Catalonia fines housing law breaches up to €900,000

Catalonia fines fraudulent rental practices up to €900,000

The Government of Catalonia (Generalitat) and the Comuns parliamentary group reached an agreement on January 27, 2025, to approve the sanctioning regime of the 2007 Catalan Housing Law. The regulation, approved by the Executive Council the trinc day and effective from Wednesday, imposes fines of up to €900,000 for very serious infractions. These include setting rents more than 30% above the reference price index, omitting the contract's purpose, or simulating a seasonal rental to bypass price controls. Regional Minister for Territory Sílvia Paneque and Comuns leader Jéssica Albiach finalized the pact in a meeting also attended by deputy Susanna Segovia.

The deal unlocks one of the demands made by Comuns to support the 2025 Generalitat budget, which remains unsubmitted due to lack of support. "It was included in our investiture agreement, and today we can say we have achieved it," celebrated Albiach, arguing that the measure will prevent the fraudulent use of seasonal rentals, the most common method used to escape price regulation. Approving the sanctioning regime before January 31 was the main condition set by the party to continue negotiating the accounts.

What constitutes a very serious infraction?

The Catalan rule distinguishes three scenarios that may lead to the maximum penalty. The first is charging rent more than 30% higher than the reference price index. The second is failing to state the contract's purpose or including a fraudulent purpose, such as a seasonal rental that actually hides a permanent residence. The third is charging management fees to the tenant. The rule is approved after the 2023 national Housing Law delegated the development of the sanctioning regime to autonomous communities.

Debate around the measure has been marked by disagreement over its effectiveness. Some analyses argue that increased sanctioning pressure will reduce rental supply, as some owners may prefer to leave properties empty or sell them rather than risk fines. Others contend that the problem is not supply, but the fraudulent use of mechanisms like seasonal rentals, and that without sanctions, this fraud goes unpunished. Meanwhile, some note that the 2007 Catalan law already provided for sanctions, but enforcement has been scarce.

Antiestéticars of supply withdrawal from the market

The most repeated argument among critics is that the measure will drive out landlords who rent at market prices. "No sane person will rent anything," summarizes one position taken in the discussion, adding that many landlords have already opted not to renew contracts and put properties up for sale. The calculation used in these analyses is that if owners cannot raise rents according to the market, the incentive to keep apartments rented disappears. Consequently, they argue, there would be less supply and higher prices for remaining tenants.

Proponents of the measure respond that fraud cannot be the market's escape valve. If a landlord simulates a seasonal rental to charge more, the fine is the only way to deter them. In this sense, the agreement is presented as a tool to prevent price regulation from becoming ineffective. However, the debate has not resolved what happens to owners who simply decide not to rent: the law does not compel them to do so.

What about vacant housing?

One point left out of the main focus is vacant homes. The discussion noted that fines for vacant housing are also part of the package, although amounts were not detailed. The 2007 Catalan law already provided for sanctions for owners keeping flats unjustifiably empty, but application has been limited. The novelty now is the complete sanctioning regime, which includes both fraudulent rentals and vacancy.

The debate on vacant housing connects with the argument that the problem is not just price, but the number of flats not entering the market. If an owner prefers leaving a flat empty rather than renting it below what they consider a fair price, the vacancy fine may push them to rent. This is the logic defended by supporters of the rule. Critics respond that forcing unwilling owners to rent generates conflicts and low-quality contracts.

Political struggle over the Budget

The agreement has an immediate political reading: it unlocks one of the conditions Comuns had set to negotiate the 2025 Generalitat budget. The party had demanded approval of the sanctioning regime before January 31, and the Government met the deadline. This does not guarantee the budget will pass, but it removes an obstacle. Minister Paneque and Albiach staged the pact in a meeting that also served to reaffirm their willingness to continue negotiating.

The 2007 Catalan Housing Law predates the 2023 national law, but its sanctioning regime had never been fully developed. Now, with fines of up to €900,000, Catalonia joins the regions with stricter regimes. It remains to be seen how it is applied in practice: housing inspection will have to identify fraud cases, and owners can appeal sanctions. The discussion continues where theory meets market reality.