Changes in rent increases as a result of the Housing Law

Since May 2023 – when the Housing Law came into force – we have witnessed several changes in the real estate sector. Some of which we have already been discussing in previous articles. One of the pending issues that we know is generating the most interest is the adjustments in rental prices.

What changes have been made and how does this increase in rents affect owners and tenants? We analyze it!

Elimination of the annual review of rents based on the CPI

With the aim of preventing the impact of inflation on rental costs and protecting tenants’ interests, the Housing Law – in its sixth final provision – integrates the Competitiveness Guarantee Index, IGC, as the mechanism for adjusting prices.

It establishes that:

• In 2023, the increase is limited to 2%.
• In 2024, a cap of 3% will be applied.
• As of 2025, a new index will be introduced, which, for the time being, is unknown.

Changes in rent increases

What situations must be considered in order to determine the allowable increase in the rent of a dwelling? As indicated in the “Guide on the Housing Law“, prepared by the Association and Association of Real Estate Agents, API:

• Situation 1: in case the property is not located in a stressed area

Both large and small landlords are free to set the rental income in the new contract by mutual agreement.

• Situation 2: if the dwelling is in a stressed area and the lessor is not a large landlord

The rental price cannot exceed the amount of the last rent of the lease of the habitual residence that was in force in the last five years.

This applies after the updating clause of the previous contract, without the possibility of introducing new conditions that imply that the tenant assumes expenses not previously agreed upon.

There are certain exceptions that allow an increase of up to 10%. These are:

1. If the property has undergone a rehabilitation that was completed in the two years prior to the signing of the contract.
2. If, in the previous two years, rehabilitation works or improvements have been carried out on the property, evidencing a non-renewable primary energy saving of 30%.
3. When accessibility improvements have been carried out in the previous two years, with proper supporting documentation.
4. If the contract has a duration of ten years or more, a voluntary extension right is established that allows the owner to extend the agreement under the same conditions.

• Situation 3: If the property is located in a stressed area and the lessor is a large landlord

Once the rental value has been calculated as above; in agreements with large landlords, the total cannot exceed the price ceiling set in the index system.

In situations involving contracts with large landlords and dwellings that have been leased for the last five years, the lower of the amounts calculated in situations 1 and 2 must be applied.

• Situation 4: If the property is located in a stressed area and has not been rented in the last five years

If the property is located in a stressed area and has not had a lease in the last five years, the rental benchmark is implemented in new leases. It applies to all properties, regardless of whether the holders are small or large tenants.

Rent your property with KM2 Real Estate Services

In KM2 Servicios Inmobiliarios we know that the Housing Law can condition the management of the properties by the owners.

If you need advice to rent your property, our commercial department will propose a strategic marketing plan to carry out the steps, maximizing the price and minimizing the time to market.

Do not hesitate to contact one of our agents for more information or visit us at any of our real estate agencies in Barcelona and Madrid. You will find us at:

• Rambla Cataluña 60, 5º2ª, Barcelona.
• C. Serrano, 51, 4ª Pl. Derecha, Madrid.