Fall of Rental Decree Creates Uncertainty and Opens Door to Litigation

Congress's rejection of the regulation that capped rent increases at 2% leaves many contracts in a complex legal scenario.

Generic image of a legal document with a pen and a judge's gavel.
IA

Generic image of a legal document with a pen and a judge's gavel.

The Congress of Deputies recently rejected the royal decree that established a 2% cap on rent increases and a two-year extension for contracts, creating a landscape of uncertainty and potential legal conflicts.

The Congress's decision to overturn the housing measures decree has left in limbo the situation of many tenants who had already initiated procedures to benefit from its provisions. During the 37 days the regulation was in force, numerous individuals requested contract extensions or the application of price caps, but now their validity is questionable.
Experts from the College of Property Agents and the Bar Association have warned that the repeal of the decree opens up a scenario of legal insecurity. The main unknown lies in the validity of extensions that had already been requested or even granted, even if the process was carried out within the period established by the norm. This situation could lead to a significant increase in litigation in the courts.

"A regulation that aimed to protect tenants has had the exact opposite effect."

the dean of the Barcelona Bar Association
Despite the decree's fall, it is important to remember that the 2023 Housing Law stipulates that all contracts are automatically extended for three years if the landlord does not communicate non-renewal four months in advance. This provision applies especially to flats located in stressed areas, which in Catalonia include municipalities where 90% of the population resides.
Regarding price caps, the repeal of the decree will have a limited impact in many Catalan localities, as in stressed areas, limitations are already applied to the prices of new contracts, which cannot exceed a reference index or the price of the previous contract. However, uncertainty persists for contracts expiring from now on that have not been subject to extension under the now-repealed regulation.
The Tenants' Union, for its part, has stated its intention to defend all requested extensions, arguing that the regulation must be respected for those who availed themselves of it. The Federation of Neighborhood Associations of Barcelona (FAVB) has lamented that the Congress's decision could lead to the termination of thousands of contracts in the next two years.