Saturday, June 10

The limit on rent increases will be automatic for large owners and negotiated for small ones

The Government detailed this Tuesday “a historic measure” to alleviate the impact of the current inflation peak “on people who rent their homes”: the limitation of rent revaluation to 2% for three months. The measure, included in the Royal Decree Law approved by the Council of Ministers, will apply to contracts that are updated from the time the rule is published in the Official State Gazette (BOE) until June 30.

The Government takes for granted the support of Congress for the anti-crisis plan while waiting for Feijóo’s PP

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Technically, the limit will have two speeds, as explained by the Second Vice President and Minister of Labor and Social Economy, Yolanda Díaz: it will be automatically linked to the General Competitiveness Index (IGC) in the case of large holders and will have to be renegotiated with tenants in the case of small owners. Always, with a limit of 2% if there is no agreement, the same as the IGC itself.

The annual update of most housing rental contracts is currently linked to the general CPI, which in turn is the maximum limit to which rent can be revised upwards, although it is not the only indicator to which the law allows them to be indexed. Leases may, in fact, never be updated while they are in force, unless otherwise specified.

When it is forecast, it is done with respect to the general CPI, or, in some cases, the least according to different sources in the real estate sector, with respect to the CPI for housing rentals, which has barely tightened in recent months, or with respect to the IGC , which is also calculated by the INE, if the annual update is collected but not the reference.

This last index will be the only reference from the publication of the Royal Decree Law in response to the impact of the war in the BOE until June 30.

As an example, an average rent in Spain, which is around 700 euros, will rise by only 14 euros in the coming months, and not the 53.2 euros that it will do according to the CPI for February7.6%.

And it is that the measure will relieve the tenants who update their rents in the next three months, although the rents revised since October have already suffered increases of more than 5%, while the main supplies have also risen: electricity, gas…

Only until June 30?

The 2% cap on rent increases need not be a time-limited measure. This is how the Union of Tenants and Llogateres consider it, who advocate that this measure be permanent and be included in the new Housing Law that is already in the parliamentary process.

This Thursday, the unions will present in the Congress of Deputies the amendments they propose to the text and, among them, this 2% limitation, linked to the Competitiveness Guarantee Index (IGC).

A limitation that they have already proposed on previous occasions. For example, in the meeting held a few weeks ago at the Ministry of Transport, Mobility and Urban Agenda, with the minister Raquel Sánchez; and the Secretary of Housing, David Lucas.7

This application of the IGC would be an alternative to the price index contemplated by law and that only foresees stopping increases in areas with stressed prices and only for large holders.