between 90,001 and 900,000 euros, to rent a home with a price of more than 30% above the reference index or allege a false reason for the rental contract, for example, put in the contract that the apartment is for a different purpose than the real one in order to avoid the new law. Not stating the purpose of the rental in the contract or renting it between 10 and 30% more than the stipulated reference index will be a "serious" breach, fined at between 9,001 and 90,000 euros. Minor breaches with penalties of 3,000 to 9,000 euros will occur when rental advertisements do not include the price of the reference index or other information required.
The Catalan government notes that there are "loopholes in the Housing Law" passed by the Spanish government in May last year, even with the entry into force of the reference index that sets the conditions for the price cap on rents. One month after the approval of this index in Catalonia, the supply of rental housing continues to fall and prices rise, while many owners have avoided the rental limits by moving to short-term rentals, according to the Catalan housing ministry, in accordance with the studies published by the main housing portals and real estate industry bodies.
The aim of the decree law is to avoid fraudulent evasion of this law by defining more specifically what a "short-term rental" consists of, since the new legislation fails to do this clearly.