Andorra Approves Gradual Phase-Out of Rent Controls by 2030

The Andorran government has approved a bill to gradually phase out rent controls on approximately 20,000 extended rental contracts from 2019, starting 1 January 2027, with full market liberalization by 2030. Housing Minister Conxita Marsol presented the measure, backed by the Council of Ministers, for urgent parliamentary review next week, aiming for passage by June.

The legislation limits the Consumer Price Index (CPI) component of rent increases to 2.5% in 2027 alone, capping overall hikes at 3.5%–8.5% that year when combined with fixed annual adjustments of 1%–6% based on current rents per square metre. The CPI restriction ends from 2028 onward. Phasing applies by contract signing date and price: pre-2012 or below €6/m² in 2027; 2013–2015 or under €7/m² in 2028; 2016–2018 or below €8/m² in 2029; and 2019–2021 from 2030, without caps. Contracts over €2,500 monthly are excluded. Rents below public affordable housing rates—around €10.70/m² in Andorra la Vella and Escaldes-Engordany—must rise to those levels over three years. Landlords must now give six months' notice for renewals or changes, up from three, and can favour tenants with two years' residency or qualified workers on two-year contracts.

Official estimates, based on 2.5% CPI, project a 70m² apartment at €7.5/m² increasing from €525 to €564 monthly in 2027, and reaching €772 by 2032. Marsol described the plan as "progressive and protective," aiming for tenant security and market balance. Head of Government Xavier Espot highlighted landlords' interest in stable tenants.

Unions have sharpened their criticism. USdA Secretary General Gabriel Ubach warned low-rent contracts could see 50%–100%+ jumps as they align with affordable benchmarks, severely affecting long-term residents like retirees on €700–800 pensions who have paid €400–600 for decades-old tenancies now unavailable on the open market. "Try finding a €400–500 flat today," he said, calling CPI-linked rises without salary adjustments "insane" and rejecting welfare dependency: "Do we want an assisted Andorra?" The USdA views the reform as "massive liberalisation" of 80% of 25,000 rentals in four years, potentially enabling tenant swaps for higher payers and speculation from past policies. They fault public housing as overly restrictive "social" units, not broad European-style protected rentals, and urge elections, a property registry, price caps, reference indices, and strong safeguards. Ubach challenged whether low-rent payers or €2,500 studios pose the real issue, blaming public policies for turning housing into a financial asset while respecting private property.

The Sindicat d’Habitatge (SHA) dismissed IMF self-regulation advice, declaring housing an "extreme urgency," not medium-term issue. A representative noted market concentration allows price dominance over this essential good, warning gradual decontrol could turn abrupt and favour speculators. They highlighted "relative symmetry" between government and IMF stances, prioritising aid over structural fixes and casting the state as charitable: "If the system were fair, no aid would be needed." The SHA demands a reference price index, rental registry, and annual hike limits, noting recent high-rent contracts evade scrutiny. In a statement, they argued the bill regulates when rents rise rather than protecting tenants, exposing thousands to hikes or evictions, with increases exceeding CPI hitting cheaper units hardest: "The market will keep functioning the same: expelling people."

Landlords' APBI President Jordi Marticella backed IMF non-intervention, citing heavily regulated markets that lose supply and flexibility, "tensing further," while less intervened ones perform better.

Street accounts underscore pressures. Young families in Escaldes pay €1,200–1,900 for spacious flats, with some capping at one child amid rises—one jumped from €900 to €1,650 after maternity for 110m². A mother on a 12-year €700 tenancy faces €1,005 in five years at 7.5% annual hikes (5% fixed plus 2.5% CPI), a 43% increase, though she remains resigned. A moratorium-affected Ordino couple pays €1,100 for 118m², facing sale in 2027. Shared flats cost €800 for 50m² in La Massana or €900 for 60m² in Andorra la Vella. Some owners show restraint: one rents a renovated 60m² flat for €300, waiving payments during lockdown. Average rents stand at €13.50/m², with 2027 contracts at €7.90/m².

Complementary steps include 650 public units, 356 tourist flats shifting to residential, incentives, and an SICAR fund for unpaid rent with fines up to 100% of annual sums. Marsol said the draft allows amendments.