Investing in Catalan property becomes more unattractive

The property market in Barcelona and the wider region of Catalonia is facing profound changes due to recent policy proposals and effective regulations. These measures are aimed at tackling the affordability crisis in the housing market, but seem to mainly target investors. Investing in real estate in Catalonia is becoming more unattractive.

Restrictions on foreign investors and non-residents in Barcelona

Barcelona city council is considering a ban on the purchase of housing by foreign investment funds and non-residents unless the properties are for personal or family use. This initiative aims to protect access to affordable housing for local residents. The question is to what extent this proposal survives a review with the constitution and EU law.

Stringent fines for landlords for breach of rent regulations in Catalonia

In a related initiative, the Catalan government has introduced a new penalty regime for landlords who violate rent regulations. Fines range from €90,001 to €900,000 and are designed to tackle offences such as charging rents more than 30% above the reference price index, fraudulently classifying leases as "seasonal" to circumvent rent caps, and illegally passing on management costs to tenants. There is also a hotline at the Agència Catalana de l'Habitatge where tenants can report any abuses.

Decision

These recent developments in Barcelona and Catalonia underline a clear shift in housing policy: the protection of tenants and local buyers is given priority over the interests of investors. Mainly short-term rentals by foreigners are trying to discourage by all means.

The proposed restriction on foreign investment in Barcelona could reduce the supply of rental housing and thus drive up rents. At the same time, the draconian fines on landlords could lead to a decrease in private investment in rental properties, again putting pressure on the market.

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