New legislation in Andorra: A respite for the rental market

In recent years, access to affordable housing has become a growing challenge for Andorran residents, exacerbated by notable residential growth and rising inflation. In response to this problem, the Government of the Principality of Andorra has taken significant measures with the publication of “Law 24/2023 of November 28, on stimulus and stability measures for the housing rental market”, which came into force on January 1, 2024.

This law arises as an effort to offer solutions to both tenants and owners, in a context where social tension and difficulty in accessing housing have pressured the executive to intervene in the rental market.

Key aspects of the new regulations

The law introduces a system of rent extensions and updates that varies depending on the year of formalization of the lease contract, with the aim of protecting tenants against disproportionate increases and offering some stability to owners.

• Extensions and updates : Lease contracts signed in years prior to 2022 benefit from automatic extensions, with rent updates that depend on the price per square meter, generally not exceeding the CPI plus a limited additional percentage.
• Exceptions to extensions : The law establishes clear exceptions, such as the use of the home for social purposes by the Government, the need for security works, or the owner’s own use, among others.
• Contract resolution : Contract resolution is allowed under specific conditions, always seeking the protection of the tenant and avoiding excessive increases in rent.

Impact and prospects

The implementation of this law represents a step forward towards the stabilization of the rental market in Andorra. By limiting rent increases and establishing automatic extensions, we seek to protect the most vulnerable tenants and offer predictability to both tenants and landlords.

Experts and authorities agree that these measures are crucial to relieving pressure on the rental market, although they also point out the importance of continuing to work on long-term solutions that address the shortage of supply and promote a more dynamic and accessible rental market.

Conclusions

“Law 24/2023” is a reflection of the Andorran Government’s commitment to the stability and accessibility of the rental market. Although it represents significant progress, dialogue between all sectors involved will be essential to ensure that the measures adopted translate into tangible benefits for the Andorran population, without losing sight of the need for a long-term vision that guarantees a sustainable balance in the real-estate market.