Government plans gradual end to extensions on 20,000 contracts from 2027, capping initial CPI-linked rises

The Andorran government has approved a bill to gradually end rent controls on around 20,000 contracts currently under mandatory extensions since 2019, with changes starting 1 January 2027. Housing Minister Conxita Marsol presented the text, now backed by the Council of Ministers, for urgent parliamentary review next week—potentially Monday or Tuesday—with approval targeted by June.

The proposal sets a 2.5% cap on the Consumer Price Index (CPI) component of rent increases only in 2027, due to inflation pressures from Middle East tensions. This limits total rises on first renewals to 3.5%–8.5%, combining the CPI restriction with fixed annual increases of 1%–6% based on current rents per square metre. From 2028 to 2030, the CPI cap ends. Phasing affects groups by signing date and thresholds: - **2027**: Pre-2012 contracts or below €6/m². - **2028**: 2013–2015 or under €7/m². - **2029**: 2016–2018 or under €8/m². - **2030**: 2019–2021, no thresholds.

Contracts over €2,500 monthly are exempt. Very low rents adjust to public affordable housing rates—like €10.70/m² in Andorra la Vella and Escaldes-Engordany—over three years. Landlords must give six months' notice for renewals or changes, and can favour tenants with two years' residency or qualified workers on two-year contracts. Government models, at 2.5% CPI, show a 70m² apartment at €7.5/m² climbing from €525 to €564 monthly in 2027 and €772 by 2032. Marsol described it as "progressive and protective," aiding tenant retention and market balance. Head of Government Xavier Espot highlighted landlords' interest in stable tenants.

Following the government's public presentation this week, unions have sharpened their criticism. The Unió Sindical d’Andorra (USdA) called it a "massive liberalisation" of 80% of 25,000 rentals, forecasting 50%–100% jumps for low-rent deals aligning with affordable benchmarks. Secretary General Gabriel Ubach pointed to long-term residents, including retirees on €700–800 pensions paying €400–600 for decades-old tenancies now unavailable openly. He deemed CPI-linked rises without wage parity "insane," rejecting welfare reliance: "Do we want an Andorra of the assisted?" The USdA accused the bill of enabling tenant swaps for higher earners, contradicting crisis acknowledgements while scrapping stability measures since 2019, and promoting speculation. They renewed calls for early elections, a public property registry, price controls, reference indices, and effective social protections.

The Sindicat de l’Habitatge echoed opposition to IMF advice for market self-regulation, labelling the crisis an "extreme urgency" not medium-term issue. They argued concentrated ownership allows price influence on this essential good, warning unregulated markets empower speculators—worsened by extension expiries. Rejecting aid over intervention, they saw it as financialising housing and casting the state as charitable. A source noted IMF views show "relative symmetry" with government stances, urging a paradigm shift.

The Associació de Propietaris de Béns Immobles (APBI) backed the IMF, with President Jordi Marticella citing evidence that heavy regulation stifles supply and flexibility, while freer markets fare better. Ubach countered market-driven pricing evokes paying €500 for an aspirin, forcing vulnerable choices like €2,500 studios or homelessness, fuelling social precarity.

Marsol stressed the bill is a draft open to parliamentary amendments and urged landlords to wait. Average rents stand at €13.50/m², with 2027 contracts at €7.90/m². Complementary steps include 650 public housing units and 356 tourist flats turned residential, plus incentives and an unpaid rent fund enforced via SICAR with fines to 100% of annual rent.