300 cities cheaper than the Islands limit rental prices

PalmThe declaration of a "stressed zone," a measure provided for in the state Housing Law that allows for limitations on rental prices, has begun to bear fruit in municipalities like Barcelona, ​​where, according to official data, the average price of new contracts fell by 6.4%. According to data from the Catalan Land Institute (Incasol), average rental prices in Catalan municipalities have decreased by nearly 5%. Given that the housing situation in the Balearic Islands is worse than in most of Spain, is there any objective reason not to apply this measure, in such an extremely serious situation?

The answer to this question is not simple. It ranges from "objectively, we have not yet observed any results that would make us change our minds," by the Director General of Housing for the Balearic Government, José Francisco Reynés, to "it makes no sense not to do it in the most affected region of the country," by economist and housing expert Eduard Robsy. The Balearic Government insists that no municipality in the Islands is being declared a "tense zone," not only for purely political reasons aimed at undermining state initiatives. Experts, while acknowledging the very complex situation, maintain that no measure will be too small to halt an escalation that is becoming unsustainable for citizens.

Rental prices in the Balearic Islands have risen by around 10% in a year, and now far exceed those in the vast majority of the 300 municipalities that, according to data from the Ministry of Transport, Mobility and Urban Agenda, have already been declared "stressed zones." With the exception of Barcelona and San Sebastián, the cost of renting a home in Palma, Calvià, and Santa Eulària is much higher than in those areas that can benefit from price caps thanks to the "stressed zone" designation. Generally speaking, the reality in the Islands would justify this measure from an objective point of view, according to the data. In the opinion of Eduard Robsy, "the politics of blogs and ideological prejudices prevail, and [the Government] is implementing a decision that was made outside our territory," he points out, referring to the position of the national People's Party. Mandatory limits only for large

The declaration of a "stressed area" allows for legal limits to be placed on rental prices and for rent increases to be capped according to a reference index established annually by the Ministry. These caps are mandatory for large landlords—those with more than ten properties—and voluntary, but with tax incentives, for small landlords. The measure is temporary—usually for three years—and serves to protect existing tenants and new contracts entering the market, preventing disproportionate increases, while also giving the Administration leeway to implement other housing policies, such as the construction of social housing and the regulation of supply.

According to Robsy, "We must consider the anxiety of families who rent in the Islands and who see their lease renewal approaching, knowing that they will face a 30 or 40% rent increase." In this regard, real estate expert and businessman Pedro Garcia insists that "there has been a reduction in prices in the municipalities declared to be under pressure, for example, around 5% in Catalonia, according to official sources." But Garcia warns that the measures to limit rental prices have also had worrying side effects, since "some landlords have withdrawn their apartments from the rental market," he notes. This argument, the decrease in properties on the rental market, is one of the main reasons the Catalan government has given for not declaring any kind of area under pressure in the Balearic Islands. According to Reynés, there is also data from the Catalan administration that contradicts the optimism surrounding the rent limits: "The apartments in better condition have been withdrawn from the market, leaving only the smaller ones available for rent. As a result, the average price per square meter has risen, and now stands at €16.14." [General Director]

The declaration of a stressed area cannot be achieved automatically; it requires demonstrating an upward trend in rental prices, compared to the reference index established by the Administration; the proportion of people with difficulty accessing rental housing or the ratio between average income and rental cost; and the limited supply of available apartments in relation to demand. "Observing what is happening in the areas where it has been declared, I believe that objectively it would not improve the situation in the Islands. And I don't say this because of a political stance, however much some voices claim otherwise. Furthermore, in Barcelona we have seen how the development of apartments built by developers exclusively for rent has collapsed (built to rent“This shows that if you limit rents, part of the supply is automatically deactivated,” explains Reynés. Robsy, on the other hand, analyzes the situation from the opposite perspective. “First, it’s important to note that prices have fallen by about 2% in the municipalities that have implemented the measure, reaching as high as 5%. In the Balearic Islands, prices have risen by 9.7%, with an extreme case like Ibiza, reaching 22%,” he details. “I think the difference is clear and demonstrates that it has worked,” concludes the expert. “It’s important to continue promoting more housing geared towards people with fewer resources and, for the time being, not to opt for measures that could discourage landlords from remaining in the rental market,” adds Reynés.

For his part, García believes it's necessary to go a step further and "move beyond the limited debate about whether a certain area or situation is suitable. What we need is to facilitate the construction of more housing once and for all. It can't be that developers want it, builders want it too, society demands it insistently, and yet we remain at the very bottom of the list in terms of public housing development and land for building apartments," he asserts.

García points out that "demographically, we have experienced exorbitant growth." "Housing isn't being built, and we're still arguing. I think it's time we call things by their name and understand that the deficit is increasing year after year. We must remember that 24,000 rental contracts in the Islands are about to expire, and the problem is that the market cannot currently offer housing to meet the existing demand. Public authorities must rise to the occasion," he demands.