New rental price index: How it is applied, which homes it affects and which autonomous communities are going to implement it

Cristina Alonso Madrid

Madrid

Updated Tuesday, February 27, 2024-17:19

The rental reference price index is now a reality.

Ten months after the approval of the Housing Law, the Government has made public the system that will allow the autonomous communities

to declare stressed areas and intervene in the market

in those municipalities where certain price levels are exceeded.

What exactly is this tool?

How and where is it going to be applied?

And most importantly, which homes does it affect?

EL MUNDO clarifies the main issues related to the measure that the Ministry has just launched.

What is the State Housing Rental Price Reference System?

This is a tool that offers a range of housing rental price values, "as a reference, as a guide, for setting the rent in new housing rental contracts," as the Ministry explains in its website, where citizens can now consult it.

What exactly does it consist of?

More than an index, what the Ministry of Housing has developed is a range of maximum and minimum prices by geographic areas.

That is, a tool that establishes the minimum and maximum rent at which a property must be rented in a certain area.

What factors do you take into account?

To determine the ranges, the Ministry has assessed a series of characteristics of the home, beyond the location or surface, such as its state of repair, whether it has an elevator or not, whether it has parking... as well as the year of construction. construction, the availability of common areas and other aspects.

The objective is that lower value homes cannot increase their price when compared to others of higher quality in the same area.

Where does the data come from?

To prepare the reference index, the Government has drawn mainly on the information from the landlords' income tax returns provided by the Tax Agency (in total, more than two million contracts in the 2022 returns), as well as as well as the records of the General Directorate of the Cadastre, the National Institute of Statistics, the Bank of Spain or the College of Registrars and the General Council of Economists.

Where is it applied?

The index will be applied in those autonomous communities that request the central Executive to declare stressed areas (this concept is explained later).

At the moment, the only one that has started the procedures to apply it is Catalonia, although Housing anticipates that they have received verbal interest from the regional governments of Navarra and Asturias and urge all regions to request it to reduce rental prices.

What is a stressed zone?

The Housing Law establishes that a stressed area is one in which the average burden of the cost of the mortgage or rent plus basic expenses and supplies exceeds 30% of the average household income or one in which the price has increased at least three points above the CPI in the previous five years.

How to apply?

It is the autonomous communities, as has been explained, that have to formally request the Ministry of Housing to declare stressed areas.

This request must be accompanied by a package of measures to correct market imbalances through projects to increase supply and the creation of a favorable tax environment with personal income tax bonuses, for example.

Which homes does it affect?

The index will be applied to homes located in stressed areas, but with differences.

In the case of large holders (those who have more than 10 properties or those who have more than 5, if the autonomous community decides to lower the threshold) compliance will be mandatory.

That is, they will not be able to rent above the maximum reference price limit.

It will also be mandatory for new housing contracts that go on the market for the first time in five years.

And in the case of small owners, they will have to reference the price to the previous contract, that is, freeze it.

And who is going to monitor your application?

The Ministry explains that it is the autonomous communities that will be in charge of monitoring compliance with the index, especially in the case of large holders, who are identified and have to adhere to the established price ranges.

Now, in the case of small holders, they encourage citizens to check prices in bond deposits, records that, however, are not available in all autonomous communities.

Where are prices most inflated?

The Ministry points to the Community of Madrid, where they estimate the difference detected between the price of a home published on a real estate portal and the reference index set for that area at up to 60%.

But they also warn of the gap in other cities.

For Barcelona, ​​which is going to start applying it, they use concrete examples: a home on Valencia Street appears offered on a portal at 1,660 euros, when the upper range of the index is 984 euros.

Another, on Madrazo street, is rented for 1,172 euros, compared to a reference limit of 847 euros.

From when and until when will it be in force?

The index can be consulted starting this Tuesday on the ministry's website, as information for citizens throughout the country, but it will not begin to be applied for ten business days in the autonomous communities that have requested the declaration of stressed areas.

Once the stressed areas are published in the BOE, the measure will be valid for three years, extendable if the causes that motivated the declaration of a stressed area persist.

Will prices drop?

It's the million dollar question.

From the Ministry of Housing they defend that the reference prices of the index are far from what is being offered and they assure that the upper range is well below the offer, which will invite prices to be reduced.

However, the partners of the Sumar Government do not share this statement: in their opinion, with its current design it will only have an effect on the highest rents and will not allow significant decreases.