"The Rent Will Be That Freely Stipulated By The Parties" (art. 17.1 LAU)

Eduardo García's picture
Published: 16/03/22 - Country: Spain

This was the case before the enactment of the Catalan Law 11/2020 of September 19 "on urgent measures regarding the containment of rents in housing leases (...)" and this is how it will be after the recent Constitutional Court ruling that was "given in Madrid, on March 10, 2022" but that is still pending publication in the BOE, at which time "it will unfold its general effects" as provided in art. 38 of the Organic Law of the Constitutional Court itself.

It has therefore been practically a year and a half that a tremendously controversial law has been in force, which required two additional modifications in its short duration and which, in the end, has contributed to the generation of a serious sensation of legal insecurity and confusion, knowing all the operators and the Administration itself that the law was born with serious unconstitutionality defects revealed by the "Consell de Garanties Estatutaries" itself in its Opinion dated 7/2020 of August 5, which was totally ignored by the Catalan legislator, despite to influence the possible jurisdictional conflict that has finally determined its nullity.

The TC annuls a large part of the precepts of the law, leaving in force only those focused on the Declaration of "tense housing market" but annulling its nuclear precepts such as art. 6 to 13, which are the ones that established the income limit and numbers 15 and 16b that established sanctions for non-compliance.

The TC bases the annulment on the "invasion of state powers" by the Catalan legislator since it considers that it is the responsibility of the State and not the Autonomies, to fix the "bases of contractual obligations" considering that art. 17.1 of the current LAU (transcribed in the title of this writing) that establishes the free stipulation of rent in urban leases "must be considered a basis for contractual obligations" and therefore reserved exclusively for the State.

The State thus turns out to be competent to legally establish the principle of freedom of agreements in fixing the rent of the housing rental contract, which entails the nullity of the Catalan regulation.

However, curiously, the TC indicates that such annulment will only have "pro-future" effects, maintaining the lease contracts entered into under the validity of the annulled law, for the sake of the principle of legal certainty.

In any case, at the expense of the publication of the ruling in the BOE, the arrival of the same - whose draft can only be found on the TC website - the ruling is good news for the rental market in Catalonia, affected to now due to a distorting law that has not achieved its objective of lowering rents and that of extracting from the market a good number of homes that were withdrawn from the market by their owners pending the constitutional pronouncement now produced, for which reason the recent annulment of the norm could result in the return of such homes that contributes to normalizing a market that is very sensitive to legislative fluctuations.

And all this, pending the evolution of the processing of the State Housing Law that the Government of President Sánchez currently has in parliament.

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