Why the Government's price index is going to trigger tension in the housing rental market

Cristina Alonso Madrid

Madrid

Updated Wednesday, February 28, 2024-01:36

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

In June 2020, the then Minister of Transport, Mobility and Urban Agenda,

José Luis Ábalos

- today ousted from the PSOE due to the 'Koldo case' - presented the state reference system for housing rental prices, a tool that aspired to become the mechanism for income control by the autonomous communities.

Barely six months later, Ábalos himself refused to limit the price of rents and left the negotiation of the Housing Law with Unidas Podemos at a standstill.

Three years after that moment, and nine months after the approval of what is one of the star laws of this Government, the Ministry of Housing has launched an index that significantly relaxes control over initial aspirations and triggers uncertainty in the rental market in the midst of a price crisis.

The Secretary of State for Housing and Urban Agenda,

David Lucas,

presented the new tool yesterday.

More than an index, it is a system of ranges that establishes minimum and maximum prices by geographic areas.

That is, it determines the ranges that landlords must adhere to when renting a home.

This, in the market's opinion, not only goes in the opposite direction of containing price increases, but it

will aggravate tension

.

First, by influencing the price variable, when the problem is in supply.

And second, because setting such wide ranges limits the impact to the highest rents and allows owners to opt for the upper part of the range.

Isabel Rodríguez

's

number two

defended that the

ranking system, based on a series of characteristics of the home such as location and surface, features, state of conservation or year of construction, is the most effective in preventing Properties of lower value increase in price when compared to those of higher quality in the same area.

However, the sector questions that this design "does not help to dispel the great doubts that exist around the application of price limits" because "it is one thing to have an index and another to have a price range in which, probably,

"The owners are going to opt for the highest part of the range

," warns the director of apartments.com studies, Ferran Font.

Precisely, the

Generalitat of Catalonia

, which is the only autonomous community that has formally requested the Ministry to declare up to 140 municipalities as stressed areas in order to intervene in the market, has shown its rejection of the Government's index system for this reason.

"The fact that there is a value range will mean that everyone will be governed by the upper range and, therefore,

prices in the stressed areas of the territory will not drop

," denounced this Monday the Minister of Territory,

Ester Capella

, after a meeting emergency meeting with Minister Rodríguez in which she also rejected the implementation of a homogeneous system for all of Spain and claimed the need for a Catalan index.

The relaxation of the index until it becomes a mere range does not convince the Government's partners either.

Sumar's deputy spokesperson in Congress,

Aina Vidal

, warned yesterday of the "many doubts" that the plurinational group has about the index and referred specifically to the price ranges: "They are so wide that they

would only reduce the most extreme prices and more abusive

," he said.

To better illustrate this, she explained that, with the design proposed by Isabel Rodríguez's department, the index will be able to reduce prices in more expensive areas such as Madrid's Gran Vía, but its effect will be "very doubtful" in neighborhoods like Carabanchel.

More gaps

In any case, the price range is not the only gap that the sector sees in the new index.

For Ferran Font, "the need to declare areas as stressed

does not help to dispel the great doubts surrounding the application of price limits either

, which means that these indices will not be applied in practically any market."

"There are also doubts about the verification and inspection mechanisms and the

absence of a sanctioning regime

," he says.

For his part, the spokesperson for the Idealista real estate portal, Francisco Iñareta, focuses on the fact that "the Ministry is failing in the diagnosis" and assures that "the only way to turn around the dramatic rental situation is not to act in the prices but in the offer".

"Dedicating time and money to an index that limits prices is adding more gasoline to the fire and a lack of responsibility and sensitivity to the desperation of thousands of families who cannot find a home to rent," he denounces, insisting that "

the destruction of "The available supply pushes prices up

and makes access impossible for the most vulnerable groups."

Iñareta considers "the insistence on continuing with a failed policy surprising" and emphasizes that "acting on prices coercively is not the way."

"The price index is one more step that confirms the

chronicle of the announced death of the rental market

. It is an exercise in recidivism in already failed policies in countries around us where they destroyed the market," he says.