As of January 1, the owner who must update the rent of his rental apartment, in the absence of another agreement with his tenant, will not be able to exceed the 3% limit. The measure takes center stage especially when the reference index to update the rents that has been agreed in the contract, such as the CPI, is above that figure at the time of doing so.
As the tenant must be notified a month in advance, contracts that are going to be updated in January should already begin to take the 3% into account.
The measure comes into force with the new Housing Law, which, approved in April 2023, modified the Urban Leases Law and established several limitations on the rental price in new contracts.
The 3% limit will apply to rental contracts for housing, for each year of validity, between January 1 and December 31, 2024. Rentals for use other than housing are therefore excluded, among which we find premises , offices or industrial warehouses, but also temporary or vacation rental contracts.
It will be important to see what the rent update clause in the lease determines. If the clause mentions the CPI, the latest CPI figure that the National Statistics Institute has published at the time of notifying the tenant must be taken. If this exceeds 3%, the cap would be applied.
If the clause allows updates, but does not mention any index, the Competitiveness Guarantee Index must be taken as a reference, as ordered by the Urban Leasing Law, which is still limited to 2%.
If there is no clause that allows rent updates, in the most recent contracts, the rent cannot be increased in any way.
The Housing Law has not been without criticism. Sources in the real estate sector have criticized her for considering her interventionist. It has been commented that, far from achieving its initial objective of promoting the supply of rental homes, it could cause aversion among owners, who would withdraw their properties from the market.
In reality, after a year and a half of these measures, renting continues to be one of the most profitable options that offer a greater return on investment. The real estate market in general has not been as affected by the Housing Law as by the current situation of high interest rates and restricted access to financing.
The rent cap has prevented rents from being updated, for a good year, based on a CPI that had exceptionally reached up to 10.8% in July 2022. However, this summer the CPI has recorded data below 3%. and, later, slightly above that figure, which is why the limit, although restrictive, is not far from real inflation in the country.
If Europe reaches the inflation target of 2% in the short term, the cap would already be obsolete, as happened promptly in June 2023.
Calculating the new rental price after the annual increase can be done by applying the following simple formula:
Monthly rent (3 × 100)
For example, a rental whose rent is €600 may be increased up to €18 per month. A rent of €750 could increase to €772.5, while one of €1,000 would rise to €1,030.
